JERUSALEM: Israel`s firebrand foreign minister on Wednesday played down US hopes, shared by his own prime minister, that peace talks starting in Washington next week would bear fruit within one year.

Further putting a damper on a public show of enthusiasm by premier Benjamin Netanyahu and the US administration, settlers threatened to bring down the Israeli government if a partial moratorium on settlement construction is renewed.

Palestinians seek a complete freeze on settlement construction in the West Bank, including east Jerusalem.

"It`s clear that the two sides are so different -- in content, in approach -- that it`s hard to talk about a peace agreement within a year," Lieberman told Israeli public radio.

The parties, due to relaunch direct talks in Washington on September 2 after a 20-month hiatus, have been negotiating since 1993, when they signed interim accords after secret peace talks in Norway, but have yet to reach agreement.

"What have we been doing for the 17 years since Oslo?" Lieberman asked rhetorically. "Suddenly we`re going to reach a peace agreement within a year? I think that the more we can lower expectations the healthier it will be."

Lieberman said Palestinian insistence that talks cannot proceed if Israel continues building in settlements are part of "difficult preconditions" likely to torpedo talks from the outset.

"Anyone coming with an `all or nothing` attitude will end up at the end of the day with nothing," he said.

Last November, at US urging, the Israeli government declared a 10-month moratorium on issuing new building permits for settler homes in the West Bank, but excluded east Jerusalem, which Israel captured, then annexed in 1967.

Yesha, the main association of settlers in the Israeli-occupied West Bank, warned Netanyahu that it would bring down his coalition government if the freeze remained in force.

"If we are not given the legal right to actually build homes for our families and children, we cannot allow a situation where this coalition will continue to govern," a Yesha said in a letter to the premier.

The settlers have strong influence in Netanyahu`s Likud party and in Lieberman`s Yisrael Beitenu, and the letter warned of "serious diplomatic and political implications" if settlement construction is restrained.

Parliamentarian Ariyeh Eldad, who represents the settler lobby as a member of the religious-right National Union party, says the hardliners can paralyse the government`s work in the legislature.

"We can make life miserable for the prime minister," he told foreign journalists at a briefing this week. "In the finance committee, in legislation, we can incapacitate him.

Palestinian president Mahmud Abbas faces his own internal opposition from the Islamist Hamas and secular groups who see talks as capitulating to Israel.

In the West Bank city of Ramallah, where Abbas has his headquarters, his security forces broke up a gathering of left-wing opponents on Wednesday, arresting several, a participant said.

But at a diplomatic reception in Ramallah, Abbas sounded a hopeful note, saying that "there exists a historic chance to attain peace" and appealing to Israel "not to miss this historic chance".

In this context, he recalled that a freeze on Jewish settlements had the support of the entire international community.

Lieberman said the settlement freeze was a major concession but the Palestinians had failed to reciprocate, campaigning against Israel in UN institutions, boycotting settlement products and preaching hostility in their schools and media.

"There is no reason to continue to freeze settlement," he told the radio. "We`ve done enough and we got nothing in return."

But Lieberman pledged that he would be prepared to give up his own home in the West Bank settlement of Nokdim if it helped to secure genuine and lasting peace.

He said there were currently about 2,000 homes in the West Bank which had all the necessary planning and building permits and were ready to begin construction on September 26. There were a further 1,600 housing units in the pipeline in east Jerusalem, he added.

BDST: 1016 HRS, August 26, 2010