Since his inauguration in Jan. 2009, U.S. President Barack Obama has been making strenuous efforts to bring the Palestinians and Israelis back to the negotiating table.

A glimpse of hope emerged when the two sides resumed direct talks in Washington in September. But the brief optimism was worn off quickly as negotiations relapsed in limbo over Jewish settlements, without any sign of breakthrough on the horizon.

DISPUTE OVER SETTLEMENT

After intensive diplomacy in the region by Secretary of State Hillary Clinton and Middle East envoy George Mitchell, Israel and the Palestinians finally resumed direct talks on Sept. 2 in Washington, the first in nearly two years.

After ceremonial handshakes and diplomatic fanfare, all leaders vowed to solve the final status issue within 12 months.

But that optimism was short-lived. Israel failed to extend a 10-month moratorium on West Bank settlement activities upon expiration on Sept. 26, whereas the Palestinians insisted they would drop out of the negotiations should settlement building continue.

As a result, the talks grounded to a halt after going for only two rounds.

To get over the settlement issue, so far the biggest obstacle to the direct talks, the United State has been pressuring Israel to extend the freeze.

On Nov. 11, Clinton held a seven-hour Marathon meeting with Israeli Prime Minister Benjamin Netanyahu in New York, at which she proposed to extend the moratorium for 90 days in order to keep the talks alive.

In exchange, Israel would receive a package of military and diplomatic incentives, including 20 F-35 jet fighters and U.S. vetoing of anti-Israel decisions in the United Nations and other international forums.

Netanyahu brought home the proposal to his senior cabinet members, but encountered fierce opposition. Moreover, the United States and Israel remained divided over whether the moratorium should include East Jerusalem.