Snap analysis: Mideast peace talks jeopardized at starting gate

JERUSALEM (Reuters) - Hamas militants have shot dead four Israeli settlers in an attack that cast a shadow over Middle East negotiations convening in Washington on Wednesday.

The violence was condemned by Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas, who were due to dine with U.S. President Barack Obama ahead of face-to-face negotiations. Both leaders are struggling to contain hardliners opposed to a settlement.

Following are some of the possible implications of the attack.

JEWISH SETTLEMENTS

Netanyahu, on landing in Washington on Tuesday, quickly pledged a "no compromise" stance on Israeli security. He will now be even less likely to meet Palestinian demands to offer a further freeze in Jewish settlement-building in occupied land in the West Bank, where the attack took place.

Far-right cabinet ministers have told Netanyahu they will not back any extension of a settlement-building freeze that expires on September 26.

Within hours of Tuesday's attack, Jewish settlers were demanding Netanyahu call off the talks, and threatening to resume expanding their illegal enclaves in occupied territory as soon as Wednesday, in defiance of his partial freeze.

PALESTINIAN SECURITY CONTROL

Prime Minister Salam Fayyad swiftly vowed to take steps to try to prevent militants from striking again against Israelis, but may now face a more intense campaign by Hamas militants who had held their fire after a punishing war with Israel last year.

Abbas's Western-trained security forces have made progress in law enforcement in the West Bank in the past two years. Cooperation with Israeli troops was said to be at an all-time high.

But now Hamas is threatening a redoubled effort, a "series of operations" to try, possibly with encouragement from its backers in Iran, to scuttle the latest efforts of U.S. President Barack Obama and the Quartet of Middle East power brokers to get Israelis and Palestinians back to continuous direct talks for the first time in almost two years.

Fayyad's pledge could see a harder crackdown in the West Bank on militants in the days to come.

ISRAELI RETALIATION

Netanyahu and his defense chief, Ehud Barak, have said Israel will retaliate for the shootings. The likely target may be a Hamas militant leader or an installation, building, or tunnels used to smuggle in weapons from Egypt, all in the Gaza Strip. The question is how big a strike could be ordered.

There is always the possibility of the violence spiraling out of control if Gaza militants respond with potentially lethal rocket fire at southern Israeli towns, setting in motion yet another deadly cycle of violence. Hamas says it has tried to stop rocket attacks by other Palestinian militant groups.