Washington's deadline for a peace deal expired Tuesday with the sides bitterly divided and warnings that Israel risked becoming an "apartheid state" if it failed to make peace with the Palestinians.
As final date for the nine-month negotiation period arrived, peace hopes appeared more remote than ever with Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmud Abbas locked in a tactical game of fingerpointing, and US attempts to broker an extension in tatters.
After more than a year of intensive shuttle diplomacy by US Secretary of State John Kerry who had initially hoped for a deal by April 29, Washington's was reluctant to admit failure, acknowledging only a "pause" in the dialogue.
And both leaders were quick to say they were open to resuming talks -- but only under certain conditions likely to be unacceptable to the other side.
"If we want to extend the negotiations there has to be a release of prisoners ... a settlement freeze, and a discussion of maps and borders for three months, during which there must be a complete halt to settlement activity," Abbas said.
But a senior Israeli government official said there would be no further talks unless Abbas renounced a reconciliation pact signed last week with Gaza's Islamist Hamas rulers.
"The moment that Mahmud Abbas gives up the alliance with Hamas, a murderous organisation which calls for the destruction of the state of Israel, we will be ready to return immediately to the negotiating table and discuss all subjects," he told AFP.
- Back to square one -
Analysts said the end of the negotiating period meant the situation would simply go back to square one.
"We’re back to where we started," said Jonathan Spyer, senior researcher at the Global Research in International Affairs Centre near Tel Aviv.
The Palestinians, he said, were likely to continue with their "strategy of political warfare" by seeking global recognition for their promised state, in a bid "to isolate Israel in international bodies and pressure it into making concessions."
Israel, Spyer said, was unlikely to make any sweeping gestures but merely seek to maintain the status quo by seeking to either "ignore, or reverse" the Palestinian diplomatic moves.
"Don't expect a grand strategy from Netanyahu besides seeking to blame the collapse of the current round of negotiations on Mahmud Abbas," he told AFP.
Other Israeli analysts said the collapse of the talks was a direct result of Israel's relentless settlement construction on land which was the subject of negotiations.
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Figures published on Tuesday by settlement watchdog Peace Now showed that in parallel with the negotiations, the Israeli government approved plans for nearly 14,000 new settler homes, describing it as an "unprecedented number".
"Netanyahu broke construction records during the nine-month peace talks," Peace Now head Yariv Oppenheimer told AFP.
The ongoing settlement building infuriated the Palestinians but Netanyahu insisted he had never agreed to any "restraints on construction" throughout the talks.
"Abu Mazen (Abbas) made a hefty contribution to the failure (of the talks)... but only politicians with amnesia can ignore the huge contribution of the settler lobby to the failure," wrote Nahum Barnea in the top-selling Yediot Aharonot newspaper.
If Israel continued its relentless drive to build beyond the 1967 Green Line, it would end up turning into an apartheid state, he said, echoing a similar warning by Kerry.
"The settlers' political lobby ... will fashion Israel in two stages. In the first stage, Israel will become an apartheid state, shunned by businesses in the world, it will come under siege politically, legally and culturally," he wrote.
"In the second stage, the world will force (Israel) to become a bi-national state."
- 'Consolidating the occupation' -
As the curtain fell on the talks, Kerry found himself at the centre of a storm after reportedly saying that if Israel didn't seize the opportunity to make peace soon, it risked becoming an "apartheid state" with second-class citizens.
"Apartheid" refers to South Africa's 1948-1994 oppressive and racially segregated social system.
In an apology issued overnight, Kerry said he had never called Israel "an apartheid state" but he did not deny using the term, suggesting only that he used a poor choice of words.
Chief Palestinian negotiator Saeb Erakat accused Netanyahu's government of using the talks as a cover to entrench its hold on the territories.
"Rather than using nine months to achieve a two-state solution, the government of Prime Minister Netanyahu has used every possible tool in order to consolidate its apartheid regime," he said.