AP — US Secretary of State John Kerry waded again into the nitty-gritty of faltering Israeli-Palestinian peace talks on Wednesday, saying he was optimistic that tensions and difficulties could be overcome, even between “two proud people” struggling to reach an accommodation.

Kerry was upbeat after separate meetings with Prime Minister Benjamin Netanyahu in Jerusalem and with Palestinian Authority President Mahmoud Abbas in the West Bank town of Bethlehem.

“As in any negotiation there will be moments of up and moments of down,” Kerry said, even as both sides traded barbs about who is to blame for the current poor state of negotiations. “But … we are determined to try to bring lasting peace to this region.”

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The secretary said, “We are convinced that despite the difficulties, both leaders, President Abbas and Prime Minister Netanyahu, are also determined to work toward this goal.”

Yet tension between the two sides was running high and on clear display after the Palestinians said a secret negotiating session on Tuesday broke down in an acrimonious dispute over Israeli settlement construction. Introducing Kerry in Bethlehem, the town’s mayor denounced Israeli settlements as a “siege” and Netanyahu opened his meeting with the secretary by bashing the Palestinians for their behavior in the peace talks.

“I’m concerned about their progress because I see the Palestinians continuing with incitement, continuing to create artificial crises, continuing to avoid, run away from the historic decisions that are needed to make a genuine peace,” Netanyahu told Kerry as they started their two hour and 45-minute meeting in a Jerusalem hotel. “I hope that your visit will help steer them back to a place where we could achieve the historical peace that we seek and that our people deserve.”

Despite Netanyahu’s slap at the Palestinians, Kerry said he was optimistic that the difficulties could be overcome.

Kerry said he would continue to plug away despite the problems.

“We need the space to negotiate privately, secretly, quietly and we will continue to do that,” he said. “We have six months ahead of us on the timetable we have set for ourselves and I am confident we have the ability to make progress.”

After seeing Netanyahu, Kerry traveled to Bethlehem where he announced that the US would give an additional $75 million in aid to create Palestinian jobs and help them improve roads, schools and other infrastructure. US officials said the aid is designed to boost Palestinian public support for the peace process.

Kerry said he had a “very, very good meeting” and an “excellent lunch” with Abbas, during which the president assured him that he was “100-percent committed to the” peace talks.

In a bid to calm rising Palestinian anger at Abbas for a perceived acquiescence to Israeli settlements, Kerry flatly denied suggestions that Abbas had in any way agreed to “condone or accept” such activity as part of the deal to return to the talks.

“The Palestinians believe that the settlements are illegal, the United States continues to believe the settlements are not helpful and are illegitimate,” he said. Kerry added, “That is not to say that they were not aware or we were not aware that there would be construction but that that would be much better off in our judgment limited as much as possible.”

Kerry said that Abbas had agreed not to take the Palestinian case for statehood to the United Nations as long as the talks are ongoing and as long as Israel continues prisoner releases.

“I am convinced that President Abbas is serious about these talks and that he wants to find peace,” Kerry said, noting that Abbas had restated his understanding that compromises would have to be made.

Once he finishes his talks with Abbas in Bethlehem, Kerry is to return to Jerusalem for a meeting with Israeli President Shimon Peres and have a working dinner with Netanyahu. On Thursday, Kerry plans to travel to Jordan, where he expects to see Abbas for a second time on his current mission.

After months of cajoling, Kerry persuaded Israel and the Palestinians to reopen peace talks in late July after a nearly five-year break.

But after being launched with great fanfare, the negotiations quickly ran into trouble with no visible signs of progress and both sides reverting to a familiar pattern of finger pointing. The goal of reaching a peace deal within nine months appears in jeopardy.

Underscoring the challenge ahead, the Tuesday negotiating session broke down, according to a Palestinian official who spoke on condition of anonymity because of the pledge not to discuss the talks in public.

The official said the outrage over the settlement plans boiled over at a secret negotiating session with the Israelis in Jerusalem. The official said the meeting, held at Kerry’s request, “exploded” over the settlement issue, and that the talks were abruptly halted.

Israeli and US officials had no immediate comment.

The talks are set to end in April and the current deadlock has raised speculation that the US may need to step up its involvement and present its own blueprint for peace early next year, or perhaps lower expectations and pursue a limited, interim agreement. Kerry and his aides have refused to discuss such an option, insisting instead that the goal of the talks remains a comprehensive peace pact.

The parties have largely honored Kerry’s request to keep the content of the negotiations secret. But officials on both sides have acknowledged that no progress has been made, though they say that the talks have addressed all key issues at the core of the dispute. These include defining the borders of a future Palestine, and addressing Israeli security demands.

The Palestinians want to establish an independent state in the West Bank, East Jerusalem and Gaza Strip, territories captured by Israel in the 1967 Mideast war. They say they’re willing to adjust those borders to allow Israel to keep some West Bank settlements as part of a “land swap.”

Netanyahu opposes a withdrawal to Israel’s pre-1967 lines, saying such borders would be indefensible.

He has also demanded that the Palestinians recognize Israel as the Jewish homeland, a condition they reject on the grounds that it would harm the rights of Israel’s Arab minority and Palestinian refugees who claim lost properties inside what is now Israel. Netanyahu also rejects shared control of east Jerusalem, home to key religious sites and the Palestinians’ hoped-for capital.

For years, the Palestinians refused to sit down with Netanyahu while he continued to expand Jewish settlements in the West Bank and east Jerusalem. The Palestinians say continued expansion of the settlements, now home to more than 500,000 Israelis, is a sign of bad faith.

Under heavy US pressure, the Palestinians reluctantly agreed to drop their demand for a settlement freeze in return for Israeli pledges to release about 100 long-serving Palestinian prisoners, and vague assurances that any settlement construction would be restrained.

The US-brokered formula has been put to the test in recent days. Israel released a second batch of prisoners, all of whom had been convicted of murdering Israelis, setting off a painful debate over the merits of such a move. Joyful Palestinian celebrations welcoming the prisoners home as heroes added to the Israeli public’s anger.

Netanyahu responded to the prisoner release by announcing plans to build thousands of homes in settlements, angering the Palestinians.

Copyright 2013 The Associated Press.