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JERUSALEM —The fate of an imprisoned American who spied for Israel could now play a big role in rescuing Middle East peace negotiations after a dramatic Palestinian rebuff to Secretary of State John Kerry.

With Kerry’s efforts in tatters, a three-way deal that includes the United States releasing Jonathan Pollard could provide incentives for Israel and the Palestinians to break the deadlock and extend the talks.

But critics say the sudden focus on Pollard has turned attention away from the real issues that need to be addressed to end decades of conflict. And it may have raised the Palestinians’ asking price: They realize that with Israel so eager to free Pollard, they may be able to hold out for broader Israeli concessions.

Negotiations on a peace deal hit a major snag late Tuesday when Palestinian President Mahmoud Abbas abruptly renewed a campaign for recognition of the “state of Palestine” in international bodies.

Abbas had promised to suspend the campaign when peace talks resumed in July but angrily reversed course after Israel failed to carry out a promised prisoner release. The move forced Kerry to cancel a planned trip back to the region and threatened to derail the talks.

White House spokesman Josh Earnest said the U.S. was “disappointed by the unhelpful unilateral actions that both parties have taken in recent days.” He said Kerry remains in close touch with negotiating teams, but added that the parties “must take the necessary steps if they want to move forward.”

Palestinian officials said Wednesday they had no desire to quit the negotiations.

“We hope that Kerry renews his efforts in the coming days,” Yasser Abed Rabbo, a top Palestinian official, said in the West Bank town of Ramallah. “We don’t want his mission to fail.”

Pollard, a former U.S. Navy intelligence analyst convicted of handing reams of classified documents to Israel in the 1980s, could play a key role in that mission.

Pollard, who is 59 and said to be in poor health, became an unlikely part of the negotiations this week when U.S. officials acknowledged they were considering releasing him as part of a package to extend talks beyond the current April 29 deadline.

In return, Israel would carry out a promised release of some 30 long-serving Palestinian prisoners, commit to the release of an additional 400 prisoners, and impose a partial freeze on settlement construction on occupied lands claimed by the Palestinians.

That arrangement was thrown into doubt after Abbas’ speech Tuesday night.

Pollard, a Jewish American who has been granted Israeli citizenship, is widely seen in Israel as a martyr who has been excessively punished. His return would also make it far easier for Israeli Prime Minister Benjamin Netanyahu to win approval for concessions to the Palestinians inside his hard-line coalition.

Israel has already freed about 70 prisoners convicted in bloody attacks on Israelis in three previous releases since talks resumed in July.

Netanyahu’s office declined comment Wednesday.

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