Peace talks AP 2.9.2010
Hillary Clinton, George Mitchell, Benjamin Netanyahu and Mahmoud Abbas at talks in Washington D.C., September 2, 2010. Photo by AP
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U.S. State Department spokesman P.J. Crowley told reporters on Friday that the Middle East peace process had not unraveled, despite the failure of the Obama administration to keep direct talks between Israel and the Palestinians alive following the late September expiration of Israel's 10-month freeze on West Bank settlement construction.

“I would say we're definitely not back at square one," Crowley said. "We think, through the many, many conversations and work that we've done over the course of almost two years, we've built a foundation for what lies ahead."

Crowley spoke ahead of Secretary of State Hillary Clinton's speech to the Saban Forum scheduled for Friday night. In that speech Clinton is expected to detail the Obama administration's plans to move the Middle East peace process forward in the wake of the collapse of the direct peace talks.

Crowley said the address would be a broad-ranging review of all the dimensions of Middle East peace, including the stakes for all sides and the cost of allowing the status quo to continue.

He said that Clinton would call on the Israelis and Palestinians to begin to grapple with the core issues of the conflict, such as borders, security, refugees, settlements, water and Jerusalem.

Crowley added that "the United States remains committed to this process, but that responsibility to end the conflict ultimately rests with the parties themselves.”

The U.S. and Israel announced earlier this week that negotiations between Washington and Jerusalem over a new freeze on West Bank settlement construction in exchange for a set of U.S. guarantees had hit a dead end.

The Palestinians have said that they would not negotiate directly with Israel while settlement construction continues.

The Americans may push for a renewal of U.S.-supervised indirect peace talks.

U.S. officials hope to make progress on security issues and setting a final border between Israel and a future Palestinian state in separate talks with the two sides, paving the way for a resumption of direct negotiations and an ultimate peace deal.

Officials said they expect Clinton to highlight the importance of security and borders in her speech and appeal for the parties to prepare to discuss those matters in depth with American officials in the coming weeks.

Clinton met on Friday with chief Palestinian negotiator Saeb Erekat and Israeli opposition leader Tzipi Livni. Other meetings included UN Special Envoy Terje Roed Larsen and Defense Minister Ehud Barak, and later the Palestinian Prime Minister Salam Fayyad, all of whom were in Washington to take part in Saban Forum meetings.

On Thursday, Clinton held lengthy talks with Isaac Molho, an adviser to Prime Minister Benjamin Netanyahu.

U.S. envoy to the Middle East George Mitchell will travel to the region next week.

Emerging from the State Department after his talks with Clinton, Erekat blamed the Israeli government for the breakdown in talks and said the Palestinians would continue to consult with the U.S., the UN, the European Union and Arab League on how to proceed.

"They are alone responsible for the derailment of the peace process," Erekat told reporters. "The Israeli government had a choice between settlements and peace and they chose settlements." He said the Palestinian position was unchanged and offered no predictions as to what might be next.