With the Palestinians refusing to return to the negotiations, Prime Minister Binyamin Netanyahu not calling for a complete settlement freeze and the Arab world declining to make any gestures to Israel, the current sense in Jerusalem is that the US is scaling back its intensive involvement in the diplomatic process.

The best example of this is that US Middle East envoy George Mitchell has not been to the region in over a month and is not now expected to come back until January, after the holiday season in the US.

The feeling in Jerusalem is that Washington believed that Netanyahu's moratorium would move the process along a bit, and when the Palestinians failed to respond positively to the move, the US decided to sit back and see how things would play out.

Following Netanyahu's declaration of a housing moratorium some two weeks ago, Mitchell was expected to come to the region the following week to see how he could move the process forward. That visit never transpired, and both Israeli and American officials said Thursday they had no indication of when he was planning to return.

In the meantime, however, he has met with Israeli negotiators Yitzhak Molcho and Michael Herzog in the US, as well as with the Palestinian negotiators.

Jerusalem does not believe that the US has "thrown up its hands in defeat," but rather that it wants to make sure its public diplomatic moves are having some kind of effect.

One source well apprised of the diplomatic moves said that while the US was frustrated with Israel, from the decision to build new units in Gilo to the fact that the settlement moratorium was far less than what the US had hoped for, it was also frustrated with the Palestinians and had delivered messages to the PA saying it should not count on outlasting Netanyahu, and that President Barack Obama would "not be around forever."

The source said that despite this frustration, the US would not stop its work in the area, but "just bring it down a couple of notches." He said there was also a sense that Washington was waiting to see where the chips would fall on a number of issues - including whether PA President Mahmoud Abbas would indeed step down as president, and what would happen if there were indeed a deal for kidnapped soldier St.-Sgt. Gilad Schalit.

A key date on the diplomatic calendar is December 15, when the PLO is scheduled to have a central committee meeting at which Abbas is expected to make some kind of announcement on his political future.

The Jerusalem Post has learned, meanwhile, that Mitchell spoke by phone with Swedish foreign Minister Carl Bildt over the last few days, trying to convince him to water down the draft resolution he had placed before the EU that would have recognized eastJerusalem as the capital of a future Palestinian state.

Israeli officials lobbied Washington to do what it could to dilute the proposal, arguing that the draft resolution put forward by the Swedes would only reinforce a feeling among the Palestinians that they could "sit on their hands" and the international community would impose a solution on Israel.

This sentiment was expressed in a meeting Netanyahu held Wednesday with Italian Foreign Minister Franco Frattini, who flew into the region for half a day for talks in both Ramallah andJerusalem.

Netanyahu relayed to Frattini, according to government sources, the feeling that if in the past the assessment in Jerusalem was that Abbas was not going toward negotiations because of the dysfunctional nature of Palestinian politics, now the assessment was that he had adopted a strategy to avoid talks with Israel. The reason for this, the sources said, was that he did not want to be put in a position of having to make concessions to Israel, and because of his feeling that he could hold out and a solution would be imposed on Israel from the outside.

In an apparent reference to Sweden, Netanyahu said there were "some voices in Europe feeding these expectations." He added that the final, watered-down EU resolution should be a "wake-up" call to the Palestinians not to expect imposed solutions.

"We move forward, and they moved backward," Netanyahu said. "And no matter what we do, some people will always see Israel as guilty."

Bildt, who has come under a barrage of criticism from Israeli officials in recent days for his attempt to pass the EU resolution prejudging negotiations onJerusalem, said Thursday that Israel should stop trying to divide the EU.

Bildt's comments came after Foreign Minister Avigdor Lieberman said on Israel Radio that Sweden wanted to present the EU declaration as its achievement before its six-month term as EU president ended.

"Sweden, which is completing its term as holder of the EU rotating presidency without any achievements or any significant returns, tried toward the end of its term to steal the show and steal the vote. That didn't succeed," Lieberman said.

Bildt shot back Thursday that Israel should not "think that a relationship with Europe is divide and rule."

"You consider some [EU members] good and some bad, and then you try to maneuver from that position," Bildt charged.