Palestinians snub peace talks because of Israeli homes expansion.

It was less than a week ago when I was writing about the decision of the Arab League to lend it's support to new proximity talks between the Israelis and the Palestinians.

Well, now, thanks to Israel's announcement that it was planning to build hundreds of new homes in a Jewish settlement in East Jerusalem, the Palestinians have pulled out of the proximity talks.

The decision to pull out, announced in Cairo by Amr Moussa, head of the Arab League, represents a major setback to months of diplomacy by the US administration and comes after the US vice-president, Joe Biden, delivered an unusually strong rebuke to Israel.

Amr Moussa said he had been told by the Palestinian president, Mahmoud Abbas, that even this low-key process of so-called "proximity talks" could not start unless Israel stopped expanding its settlements.

"The Palestinian side is not ready to negotiate under the present circumstances," Moussa said.

Israel made this announcement during the visit of the American Vice President, and it's hard to believe that the timing was accidental. During visits like that officials tend to examine every detail to ensure that the visit goes smoothly. Netanyahu has since claimed that he was surprised by the announcement, but I find that hard to believe.

And it appears as if the Kadima party share my scepticism.

Israel's opposition Kadima party said it is planning a no-confidence vote in the prime minister in parliament for "destroying" the Biden visit.

The announcement sounded as if it was being made whilst Biden was there to make a point. That, although talks were to go ahead, Netanyahu was making his displeasure at them known in a not too subtle fashion.

Yesterday, Biden emerged from talks with Abbas in Ramallah, on the occupied West Bank, and repeated his criticisms of the timing and substance of Israel's announcement. "It is incumbent on both parties to build an atmosphere of support for negotiations and not to complicate them," he said.

"The decision by the Israeli government to advance planning for new housing units in East Jerusalem undermines that very trust, the trust that we need right now in order to begin … profitable negotiations."

Palestinian prime minister Salam Fayyad said the Palestinians appreciated "the strong statement of condemnation" by the US administration.

Eli Yishai, Israel's interior minister, apologised for the timing of the announcement, admitting that it had caused Biden "real embarrassment".

So, even the Israeli interior minister can see that Biden was embarrassed and his visit overshadowed by this announcement.

And now the Palestinians are walking away from the table.

The ball is back in Obama's court. His VP has been undermined by Netanyahu's gamesmanship, but is there any kind of price to be paid for this?

We have heard Biden's tough words, now what say Obama?

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Tags: Biden, Obama, Israel, Palestine, Netanyahu