The Middle East peace talks were in disarray this week after the Americans cancelled meetings, the Israelis refused to release prisoners and the Palestinians decided to go it alone at the UN.

In the middle of it all was Jonathan Pollard, a notorious American-Jewish spy serving time for selling secrets to Israel, whose freedom was being touted as a potential catalyst to the talks.

But when, on Tuesday, it emerged that Pollard (pictured, below right) had declined the chance for release and Palestinian Authority President Mahmoud Abbas had signed ‘the State of Palestine’ up to several UN agencies, all looked lost.

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Former US intelligence officer Jonathan Pollard has served 28 years for spying for Israel against the United States

US Secretary of State John Kerry, who has been instrumental in bringing the two sides to the table, cut a lonely figure midweek, as he sought to play down the problems that were unfolding around him.

The latest problems started at the weekend, when Israelis reacted to remarks attributed to Abbas, suggesting that he would “blow up” the negotiations once the final batch of 26 prisoners were released.

That caused Israel to withhold the final batch, due for release on Saturday night, and lodge a proposal that would have extended the talks, which was rejected by the Palestinians.

By Tuesday morning, amid reports of a possible deal involving Pollard, the Israeli Land Authority tendered 708 housing units in a Jewish settlement in East Jerusalem.

Abbas reacted furiously, applying for ‘The State of Palestine’ to become a party to more than a dozen UN treaties. It was a unilateral move which led to Kerry cancelling a meeting in Ramallah.

“We are not doing this against America, but we still don’t see other ways forward,” said Abbas.

Later that same day, Pollard appeared to take himself off the table as a potential bargaining chip, waiving his a chance at parole, which was reportedly being offered in return for 400 more Palestinian prisoners.

As gloom descended, Kerry tried in vain to contain the pessimism, saying: “It is completely premature to draw any kind of judgment about today’s events and where things are.”

Privately, however, a senior American official said Kerry now felt he had “gone as far as he could as mediator” and that the release of Pollard was now dependent on Israelis and Palestinians making “significant moves forward”.

After eight months of largely secretive negotiations, Kerry said it was up to Netanyahu and Abbas to make decisions and concessions, not the US, but inside Israel, some said Israeli decisions were acting against the peace talks.

However, some suggested those decisions were designed to cause problems, not move things forward. Commenting on the tenders, Hagit Ofran of Settlement Watch said: “It looks like a provocation by the housing minister, it looks like it was done to make John Kerry’s job more difficult.”

It is unclear as yet as to the extent to which the two sides remain deadlocked, and in what areas – if any – there has been progress.