Obama in direct appeal to young Israelis on peace

US President Barack Obama on Thursday insisted that the two-state solution was still viable and made a direct appeal to young Israelis to seize the chance to make peace with the Palestinians.

"Israel is at a crossroads," Obama declared in a major speech in Jerusalem, challenging an audience of young Israelis to force their leaders to revive talks with the Palestinians which have been frozen for two-and-a-half years.

In direct language that may be seen by some as an unwarranted intervention in internal Israeli politics, Obama argued that the Jewish state's destiny and ultimate survival could never be assured without a final peace deal.

"Peace is necessary. Indeed it is the only path to true security," Obama told an excitable audience at a Jerusalem conference centre, after jokingly brushing off an interruption from a heckler.

"You can be the generation that permanently secures the Zionist dream," he said, warning that changing demographics meant a two-state solution was the only way to ensure Israel's security.

In a speech frequently peppered with enthusiastic applause, Obama told young Israelis to "look at the world through (Palestinian) eyes.

"Just as Israelis built a state in their homeland, Palestinians have a right to be a free people in their own land."

"Peace is possible," Obama said, wrapping up a landmark charm offensive which was flagged as the high point of his three-day trip, his first since becoming president more than four years ago.

Obama has said he has not come with any grand peace plan but with a desire "to listen" to ideas about how to resolve the decades-long conflict.

But the rhetorical power of his speech will be sure to send expectations soaring of a new US intervention to revive the peace process, even though previous efforts by Obama did not live up to the muscle of his oratory.

Cynics will note that Obama made similar calls for movement in Middle East talks in 2009 with his seminal Cairo speech -- but failed to live up to the expectations he generated, as the peace process foundered.

A sign of just how hard it will be to reframe the peace equation came after Obama flew by helicopter over the barbed wire fences and dividing walls of the West Bank to see Palestinian leader Mahmud Abbas in Ramallah.

There he told his audience the two-state solution was still very much alive and that the Palestinian people "deserve an end to the occupation."

"Based on the conversations I've had with president Abbas and Prime Minister Benjamin Netanyahu... the possibility continues to exist for a two-state solution," he said, countering claims it was no longer possible because of the pace of Israel's settlement construction.

Although he singled out settlement building as a major impediment to reviving peace talks, he steered clear of calling for a new settlement freeze.

Direct peace talks broke off in late September 2010, just weeks after they were launched, with the Palestinians refusing to continue talking while Israel builds on land they want for a future state.

Abbas was less hazy on the question, according to his political adviser Nimr Hammad.

"A resumption of negotiations is not possible without an Israeli settlement freeze in the West Bank and east Jerusalem," Hammad told AFP.

In Ramallah, Obama also condemned the "continuing threat" of attacks from the Hamas-run Gaza Strip after two rockets slammed into southern Israel.

Abbas also spoke out: "We condemn violence against civilians, whatever its source, including the firing of rockets," he was quoted as saying by Hammad.

The talks were followed by a somewhat frosty news conference between the two leaders, which contained none of the jokey repartee that flew back and forth between Obama and Netanyahu a day earlier.

Obama has had a prickly relationship with the Israeli leader, but has made reframing their relationship a key goal of his trip to Israel, which ends on Friday and then moves on to Jordan.

The US leader also used the speech to bolster a sense of security among Israelis, and to touch on regional turmoil raging around the Jewish state, urging foreign governments to blacklist Lebanon's Hezbollah militia for its attacks on Israelis.

"Every country that values justice should call Hezbollah what it truly is -- a terrorist organisation," Obama said in remarks aimed at the European Union which has declined to blacklist the group.

Obama also issued a fresh call for Syrian President Bashar al-Assad to leave power as the bloody uprising against his regime, which the UN estimates has so far claimed 70,000 lives, enters its third year.

And he issued a fresh warning to Iran, warning that the time for pursuing a diplomatic resolution was "not unlimited."

"Iran must not get a nuclear weapon. This is not a danger that can be contained," he said.