Ramallah: After a year as the West Bank's prime minister, Salam Fayyad is deeply pessimistic about a peace deal with Israel, saying Israel's accelerated settlement construction largely strips the negotiations on the terms of Palestinian statehood of meaning.

The peace process is "being trampled upon" with Israel's accelerated settlement construction, including the latest plans for 900 more apartments in disputed east Jerusalem, Fayyad said in an Associated Press interview.

"Believe me, I would want this (an agreement) to happen today before tomorrow, but I am really at a loss trying to really find reasons to be encouraged or optimistic, especially because the pace (of construction) has picked up so much," he said.

He said the international community must take a firm stand, but stopped short of criticising the Bush administration, the only mediator powerful enough to call Israel to order.

Fayyad said his biggest mission has been to try to change attitudes, instill a sense of hope, by taking small steps, such as a gradual deployment of Palestinian security forces in some West Bank towns.

He said he took a political risk by doing so, since Israel did not promise to stay out of those cities, and continued Israeli army raids undermine his credibility. Israel says the Palestinians aren't ready yet to handle security on their own.

Still, Fayyad said he had no choice, since the chaos on West Bank streets had become unbearable, and residents in the cleaned-up towns are now feeling safer.

Those gradual successes "give us a much better ground from which to argue our case than to continue to debate it," he said.

He said he'll keep trying to improve life in the West Bank in small steps, regardless of the fate of the US-backed peace efforts.

He hopes to break what he described as a culture of defeatism among Palestinians, nurtured by decades of Israeli occupation, and instead to instill a sense of the possible.

"The way we end it (occupation) is by this ... spirit of positive defiance, to build despite the occupation, do what we can," he said.

However, he said his biggest failure of the past year is the continued split between the West Bank and Gaza.

"That's about the only thing on my mind on the anniversary," he said.