Secretary of State John Kerry stands with Israel's Justice Minister and chief negotiator Tzipi Livni, right, and Palestinian chief negotiator Saeb Erekat at the State Department in Washington.

Secretary of State John Kerry stands with Israel’s Justice Minister and chief negotiator Tzipi Livni, right, and Palestinian chief negotiator Saeb Erekat at the State Department in Washington.

In a week that seemed to mark the end of Middle East peace talks, America’s top diplomat laid the blame squarely at the feet of Israel, with John Kerry recalling the moment hope went “poof” and disappeared.

The doggedly determined Secretary of State told fellow lawmakers that the two sides were closer to resolving differences over a delayed Israeli release of Palestinian prisoners when “700 settlement units were announced in Jerusalem and, poof, that was sort of the moment”.

Testifying before the Senate Foreign Relations Committee, Kerry was careful to note “unhelpful actions” on both sides, but clearly identified settlement-building in East Jerusalem as the moment, in his mind, that killed all hopes.

Kerry, who has been careful not to engage with the blame game raging between Israeli and Palestinian leaders, appears to have thrown in the towel, with senior aides briefing that he thinks he has gone as far as he can.

The Israeli reaction to his comment was immediate, with former settler leader and cabinet member Naftali Bennett saying: “Israel will never apologise for building in Jerusalem.”

He added: “Construction in Jerusalem is no ‘poof’ – construction in Jerusalem is Zionism.”

Bennett’s Jewish Home faction, which is abjectly opposed to an independent Palestinian state, controls the Housing Ministry from where tenders are issued, and fellow ministers were quick to point him out, saying the dissolution of talks had been Bennett’s aim all along.

Abbas submits applications to UN bodies

Abbas submits applications to UN bodies

“He’s been playing a double game,” said Environment Minister Amir Peretz, who accused his cabinet colleague of sabotaging the talks.

“They do everything they can to throw cold water on the process, to blow it up, in order that the people of Israel completely lose all hope.”

In the US, Republican Jewish leader Matt Brooks said it was “outrageous for Secretary Kerry to blame the Jewish state”.

Israeli Prime Minister Benjamin Netanyahu reacted by banning all ministerial contact with the Palestinians outside negotiations. He also blamed Palestinian President Mahmoud Abbas, saying his move to sign ‘the State of Palestine’ up to 15 UN agencies and treaties was a “unilateral action.”

But critics say Abbas only acted after Israel tendered 708 East Jerusalem units on 1 April and reneged on the release of 26 Palestinian prisoners.

They also point to the demolition of more than 600 Palestinian structures in the West Bank last year, the highest rate in more than five years.