Obama seeks to soothe Israel on Mideast vision

President Barack Obama sought to soothe Israeli fury over his new Middle East peace proposals by making clear that the Jewish state would likely be able to keep some settlements in any final deal with the Palestinians. 

Obama, addressing Israel's staunchest US supporters, repeated his view that long-stalled peace talks should start on the basis of the Jewish state's 1967 borders, an assertion that angered Israel, exposed a deep rift in its relations with Washington and raised further doubts about peace prospects.

But Obama, in his speech to Washington's most powerful pro-Israel lobbying group, sought to ease tensions with the close US ally over Obama's endorsement three days earlier of a longstanding Palestinian demand on the borders of their future state. 

Obama stressed that he expected the two sides to eventually negotiate an accord that included land swaps that would take into account the "new demographic realities on the ground," signaling that Israel would be allowed to keep some Jewish settlements built on occupied land.

The speech followed a testy encounter at the White House on Friday with Prime Minister Benjamin Netanyahu, who warned Obama against seeking peace "based on illusions" and vowed Israel would never pull back to old borders he regarded as "indefensible." 

Netanyahu quickly expressed his appreciation for Obama's remarks on Sunday, saying in a statement, "I am determined to work together with President Obama to find ways to resume the peace negotiations."

Obama's appearance before the annual assembly of the American Israel Public Affairs Committee (AIPAC) served as a stark reminder that his new formula for Middle East peace could cost him support among Jewish and pro-Israel voters and donors as he runs for re-election in 2012. 

Some of Obama's prospective Republican presidential challengers have already pounced on his peace "principles" as a betrayal of Israel, Washington's closest ally in the region.

"Even while we may at times disagree, as friends sometimes will, the bonds between the United States and Israel are unbreakable, and the commitment of the United States to the security of Israel is ironclad," Obama said to loud applause. 

But at one point he faced a light smattering of boos, which were quickly drowned out by loud applause, when he touched upon some of the most controversial issues now dividing the United States and raising doubts whether Obama's peace vision will ever get off the ground.

A week of hectic Middle East diplomacy has laid bare the divide between the Obama administration and one of Washington's closest allies and made the prospects for reviving the moribund Israeli-Palestinian peace process more remote than ever. 

In Sunday's speech, Obama reiterated the peace "principles" he outlined on Thursday in a policy speech on upheaval in the Arab world, but he sought to assuage Israeli concerns that had caused Netanyahu to warn him against pursuing peace "based on illusions."

At issue is Obama's embrace of a long-sought goal by the Palestinians: that the state they seek in the occupied West Bank and Gaza Strip should largely be drawn along lines that existed before the 1967 war in which Israel captured those territories and East Jerusalem. 

The proposal would call for land swaps to compensate for Israel keeping some settlements in the West Bank.

"By definition, it means that the parties themselves - Israelis and Palestinians - will negotiate a border that is different than the one that existed on June 4, 1967. That's what mutually agreed upon swaps means," Obama said. 

"It allows the parties themselves to account for the changes that have taken place over the last forty-four years. It allows the parties themselves to take account of those changes, including the new demographic realities on the ground and the needs of both sides," he said.

Obama's new language was more in line with promises that by former President George W. Bush in 2004 suggesting that the Jewish state may keep big settlement blocs as part of any peace pact. 

Obama's reassurances could help ease strains with Netanyahu, who has had a history of tense relations with the president. Obama's stress on 1967 borders went further than before in offering principles for resolving the impasse between Israel and the Palestinians and put the United States formally on record as endorsing the old boundaries as a starting point.

Netanyahu is expected to be feted when he addresses the same audience on Monday and then the US Congress on Tuesday where he will have a chance to rally support for his stance.

Talks brokered by Washington at Obama's initiative collapsed last year when Netanyahu refused to extend a moratorium on settlement building in the West Bank.