The Associated Press 
Israel's foreign minister said Sunday a peace deal with the Palestinians is impossible under current conditions and that Israel should pursue a lesser deal instead — a concept the Palestinians swiftly rejected.
The latest diplomatic spat between the two sides came as violence along the Israel-Gaza border simmered. After days of accelerated Palestinian rocket attacks on southern Israel and Israeli airstrikes in response, Israeli soldiers killed two Palestinians on the border early Sunday.
Avigdor Lieberman, the Israeli foreign minister, told a conference of Israeli diplomats that instead of a full peace deal, Israel should seek a long-term, interim agreement on security and economic matters. Palestinians have consistently rejected that approach.
"It's not only that it is impossible" to reach an overall agreement, he said. "It is simply forbidden."
Lieberman said the West Bank Palestinian Authority — with whom Israel has pledged to negotiate — is "not legitimate" because it has postponed elections. Palestinian President Mahmoud Abbas' term expires next month, but there is no date for a new election.
Lieberman is known for expressing hard-line views that don't always represent Israeli Prime Minister Benjamin Netanyahu, who says he seeks a negotiated, final peace deal with the Palestinians but has declined to give specifics. Netanyahu's office declined repeated requests for comment.
Peace talks between Israel and the Palestinian Authority broke down in September after an Israeli freeze on settlement construction expired.
The Palestinians say they will not negotiate as long as Israel builds homes for Jews in the West Bank and east Jerusalem, lands the Palestinians claim for a future state.
U.S. mediators have returned to indirect talks to seek a way out of the impasse.
Palestinian Authority Spokesman Ghassan Khatib rejected Lieberman's comments, saying most world governments — including Israel's — recognize the Palestinian Authority as legitimate. He said the Palestinians would not accept an interim agreement.
"It's too late now for anything except ending the occupation and allowing for two states on the '67 borders," he said, referring to 1949 truce lines that marked the West Bank until the 1967 Mideast war, when Israel captured the territory.
Israeli Cabinet Minister Binyamin Ben-Eliezer warned Sunday that if peace talks fail, "the whole world" is likely to recognize a sovereign Palestinian state — a development Israel would not welcome.
"Within a year, we will find ourselves in a situation where the whole world — and I wouldn't be surprised if even the United States — would support a Palestinian state," he said.
Violence again hit Israel's border with the Gaza Strip Sunday, threatening a de-facto two year truce.
The Israeli military said it launched an airstrike after spotting two men trying to plant explosives along the border. The Islamic Jihad militant group said two of its members died in a clash with Israeli ground troops. There was no way to immediately reconcile the two accounts.
The border has been mostly calm since Israel's Gaza war two years ago, but clashes have flared in recent weeks. On Saturday, Gaza's militant Hamas rulers warned they would escalate hostilities against Israel if tensions didn't subside.
The Islamic militant Hamas, which rules Gaza, is at odds with the West Bank Palestinian Authority and rejects negotiations with Israel.
Also Sunday, an Israeli court said a Palestinian whom Israel is trying to ban from the city could remain while he appeals his case.
Adnan Gheith, who has led protests against Jewish settlers in his east Jerusalem neighborhood, was to remain outside of Jerusalem for four months starting Sunday evening. The military issued the ban, saying it considers him a threat to the public order.
Rights groups worry the ban — based on an obscure emergency regulation that predates Israel's establishment — could be used to target others.
Copyright 2010 The Associated Press.
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