Palestinians Say Hope in Obama Has 'Evaporated'

JERUSALEM Oct. 13 2009— -- Palestinian moderates say hope in President Obama has "evaporated."

That's the damning message contained in a memo circulated among the top leadership of the Palestinian faction Fatah, the faction which is led by the moderate President Mahmoud Abbas, head of the Palestinian Authority.

A copy of the internal memorandum was obtained by the Associated Press in Ramallah and its contents confirmed to ABC News by senior Palestinian sources. It accuses the Obama administration of backing down on its calls for an Israeli settlement freeze, a move that sources say has damaged the political credibility of moderate Palestinians.

Tuesday's publication of the memorandum comes just days after Obama received the Nobel Peace Prize, and the latest visit to the region of his special Mid East envoy George Mitchell ended without progress.

The search for a comprehensive solution to the decades old Israeli-Palestinian conflict is one of the main planks of the administration's foreign policy.

The State Department released a statement today saying, "We must all be patient and understand that this is a long and difficult process."

Earlier this year both Obama and Secretary of State Hillary Clinton called on the Israeli government of Prime Minister Benjamin Netanyahu to stop all construction in the West Bank settlements. The call was designed to encourage the Palestinians back to the negotiating table and was a stricter recognition of the stipulations contained in the internationally agreed Road Map for peace.

The Israelis said such a demand was unreasonable and complained that a certain amount of continued building was essential. It has also refused to consider any limits on construction in East Jerusalem, where the Palestinians want to establish their future capital. The current Israeli government is comprised of parties that have long supported aggressive settlement building.

Months later no agreement has been reached on the settlement freeze and in a recent meeting in New York Obama appeared to soften his position on settlement building as a pre-condition for talks.

"All hopes in the new U.S. administration of President Obama have evaporated," said the document issued by Fatah's Office of Mobilization and Organization.