The Obama administration says it’s withdrawing an offer of sweeping incentives to Israel in return for a limited settlement freeze in the occupied West Bank. Israel was reportedly promised 20 advanced F-35 warplanes worth around $3 billion and a U.S. pledge to veto U.N. resolutions deemed hostile to Israeli policies. Israel would have been free to continue building settlements in occupied East Jerusalem and then throughout the West Bank after just 90 days. Israel reportedly rejected a similar offer in September out of a blanket refusal to stop any settlement expansion but revived negotiations last month. Israeli Defense Minister Ehud Barak says the latest talks were sidelined following the WikiLeaks release of diplomatic cables and the crisis on the Korean Peninsula. In Washington, State Department spokesperson P.J. Crowley gave few details on why the administration had dropped the plan.

P.J. Crowley: “We thought for a period of time that the moratorium, and then a resumption of the moratorium, might be the best mechanism to advance a meaningful and sustained dialogue between the parties. We’ve come to the conclusion that that is not the best basis to move forward. We will have further conversations on the substance with the parties and will continue to try to find ways to create the kind of confidence that will eventually, we hope, allow them to engage directly.”

Palestinians and critics of the Obama administration’s Mideast policy had widely denounced the incentives. This week, the linguist and political analyst Noam Chomsky wrote: “Washington’s pathetic capitulation to Israel while pleading for a meaningless three-month [settlement] freeze… should go down as one of the most humiliating moments in U.S. diplomatic history.”