The “proximity talks” between Israel and the Palestinians are only the latest cynical exercise launched by the Obama administration.

Washington views such “peace negotiations” as a necessary quid pro quo for the support of Egypt, Jordan and Saudi Arabia against Iran, under conditions where the Israel-Palestine conflict and the ongoing occupation of Iraq are explosive issues.

Despite the hype, the talks are nothing more than a continuation of US Middle East envoy George Mitchell’s shuttle diplomacy. The two sides will not even meet face to face to discuss the issues: the borders of any future state, the Palestinian refugees and their descendants’ right of return and a Palestinian capital in East Jerusalem. Hamas, which rules in Gaza, is not included in the talks.

In practice, any Palestinian “state” would be nothing more than two prisons surrounded by Israel and subject to repeated military invasions and economic blockades. These mini-states would be presided over by a corrupt clique that has grown phenomenally rich while workers and peasants lack jobs, health care, food and clean water. Under such conditions, the Palestinian business elite can only enforce their rule by authoritarian means.

That Mahmoud Abbas, the Palestinian Authority and the PLO are willing to go along with this charade reflects their class character and confirms the PLO and Fatah, its dominant faction, as clients of US imperialism.

Benyamin Netanyahu’s right-wing government is vehemently opposed to a Palestinian state.

Even as talks were proclaimed, Israel announced a further round of settlement construction. On Monday, Zvi Hauser, the Israeli cabinet secretary, told Army Radio, “Building is expected to begin soon in Har Homa...and Neve Yaakov, where [construction] bids have been issued.”

Peace Now said that renovation had begun on the construction of 14 homes in an old Israeli police station in East Jerusalem, which is to form part of a larger block of housing on the site.

On Wednesday, Yitzhak Aharonovitch, public security minister, announced in the Knesset that while demolitions had been postponed in recent months to enable Mitchell to get the peace process going, “That has now ended”.

Eli Yishai, the interior minister and leader of the religious Shas party, reportedly told his staff to resume planning for building in all parts of the city “as normal”.

Netanyahu insisted, in a speech to mark the 43rd anniversary of Israel’s capture of East Jerusalem, that building would not be frozen anywhere in Jerusalem.

Palestinians leaders in the West Bank called off direct negotiations after Israel’s military assault on Gaza in 2008-2009. According to Abbas, the acting president of the Palestinian Authority, he had agreed with then-prime minister Ehud Olmert all the security aspects of a peace deal. This included an arrangement whereby a NATO force under US command would monitor and secure the Jordan valley, the eastern border of a Palestinian state. They had also reached an agreement in principle to a land swap with Israel in return for the West Bank settlements. But Netanyahu’s government is opposed to ceding any land in return for the largest settlement blocks, Maale Adumim and Ariel.

The Palestinians refused to resume talks until Israel declared a complete freeze on settlement construction in the West Bank and East Jerusalem. For the past year, Mitchell and other US envoys have been shuttling between Jerusalem and Ramallah, the seat of the Palestinian Authority in the West Bank, to try to convince the two parties to resume full-scale talks.

In March, however, Israel announced plans for 1,600 new housing units in the Ramat Shlomo settlement during a visit to Jerusalem by Vice President Joe Biden. Netanyahu infuriated the While House by formally rejecting its demands for a freeze on settlements in East Jerusalem, although he did finally agree to delay the Ramat Shlomo project.

Washington was only able to get the talks going again after giving the Palestinians private assurances that President Obama was personally committed to the creation of a Palestinian state and would invite Abbas for talks in Washington.

The US said that no work would be done on the Ramat Shlomo project for two years and that Netanyahu would make some “goodwill gestures”, such as the release of Palestinian prisoners. Washington would even consider allowing the United Nations Security Council to condemn any “significant” new Israeli settlement activity by abstaining rather than vetoing it. All of these assurances were made verbally.

The State Department talked up Netanyahu’s statement “that there will be no construction at the Ramat Shlomo project for two years”, saying that it “helped to create an atmosphere that is conducive to successful talks”.

On this basis, the Arab League and the PLO endorsed the proximity talks. But Netanyahu’s right-wing coalition partners want nothing to do with any talks and have once again contradicted Obama. Netanyahu’s office denied delaying the Ramat Shlomo project, saying that construction there would begin “in a few years”, only because there are planning procedures left to complete. Furthermore, the 10-month moratorium on construction in the West Bank expires in the autumn.

Israel reacted furiously to the Palestinian Authority’s outlawing of Palestinian work in the settlements after the end of this year, and a ban on the sale of all goods and services from the settlements. Danny Ayalon, Israel’s deputy foreign minister, described the boycott on settlement products as “part of a continuous...campaign of incitement and de-legitimisation against Israel”.

The US has responded by warning both Israel and the Palestinians against any inflammatory actions in Jerusalem. “As we have said, if either side takes significant actions during the proximity talks that we judge would seriously undermine trust, we will respond to hold them accountable and ensure that negotiations continue”.

The State Department said, “Our policy on Jerusalem remains unchanged. The status of Jerusalem is an issue that should be resolved in permanent status negotiations between the parties”.

Ehud Barak, Israel’s defence minister and leader of the Labour Party, has called for a change in the coalition, which would mean Netanyahu ditching the ultra-orthodox and nationalist parties for Kadima, led by Tzipi Livni, which favours a “two state” solution. Kadima has more seats in the Knesset than Netanyahu’s Likud party, but was unable to form a coalition.

The political calculations involved were made explicit by Barak. He told a Labour Party meeting, “A fundamental change is required in our relations with the US. We cannot do this without a far-reaching political initiative on our part”.

He added, “The Americans are trying to organize sanctions against Iran, are busy stopping North Korea, and other countries like Somalia and Yemen. Therefore, they expect Israel, as a friend, to mobilize in the areas in which it can help the overall effort—in other words, in a peace agreement with the Palestinians”.

Barak’s notion of a Palestinian state is one that suits the national interests of Israel alone. He seeks a demilitarised state, whose borders will be determined by Tel Aviv to ensure Israel’s security and a Jewish majority well into the future. This means annexing the major settlement blocks in the West Bank to Israel. He acknowledged that maintaining Israeli rule over the Palestinians would mean Israel would be an apartheid state. “As long as in this territory west of the Jordan River there is only one political entity called Israel it is going to be either non-Jewish, or non-democratic”, he said. “If this bloc of millions of Palestinians cannot vote, that will be an apartheid state”.

But the type of Palestinian “state” he envisages is more akin to an Apartheid-era Bantustan.

Livni, for her part, made clear that maintaining Jewish exclusivity demanded “a specific decision on establishing a democratic Jewish state by reaching a settlement with the Palestinians.” Otherwise, “we shall turn into an Arab state”.