In a statement from the Netherlands, chief government negotiator Silvestre Bello III said "exploratory talks toward resuming the peace negotiations" ended abruptly following a meeting in Utrecht, where Sison and many communist leaders live in exile.
"We have reached an impasse, but this is not the end of the road," he said. "The peace process will continue on other paths."
However, Bello said they told rebel negotiators the government "is not inclined to change its position, which has important implications on the national interest."
Presidential Spokesman Ignacio Bunye said Mrs. Arroyo has been advised about the development and that she has "re-echoed" the government stand to continue with the peace process.
"But we’d like to state we’re not discouraged by this," he said. "We will always be open to negotiations until things become more conducive in the future."
Bunye said the impasse in the peace negotiations might lead to more NPA attacks against vital installations and telecommunications facilities nationwide.
"The situation, of course, has not really improved, the other side has engaged in harassment tactics and we expect this to continue," he said.
"We’ll have to wait a little while, I don’t think the (CPP-NPA-NDF) is in the mood to resume the negotiations right now."
Bunye said the government is ready to resume peace talks "anytime" with communist rebels.
"But maybe not within the immediate future," Bunye said. "You’ll have to give this process time to proceed."
The US and EU have tagged as "terrorists" Sison, the Communist Party of the Philippines and the New People’s Army upon representations of the Philippine government.
Mrs. Arroyo sent the three-man peace panel led by Bello to Utrecht to sound out communist leaders on resuming peace talks.
Mrs. Arroyo suspended negotiations in mid-2001 after the NPA killed Cagayan Rep. Rodolfo Aguinaldo and Quezon Rep. Marcial Punzalan.
The government proposed a "fast-tracked negotiation leading to one comprehensive agreement, backed by a unilateral suspension of offensive military operations."
Apart from Bello, other members of the delegation were Secretary Silvestre Afable Jr., head of the Presidential Management Staff, and Carla Munsayac-Villarta, executive director of the government peace panel. –Marichu Villanueva, Benjie Villa, AFP