JERUSALEM, April 2, 2009  -- Israel's new foreign minister Avigdor Lieberman wasted no time in grabbing the headlines. The controversial and ultra nationalist politician has a reputation as a hardliner and a tough talker. He didn't disappoint on either front.

In his first speech to foreign ministry staffers Wednesday, with outgoing foreign minister Tzipi Livni looking on, he declared that the new government of Benjamin Netanyahu did not consider itself bound to the so-called Annapolis peace process.

That process was launched by President Bush in November 2007 and was formulated with the express goal of establishing the terms of a Palestinian state by the end of 2008. Although the ambitious deadline was missed, both sides, Israeli and Palestinian, conducted many rounds of detailed negotiations during the year. It was considered the focal point of Middle East diplomacy. It was the only game in town.

To tear up the script with such forceful language as Lieberman's grabbed the headlines. Lieberman continued: "Whoever thinks that he will achieve something by way of concessions, no, he will only invite more pressure and more wars. If you want peace, prepare for war."

His tone surprised even the Israeli diplomats in attendance. After hearing his tirade Tzipi Livni is reported to have told Lieberman, "You've convinced me that I was right not to join the government."

She rejected a possible coalition partnership with Netanyahu's Likud and other rightist parties, including Lieberman's own Israel Our Home faction, when he refused to explicitly endorse the creation of a Palestinian state.

And that is the crux of the matter. Does this new Israeli government dominated, but for the presence of Ehud Barak's Labor Party, by right wing ideology, support a two state solution? The solution that is at the heart of U.S. policy?

How Will the U.S. React?

In all public statements so far, Netanyahu has stopped short of mentioning a Palentinian state. Instead, he talks of economic development and the Palestinians' governing themselves in some way. He doesn't mention Palestinians having their own state.

The Palestinians were quick to condemn Lieberman's speech and appealed for U.S. help. "He has slammed the door in the face of the U.S. and the international community," said chief Palestinian negotiator Saeb Erekat. "It seems to me that this is President Obama's first real test."

It's not clear whether Obama and Netanyahu discussed the speech when the two spoke for 30 minutes on the phone Wednesday.

Israel's media report that the two will meet face-to-face in early May, when Netanyahu flies to the United States to attend a meeting of AIPAC, the powerful Jewish lobbying organization.

Secretary of State Hillary Clinton in the meantime had her own phone call Thursday with Lieberman, her new opposite number. According to Lieberman's spokeswoman, the conversation was conducted in a "good atmosphere."

The two hope to meet soon. With such a glaring differences in policy emerging so soon it's not clear how long this "good atmosphere" will last.