US Secretary of State John Kerry spoke on the phone Thursday evening with Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas to urge them to continue negotiating, as US officials said they would continue to push for a resumption of peace talks between the sides.

The phone calls came despite indications by officials in Jerusalem and Ramallah that talks begun last July were irrecoverably broken.

In Washington, White House spokesman Jay Carney said Israel’s announcement that it would not release a promised fourth and final batch of long-term Palestinian terrorists “creates problems” but that US-mediated efforts to bring the sides together were continuing. “Neither side has indicated that they want to walk away from the talks,” Carney said.

Earlier Kerry said it was time for compromise at what he called a “critical moment” in the peace process.

“You can facilitate, you can push, you can nudge, but the parties themselves have to make fundamental decisions to compromise,” he said. “The leaders have to lead, and they have to be able to see a moment when it’s there.”

State Department spokesperson Marie Harf said Thursday night that the sides were still willing to keep talking.

“Neither side, throughout this process recently, has indicated they want to walk away from the talks. They both indicated they want to find a path forward,” she told reporters.

“I think they are at a very critical point where they – both sides need to take a really hard look in the mirror and they need to determine what choices they’re willing to make going forward. I think this is a point for reflection,” she said.

But leaders on both sides appeared increasingly entrenched in their positions Thursday night. Palestinian and Israeli media outlets quoted Abbas as saying, “I would rather become a martyr” than rescind the applications he signed on Tuesday to join 15 UN and other international treaties and conventions. Instead, the Palestinians reportedly issued a long list of new preconditions for resuming talks — demands that Israeli officials privately dismissed immediately.

These preconditions, according to the Ma’an news agency, included a demand for official Israeli agreement to the establishment of a Palestinian state along the pre-1967 lines with East Jerusalem as its capital; the release of 1,200 Palestinian prisoners including convicted terrorist chiefs Marwan Barghouti and Ahmad Saadat; a building freeze in East Jerusalem and the West Bank; granting Israeli citizenship to 15,000 Palestinians under a family reunification program; the termination of Israel’s security blockade of Gaza; permission to bar the IDF from West Bank Area A (areas under full PA control) for entrance to arrest or kill terror operatives; and increased Palestinian control in Area C (areas under full Israeli control).

In what was reportedly a very unpleasant meeting Wednesday night, Israel’s chief negotiator, Justice Minister Tzipi Livni, was said to have demanded of her Palestinian counterpart, Saeb Erekat, that Abbas rescind the applications to the 15 treaties. After that request was refused, Livni announced Thursday that Israel would not release a promised fourth and final batch of long-term Palestinian terrorists.

On Thursday, each side predictably blamed the other for the collapse, with Israeli officials asserting that the Israeli government had been ready to approve a complex, three-way deal under which Israel would have freed the final batch of 26-30 long-term Palestinian terror convicts and also released 400 more Palestinian security prisoners not guilty of violent crimes, peace talks would have extended beyond the current April 29 deadline, and the US would have released American-Israeli spy Jonathan Pollard. The PA’s resort to unilateral UN-related action was a breach of the understandings underpinning the peace talks, they said.

The Palestinians, for their part, said Israel had breached the understandings by failing to release the prisoners on schedule, and they also objected to building tenders issued by Israel for 708 homes in Gilo, a Jerusalem neighborhood over the pre-1967 Green Line.

With telling timing, Israel’s Channel 2 News on Thursday night broadcast a report on the IDF’s Duvdevan undercover unit, which operates in the territories, in which the unit’s commander said his forces were preparing for a possible further escalation in violence, continuing a trend witnessed in recent weeks.

Marissa Newman contributed to this report.