The White House has hit a wall in its attempts to revive Israeli-Palestinian peace talks, a senior Palestinian official said Tuesday.

Saeb Erekat, the chief Palestinian negotiator, said that recent US efforts to get the two sides back to the negotiating table – or at least nearby tables as part of proximity talks – had reached a "dead end."

"It appears that all the consultations that have happened with the Israeli government and the American administration and other states have reached a dead end, with Israeli positions insisting on a continuation of settlement," Dr. Erekat said on the Voice of Palestine Radio today.

As Palestinians have become increasingly disillusioned with a negotiated two-state solution, they have gravitated toward two main alternatives: unilaterally declare statehood, or back a "one-state solution" in which a common border and higher Arab birthrates would force Israel to become either non-Jewish or non-democratic.

Foreign Minister Avigdor Lieberman today warned Palestinians against the first option – declaring independence unilaterally – saying that in response Israel could annex part of the West Bank or back out of peace agreements including the Oslo Accords.
Obama unable to extract concessions from Israel

Relations between Jerusalem and Washington have been tense since March, when the government of Israeli Prime Minister Benjamin Netanyahu announced plans to build 1,600 new housing units in East Jerusalem.

Mr. Netanyahu and President Barack Obama tried to resolve their differences during several tense meetings two weeks ago, but did not come to an agreement. Mr. Obama has asked Netanyahu for written pledges that would confirm Israel's commitment to advancing talks with the Palestinians through a series of confidence-building measures; Israel has not formally replied to this request

Whether the talks have actually reached a dead-end or not – US officials will confirm nothing of the sort – the statement reflects dwindling Palestinian expectations in Obama's ability to coax or prod Israel towards peace talks.

"It's a fair characterization of the way most Palestinians feel at this point," Bassem Zubeidy, a professor at Bir Zeit University in Ramallah, says of Erekat's declaration.

"Everyone's realizing the Americans have their own limitations vis-a-vis Israel."

"Obama is unable to invest any more political capital in this issue than he already has, and the Israelis are more interested in creating facts on the ground than in his peace plan," says Prof. Zubeidy.

Crux of stalemate: Jerusalem

At the crux of the delay on returning to peace talks are differences in how Israel and the Palestinian leadership view Jerusalem, and whether it should be considered part of the larger settlement issue. Netanyahu agreed in November 2009 to a 10-month moratorium on building new settlements across the West Bank.

However, he has refused the long-standing demand of Palestinian President Mahmoud Abbas that the building freeze include East Jerusalem, which Israel captured in the 1967 Middle East war and later annexed. Israel views Jerusalem as its eternal, united capital, while Palestinians view it as the capital of their future state.

Israel has sent mixed messages on the issue. Some officials have indicated that while there would be no official freeze in Jerusalem, a quiet, de facto halt might be instituted. Others, such as Israeli Foreign Minister Avigdor Lieberman, are making it clear that Israel does not intend to stop or slow its plans to build in Jerusalem.

"We cannot freeze construction in Jerusalem, neither in the east nor the west, neither for Arabs nor for Jews, because it would jeopardize our sovereignty as a state in our own capital," Mr. Lieberman said Tuesday on Israel radio.

"The international community wants us to go back to the lines of June 1967, which would not end the conflict but move it closer to Tel Aviv," said Lieberman.

The 1967 border is west of many of the West Bank's largest Jewish settlement blocs, which the US, the United Nations, and others consider illegal under international law. The closer Palestinians live to Tel Aviv, site of Israel's main airport and key government institutions, the easier it would be for Palestinian militants to strike those targets, politicians such as Lieberman worry.