Palestinian leader Mahmoud Abbas announced on Thursday that he will not seek reelection in the upcoming Palestinian election tentatively set for January 24.

Abbas insisted his decision was not an attempt to manipulate those involved in the peace process. But that didn't stop US President Barack Obama from responding as though it was by shifting Washington's position on the future of Jerusalem to favor Palestinian demands.

A diplomatic source told Ha'aretz that Obama told Abbas that the US does not view the eastern side of Jerusalem as part of Israel, and therefore rejects the presence of Jewish residents in that half of the holy city. Obama's reassurance came just a day after visiting US Secretary of State Hillary Clinton angered Palestinians by praising Israel for implementing a partial settlement freeze for the sake of getting peace talks back on track. Clinton also said such a settlement freeze was not a precondition for peace talks, as demanded by Abbas.

But Abbas did not blame the US for his resignation. Instead, he turned on Israel, accusing the Jewish state of "ruining all attempts at peace." He also said the inability to overcome Hamas in popularity polls meant he couldn't effectively govern and would probably lose the next election anyway.

With Abbas out of the running, the most likely winners of the upcoming Palestinian presidential election are Gaza-based Hamas leader Ismail Haniyeh or jailed Fatah terrorist leader Marwan Barghouti. Both Israel and the US view both men as less than adequate peace partners, so Jerusalem is expecting heavy pressure from Washington to offer even more concessions to convince Abbas to change his mind.

Israeli observers noted, however, that if Abbas is truly the only top tier Palestinian leader and representative of the people that can be viewed as a peace partner, then any peace deal made with him will be hollow since the Palestinian public's preference for more hostile candidates means it doesn't really want peace with Israel.