The growth of a Jewish settlement next to Hany Abu Haykel's home means the Palestinian needs an Israeli permit to use his front gate.

Hardly anyone visits, he says. Guests need permission to reach the house where he was born 41 years ago, in an old neighbourhood of Hebron, in the occupied West Bank. Abu Haykel's family must trek through an olive grove patrolled by Israeli soldiers to enter the house the back way.

"My life here has been destroyed," he says. His windows are covered with wire mesh to guard against the rocks and other projectiles, most recently rotten eggs, that he says are hurled at his house by the settlers next door.

Around 800 Jewish settlers live among 30,000 Palestinians in the parts of the ancient city that are under Israeli control.

Driven by ideology, they claim a biblical right to Hebron, where tension between Israelis and Palestinians often spills into violence. Memories of massacres linger on both sides.

For a Palestinian, Abu Haykel says, life among the soldiers and settlers, who first arrived on his street in 1984, is almost unliveable. On a bad day, he is searched up to five times on his way home, he says. The simplest errand can take hours.

His experience leaves him deeply pessimistic about the chances of the Palestinians being able to establish a state in the West Bank and Gaza Strip -- the stated aim of U.S.-sponsored peace talks that are already in jeopardy because of the settlement issue.

Hebron, dotted with Jewish settlements and divided into zones of Israeli and Palestinian control, is a microcosm of the occupied West Bank, where the Palestinians have self-rule over islands of territory surrounded by areas of Israeli control.

Today, some 500,000 Jews live on land where the Palestinians hope to found their state.

"To be frank, I don't even contemplate the idea of a Palestinian state," said Abu Haykel. "What kind of state would it be when you've got settlements in the middle of it?".

BIBLICAL RIGHT?

The growth of settlements across the West Bank has made even committed believers in the "two-state solution" sceptical about whether it is achievable any more.

Palestinian President Mahmoud Abbas has already threatened to quit the talks, which began on Sept. 2, unless Israel extends a 10-month partial freeze on new construction in West Bank settlements that expires on Sunday -- something Israeli Prime Minister Benjamin Netanyahu has resisted.

To mark the end of the moratorium, the Hebron settlers plan to lay a cornerstone for a new kindergarten on Monday in Avraham Avinu, one of the settlements nestled among Palestinian homes in and around the city's warren of narrow streets and passageways.

"No artificial freeze, no talks of an imaginary peace, can deny the Jews their most elementary right: to live in the city of Abraham," David Wilder, a spokesman for the Hebron settlers, said in a statement announcing the new work.

The ideologically motivated Hebron settlers see themselves as pioneers, re-establishing a community driven out by the massacre of 67 Jews by Arabs in 1929. The British authorities who controlled Palestine at the time stopped Jews moving back.

GHOST TOWN

Hebron was split into areas of Palestinian and Israeli control by agreement in 1997. The Israeli-controlled "H2" area includes the settlements and the Tomb of the Patriarchs, where a settler massacred 29 Muslims at prayer in 1994.

The Palestinian area of control, where another 170,000 Palestinians live, is called "H1".

Reports of physical violence and stone-throwing from both sides signal deep hostility between the settlers and the Palestinians, who number 200,000 across the entire city.

Israeli restrictions on movement and access, many of them dating back to the Palestinian uprising at the start of the decade, have turned parts of H2 into a ghost town. Poverty has risen in a city that was traditionally an engine of the Palestinian economy.

Israel has said the Hebron settlements would be among those it would seek to keep in any peace deal, suggesting that more remote enclaves could be evacuated and that it would cede other land to the Palestinians in compensation.

Hussein al-Araj, a former Palestinian governor of Hebron, says the city's experience shows why settlements and peace cannot mix.

"What applies to Hebron applies to all the other areas of Palestinian territory occupied in 1967," he said.

"Settlement within the Palestinian territories means there is no hope for a viable Palestinian state."