Two weeks ago we were prophesying that a deal on a second freeze of settlement building and a return to direct talks between Israel and the Palestinian Authority was a matter of days away. But on Tuesday, the White House unofficially admitted that there was no hope for a settlement moratorium and that it would return to pursuing peace through indirect talks between the sides.

Who is to blame? Is it Mr Netanyahu and his intransigent right-wing coalition that could not get their act together and agree even on a 90-day freeze? Was it the Palestinian leadership who failed to act for the first nine months of the previous halt in building and now were prepared to accept nothing less than a total freeze, including East Jerusalem?

Both sides could have certainly worked harder and taken great political risks in order to reach an interim solution. But the failure lies squarely on the shoulders of Barack Obama and his advisors who unwisely, even in the Palestinians' opinion, transformed a "final status" item, the future of the settlements and the border between Israel and the Palestinian state, into a precondition for talks.

The two Israeli governments which were closest to a comprehensive deal with the Palestinians, that of Ehud Barak in 2000 and Ehud Olmert in 2008, negotiated directly while the bulldozers continued to work in Beit El and Ariel. That didn't stop Palestinian presidents Yasser Arafat and Mahmoud Abbas from meeting their Israeli counterparts, but as Abbas said in an interview two months ago, once the Americans had put the issue of the settlements on the table, how could he possibly afford to back down?