WASHINGTON, Aug 29 (Arshad Mohammed and Andrew Quinn/Reuters) - Many clocks will be ticking during the next year when Washington hopes an Israeli-Palestinian peace deal can be hammered out.

President Barack Obama faces congressional elections on Nov. 2 and a possible re-election bid in 2012, Palestinian President Mahmoud Abbas is on borrowed time because his elective term has already expired and Israeli Prime Minister Benjamin Netanyahu's delicately balanced coalition could unravel at any time.

For all three, the clock starts ticking on Thursday when Netanyahu and Abbas meet in Washington for the first direct Israeli-Palestinian peace talks since 2008.

Announcing the negotiations, U.S. Secretary of State Hillary Clinton said she believed the core issues -- which include borders, Jewish settlements on the West Bank and the fate of Palestinian refugees -- could be resolved in a year.

EARLY TEST FOR TALKS

The fledgling talks' first test will come far sooner, on Sept. 26, when Israel's temporary, limited moratorium on new settlement building in the occupied West Bank is set to end.

The expiration of the 10-month freeze -- which exempted some 3,000 West Bank units already under way and excluded East Jerusalem -- is marked on everyone's political calendar.

Abbas has threatened to pull out of the talks if settlement activity resumes, while Netanyahu's coalition rests on the support of small pro-settler parties eager to build more.

Daniel Levy of the New America Foundation think tank said the most likely outcome was a fudge between extending the current freeze, under which West Bank construction would shrink to zero as the 3,000 units are gradually completed, and ending it entirely, which could lead Abbas to abandon the talks.

Levy and other analysts suggested one outcome might be a variation on the existing settlement freeze that would permit some additional West Bank construction to appease Netanyahu's right-wing coalition partners.

PALESTINIAN POLITICAL CLOCK STOPPED?

Such a compromise would be hard to swallow for Abbas, who enters the talks with the weakest hand politically.

In some ways, the Palestinian political clock has stopped.

The Palestinian Liberation Organization last year decided to indefinitely extend Abbas' term, which formally expired on Jan. 25, because the split between his Fatah movement and the Islamist Hamas party made it impossible to hold elections.

Hamas, which is hostile to Israel, won a majority in 2006 parliamentary elections and seized control of the Gaza Strip in 2007, limiting Fatah's influence to the West Bank.

The Fatah-Hamas division underscores Abbas' weakness and the enormous difficulty of reaching a peace agreement with a Palestinian society that is deeply split and an Israeli prime minister looking constantly to protect his right flank.

It is unclear what, if anything, may come out of Thursday's talks or whether the meeting itself is the message.

At a minimum, the White House will want a date for the next direct talks -- perhaps in the region -- before the settlement issue erupts the week of Sept. 20, when world leaders gather in New York for the annual U.N. General Assembly.

NETANYAHU'S COALITION CLOCK TICKS

The one-year U.S. timeline has led to talk it was crafted to push the issue beyond the Nov. 2 U.S. elections -- when Obama's fellow Democrats could lose control of the House of Representatives and see big losses in the Senate -- and to wind it up well before Obama faces re-election in 2012.

Daniel Kurtzer, a former U.S. ambassador to Israel and Egypt now at Princeton University, said the U.S. investment of time and effort in resuming the talks suggested this is not a political calculation but a larger strategic calculation.

The year timeline seems to have been his decision, which suggests that he (Obama) is ready for it to spill over into the campaign, the retired diplomat said.

Martin Indyk, vice president of foreign policy at the Brookings Institution think tank and a senior aide on Middle East policy under former U.S. President Bill Clinton, said it was in fact Netanyahu's political clock that's ticking here.

Sworn in as prime minister in March 2009, Netanyahu does not have to face an election until 2013. But under what Indyk called an iron law of Israeli politics, coalitions start to fray the year before an election, limiting Netanyahu's time to pursue and possibly secure a peace agreement.

I think that's one reason why Bibi feels that if he is going to make the deal, he's got to make it in the second year, more or less, of his prime ministership, Indyk said.

THE IRANIAN ATOMIC CLOCK

A second reason for speed, Indyk suggested, was the Iranian atomic clock. Israel and the United States fear Iran is seeking atomic weapons under cover of its civil nuclear program. Iran says its nuclear program is solely to generate electricity.

In a year's time, the Iranians will, more likely than not, be on the threshold of nuclear weapons with a robust breakout capability and he (Netanyahu) needs the president of the United States to be in his corner should that moment arise, he said.

Saying Netanyahu was more worried about the Iranian nuclear threat than about making peace with the Palestinians, Indyk said, A one-year timetable in which he demonstrates his seriousness is critical to making sure Obama is on side for either what Israel might have to do or what the United States might have to do, a reference to possible strikes on Iran.

Hanging over everything is the historical clock, which the U.S. secretary of state has said favors no one.

There is, I think, a belief among many that the status quo can be sustained. But the dynamics of demography, ideology and technology make this impossible, Clinton said in March.

The status quo is unsustainable for all sides, she said. (Reporting by Arshad Mohammed and Andrew Quinn; Editing by Peter Cooney)