Netanyahu and Kerry in Jerusalem.
Prime Minister Benjamin Netanyahu reaches out to shake hands with U.S. Secretary of State John Kerry, but Kerry is about to explode. Photo by Reuters
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A senior official in the Prime Minister's Office told The New York Times on Wednesday that Israel was "deeply disappointed" by U.S. Secretary of State John Kerry's assertion that Jerusalem is to blame for the breakdown in talks with the Palestinians.

The official added that Kerry's remarks would "both hurt the negotiations and harden Palestinian positions."

Prime Minister Benjamin Netanyahu's office said that Kerry knows full well that it is the Palestinians who carry most of the responsibility for the collapse of the peace talks, as they have rejected every proposal offered to them including the framework agreement Kerry attempted to draft.

"They said ‘no’ to even discussing the recognition of Israel as the nation-state of the Jewish people…and said ‘no’ to an extension of the talks," the official said.

The official said that Israel is interested in continuing efforts to solve the crisis and to extend the negotiations with the Palestinians. Israel would nevertheless take unilateral steps of its own in response to the unilateral steps taken by the Palestinians.

Earlier Wednesday, Israel announced that it would continue to impose sanctions against the Palestinian Authority in response to President Mahmoud Abbas' request to join 15 international conventions.

Netanyahu ordered all government ministries on Wednesday morning to halt cooperation with Palestinian entities, with a particular emphasis on meetings between Israeli ministers and their Palestinian counterparts.

A senior Israeli official said that the ministers were updated by telephone over the course of the morning by Cabinet Secretary Avichai Mendelblit, who ordered communication stymied with Palestinian officials including ministers and director generals in response to the Palestinian unilateral actions. Only low-level field cooperation will be permitted, according to the Israeli official.

Labor Chairman and opposition leader Isaac Herzog slammed the government over its decision, accusing it of adding fuel to the fire. "The prime minister is handing petrol and flammable materials to the last of Israel's haters," said Herzog.

"It's not clear what good will come of this superfluous move of cutting off relations with the Palestinian Authority," he added. "In fact, it's quite clear what damage will come of this step. It will harm the interests of the state of Israel and its economic sector."

"The prime minister has begun a process of disengagement between Israel the world. This is the result of frustration and helplessness, and the prime minister of Israel's lack of ability to operate within a plan and reached any sort of achievement in that realm. Frustration and helplessness are not diplomatic policy," he said.

Minister Amir Peretz echoed Hezog's sentiments, saying the move was "useless" and "deserving of prior discussion."

"I intend to ask the prime minister to hold an in-depth discussion on the significance and implications of this decision," he said.