The U.S. administration is furious with Defense Minister Ehud Barak over the stalled peace talks, sources have told Haaretz.
Secretary of State Hillary Clinton and President Barack Obama's senior advisers say that for more than a year and a half Barak misled them about his persuasive powers with Prime Minister Benjamin Netanyahu regarding the peace process.
The Americans will continue working with Barak on security issues, but he will no longer receive special treatment.
A senior Israeli official, who requested anonymity, told Haaretz about his recent hour-long meeting with a senior U.S. official who detailed the reasons Clinton and the White House are so disappointed with Barak.
The accusations were confirmed over the past few days by four other sources close to the situation, all of whom requested anonymity.
The Israeli official said his U.S. interlocutor stressed that the infuriation with Barak reached as high as Obama and Clinton.
This came after Barak reached an understanding with Washington over extending the settlement construction freeze by three months in exchange for a written pledge of diplomatic and military guarantees in September.
Barak promised that Netanyahu would approve the deal, but did not deliver the goods.
"We put all our money on him a year and a half ago," the Israeli official quoted his U.S. colleague as saying. "The entire administration bet on Barak because he said he could nudge Netanyahu toward an agreement with the Palestinians, but he deceived us and led us down the garden path."
According to the U.S. official, as soon as Netanyahu formed his government, the White House decided to open all its doors to Barak, and Obama took the unusual step of meeting with him there.
"He charmed us with his intelligent analyses; the president listened to Barak like a student with his teacher and trusted him, but he didn't meet any of his promises over the peace process and the building freeze," the official told the Israeli.
The latter said he left the meeting "in shock .... I almost burst into tears." Barak's last visit to Washington, two weeks ago, was depicted as the watershed in Barak-Washington ties. The brevity of Clinton's meeting with him at the Saban Forum last month - 15 minutes - was intended to signal Barak's loss in status.
The U.S. official said Barak's disappointing behavior evoked a sense of deja vu in Washington, especially at the State Department, recalling his failures as prime minister in the peace talks at Shepherdstown and Camp David.
Barak's office said in a statement on Saturday that he maintains continuous ties at the top of the U.S. administration, detailing Barak's meetings with Clinton, Vice President Joe Biden and Defense Secretary Robert Gates.
According to the statement, the accusations in the report were not raised in any of these meetings, nor did they appear in reports by diplomatic sources.
"Defense Minister Barak is punctilious about presenting situations accurately, without beautifying the facts," the statement said.
Washington is expected to resume its efforts this week to restart the peace process, but its expectations are low. The administration is not walking away only because of its fear of renewed violence that would suck in the United States.
"We lost our hope in this coalition," the U.S. official told the Israeli. "We simply have no more expectations."
Both Netanyahu and Palestinian President Mahmoud Abbas are firmly entrenched in their positions, and a renewal of direct talks is not on the horizon.
The Palestinians are busy with their campaign against the settlements and for winning recognition of a Palestinian state within the 1967 borders.
This week they will renew efforts to push through a UN Security Council resolution denouncing the settlements.
Netanyahu, for his part, continues to blame the Palestinians for the paralyzed peace process.