Snap Analysis: Is Mideast peace breaking out? Not likely

WASHINGTON (Reuters) - Never mind the ceremonial handshakes and diplomatic fanfare.

Through decades of halting U.S.-led peace efforts, rarely has an Israeli-Palestinian peace process started with lower expectations than the relaunch of face-to-face talks hosted in Washington Thursday.

While both sides voiced their commitment to President Barack Obama's ambitious goal of forging a deal on Palestinian statehood within a year, that's easier said than done.

Talks between Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas -- the first direct negotiations in 20 months -- brought soaring words in public about the need for difficult compromises.

Behind closed doors, apparently the biggest tangible achievement was an agreement to talk again -- next on September 14-15 in the region and then every two weeks thereafter.

It was not immediately known whether the leaders directly addressed any of the volatile issues at the heart of the conflict, but there was widespread skepticism that future rounds would yield a major breakthrough.

* The obstacles are daunting, not least the entrenched differences and long history of distrust that most analysts believe make a one-year timeframe unrealistic.

A crucial deadline already looms -- the September 26 expiration of a partial Israeli freeze on settlement building in the occupied West Bank. The Palestinians could quit the talks if the 10-month moratorium lapses.

Fresh Hamas attacks have already rattled the new peace effort, and hardliners on both sides have the potential to derail the process as it unfolds.

* Obama will now have to earn his Nobel Peace Prize -- as one Middle East expert put it -- if he hopes to make significant progress toward a peace accord that has eluded so many of his predecessors.

The president, who has at times stumbled through the Middle East thicket, will have to make good on his promise of sustained engagement.

His diplomatic skills will be tested with leaders widely believed to be either not politically strong enough or not willing to make necessary concessions. Netanyahu and Abbas are widely believed to have come to the negotiating table, at least in part, to avoid being seen by Obama as the spoiler.

* There are risks in setting the clock ticking.

Failure to achieve a peace deal could set back Obama's faltering attempts at winning over the Muslim world as he seeks solidarity against a nuclear-defiant Iran.

An Israeli attack on Iran's nuclear sites -- which Netanyahu has not ruled out if a U.S.-led sanctions drive does not work -- would plunge the entire Middle East into crisis.

Obama is also spending considerable political capital in a congressional election year when putting heavy pressure on Israel could hurt his Democratic Party's chances among pro-Israel voters.

If talks do not produce significant results in a year, he would be looking at a foreign policy problem at a time when he is starting to run for re-election in 2012.

(Reporting by Matt Spetalnick, editing by David Alexander and Vicki Allen)