"I think the chance of achieving a mutual agreed understanding about the moratorium is 50/50," he told the BBC. "I think the chances of having a peace process are much higher."
"I hope it will not be blocked by this moratorium issue and that we will sail full engines forwards [to] substantial negotiations and agreement," Barak told the BBC.
For his part the Palestinian President Mahmoud Abbas said on Saturday Israel must choose between peace and the continuation of settlements.
"Israel must choose between settlements and peace," Abbas told the UN General Assembly in New York on Saturday.
However he stopped short of publicly threatening to withdraw from talks with Israel if the moratorium on new West Bank construction is not extended.
Abbas did not refer to Sunday's expiry of an Israeli freeze on new settlement construction in the West Bank.But he made clear that Israel would have to cease all settlement activities if the direct negotiations are to succeed.
SETTLEMENTS FREEZE EXPIRES ON SUNDAY
The 10-month freeze on West Bank settlement-building expires at midnight local time on Sunday (2200 GMT). The moratorium freeze has never applied to East Jerusalem settlements.
Right-wing politicians in Israel are calling for a swift resumption of construction, and are backing settlers' plans to resume building as soon as possible.
"The building needs to restart - there are some 2,000 (housing) units that are already approved," Sport and Culture Minister Limor Livnat, a member of Prime Minister Benjamin Netanyahu's Likud party, told the AFP news agency.
However, any resumption of construction is likely to be small in scale, commentators say, as most projects will require approval from Barack.
On Thursday, US President Barack Obama urged Israel to extend its moratorium, saying it had "made a difference on the ground, and improved the atmosphere for talks".
An Israeli official on Sunday said that Israel has raised the possibility of reaching a compromise on the settlements constructions issue.
However, any deal between the two sides is not going to be a long-time deal. An unnamed Palestinian official said on Friday that US officials have suggested a three-month extension to the moratorium during which time the two sides "could agree on borders."
Ynet reported that negotiation between the Israelis and Palestinians may come up with a formula which would prevent a political embarrassment for both sides. One of the options discussed is limited construction in the large settlement blocs only, without a public announcement.
Israel Raises Possibility of Settlement Freeze Compromise: Official
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