"Poof, that was sort of the moment," said Kerry, referring to the housing plans.

Israelis, stung by what they've labeled the "poof speech," countered that it was the Palestinians who had "violated their fundamental commitments" by applying to join 15 UN international conventions and treaties.

In response, Prime Minister Benjamin Netanyahu made the following remarks on at the start of his weekly Cabinet meeting:

"In recent months the State of Israel has conducted negotiations with the Palestinians in order to reach a peace agreement. Israelis expect peace, a genuine peace, in which our vital national interests are assured, with security first and foremost. During these talks we carried out difficult steps and showed a willingness to continue implementing moves that were not easy, in the coming months as well, in order to create a framework that would allow for putting an end to the conflict between us. Just as we were about to enter into that framework for the continuation of the negotiations, Abu Mazen hastened to declare that he is not prepared even to discuss recognizing Israel as the national state of the Jewish People, which we have made clear to both the President of the United States and to other world leaders as well.

"To my regret as we reached the moment before agreeing on the continuation of the talks, the Palestinian leadership hastened to unilaterally request to accede to 14 international treaties. Thus the Palestinians substantially violated the understandings that were reached with American involvement.

"The Palestinians' threats to appeal to the UN will not affect us. The Palestinians have much to lose by this unilateral move. They will achieve a state only by direct negotiations, not by empty statements and not by unilateral moves. These will only push a peace agreement farther away and unilateral steps on their part will be met with unilateral steps on our part. We are ready to continue the talks but not at any price."

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