A top Palestinian official on Wednesday questioned Washington's ability to forge Middle East peace after a new breakdown in American attempts to revive negotiations.

The U.S. failure to persuade Israel to renew a limited freeze on construction in West Bank Jewish settlements, announced late Tuesday, was the latest setback for the Obama administration in its quest to broker a peace deal by September. That goal, a top priority of the president, appears increasingly in doubt.

Yasser Abed Rabbo, an aide to Palestinian President Mahmoud Abbas, said the Palestinians are assessing their options before responding to the American announcement. While accusing the Israelis of being intransigent, he also voiced disappointment with the Americans.

"We will assess if the U.S. would be able ... to achieve success in its upcoming efforts," Abed Rabbo told the Voice of Palestine radio station. "The one who couldn't make Israel limit its settlement activities in order to conduct serious negotiations, how can he be able to make Israel accept a fair solution," he added. "This is the big question now."

Abbas told a news conference in Greece: "We think the European Union ... must play a political role."

Israeli and Palestinian negotiators are expected in Washington in the coming days in hopes of finding a way out of the impasse. One Israeli official said the government was seeking "a new pathway" with the Americans.

"There is no doubt that there is a crisis, a difficult crisis," Abbas said.

Abbas is expected in Cairo on Thursday for consultations with Arab leaders. Among the Palestinians' options are finding a new formula for peace talks or taking unilateral action, such as rallying international recognition for a Palestinian state in the absence of a peace deal.

Saeb Erekat, the chief Palestinian negotiator, said that as a next step, the Palestinians would ask the international community, including the United States, to recognize a Palestinian state in the West Bank, Gaza and east Jerusalem, the territories Israel captured in the 1967 Mideast War.

Erekat suggested that such a nod from the Americans, which would represent a sharp deviation from current U.S. policy, would be crucial for resuming negotiations.

"It can't be business as usual," Erekat said, after nearly two decades of intermittent talks.

The Israelis and Palestinians launched the latest round of peace talks on Sept. 2 at a White House ceremony, where they committed themselves to reaching a deal within a year.

But weeks later, the talks broke down after an earlier, 10-month Israeli slowdown on settlement construction expired. The Palestinians say there is no point in negotiating if Israel continues to build homes for its citizens in the West Bank and east Jerusalem — captured territories that the Palestinians claim for a future independent state.

The Americans have been negotiating with Israel for weeks on the terms of a renewed settlement freeze in hopes of drawing the Palestinians back to the talks.

Last month, Prime Minister Benjamin Netanyahu announced after a trip to the U.S. that he was close to an agreement in which he would slow settlement construction for three months in exchange for a package of American security and diplomatic assurances.

However, the sides were unable to wrap up the deal, in part because of uncertainty what would happen after the three months.

The Americans had hoped the freeze would allow the sides to work out a deal on their future borders. Such an arrangement could make the settlement issue irrelevant, since Israel could resume construction in territories it expects to keep while halting building in areas given to the Palestinians.

In radio interviews Wednesday, aides to Netanyahu said the Palestinians were to blame by being inflexible on the settlement issue.

Ron Dermer, top Netanyahu adviser, insisted Netanyahu is committed to peace and said the Israelis are "building a new pathway" with the Americans.

"He doesn't enter negotiations just to negotiate," Dermer said. "But he has red lines."

In a separate development Wednesday, Israeli military bulldozers demolished a series of homes, medical clinic and small school in a West Bank hamlet.

Atif Hanini, a leader in the Palestinian community of Khirbet Tana, said some 23 families were made homeless. He said most residents have lived in shacks since Israel's military knocked down the hamlet earlier this year in a similar operation.

The Israeli military says the entire hamlet is built illegally in a military firing zone. Palestinians say Israeli authorities rarely give construction permits, forcing them to build illegally.