Unless George Mitchell can work a miracle in a region that has seen far too few of them over the last 2000 years, it looks increasingly like the direct Middle East talks are headed for an ignominious early failure.

One clear sign (in case you needed any after the Palestinians threatened Saturday to walk out) is this story in today’s Haaretz by the very well-sourced Barak Ravid, who reports that Mitchell has dramatically overstated the extent to which the negotiations were going well -- to the chagrin of the Palestinian side.

We’ll get to the reasons to be a little skeptical of this story in a minute, but first let’s look at what Ravid’s sources are telling him.

The main takeaway is that Palestinian President Mahmoud Abbas has been telling anyone who will listen, that his ostensible partner for peace, Israeli Prime Minister Benjamin Netanyahu, is not serious. He only wants to talk about security, and won’t engage on other “core issues” of the conflict such as the borders of an eventual Palestinian state. "I heard nothing from Netanyahu but niceties," Abbas is quoted as telling unnamed “foreign diplomats” at the U.N. General Assembly.

The second interesting bit is that we’re learning more about what the actual contents of the discussion were. Abbas and Netanyahu held three meetings. The first one, Ravid tells us, was mainly about setting the ground rules for the discussion and agreeing to keep talking, though the two sides did have a conversation about whether to deal with borders or security first. At the second sitdown, Abbas and Netanyahu attempted (and apparently failed) to define what the “core issues” to be discussed actually were.

The third meeting, held in Jerusalem, sounds like a real disaster, with Abbas trying to get Netanyahu to discuss the offer made by his predecessor, Ehud Olmert, while Bibi again focused on security and supposedly didn’t engage on Abbas’s presentation of Palestinian positions. “The American brokers were reportedly extremely frustrated after the meeting in Jerusalem and some of them wondered if the talks hadn't in fact gone backward.”

Cleary, we’re getting largely the Palestinian side of the story here, so we don’t have a full picture of what is going on (the story also contradicts what we heard about the first meeting, after which Abbas aides told pan-Arab daily Al Hayat that they were feeling optimistic about the talks). But it looks like Ravid did try to confirm details with Netanyahu’s office, which doesn’t seem to have pushed back very hard. Be on the lookout for a follow-up article that tells Netanyhu’s side of the tale.

The real significance of the story, though, is not the details -- it’s the fact that they’re emerging now in such an ugly way. We’re no longer in the middle of a negotiation; we’re well into the blame game, with each side trying to hang the likely failure of the talks around the necks of the other.

That failure is going to have repercussions for both sides. On the Israeli side, some in the Labor Party are agitating to withdraw from Bibi’s coalition, and some in the opposition Kadima Party want Bibi to boot out Foreign Minister Avigdor Lieberman and his far-right Yisraeli Beitenu party -- which has become a national embarrassment -- thus paving the way for Kadima to join the government. Meanwhile, the right is blaming Netanyahu for agreeing to the settlement moratorium in the first place. A collapse or a reshuffle of Bibi’s coalition may be exactly what the Palestinians are hoping to provoke by withdrawing from the talks. But it’s not clear whether these rumblings have much traction, and in any case Defense Minister Ehud Minister, the head of the Labor Party, seems to enjoy being at the center of the action.

The key player to watch now is Kadima leader Tzipi Livni, who has kept her criticism of Netanyahu to a minimum while the negotiations still held out some hope of success. On Saturday, she urged Netanyahu to keep the Palestinians at the table, warning of dire consequences to Israel’s security if the talks “blow up.” Look to her now to start speaking out more often, and try to make some moves behind the scenes. It’s not clear whether she can do much, however, and she has her own internal opposition to worry about.

Hamas, meanwhile, is licking its chops, vowing that Palestinians will return to “resistance” when, not if, talks fail. And then things will really get ugly.

UPDATE: Haaretz, citing a story in London's pan-Arab daily Asharq al-Awsat, reports that Netanyahu has agreed to extend the settlement freeze for two months. Sourcing looks weak on this one, so let's see what actually happens.