Obama in direct appeal to young Israelis on peace

In a powerful direct appeal to Israelis, President Barack Obama Thursday insisted a two-state peace with the Palestinians could still be forged and was their only hope of true security.

In a trademark soaring address, Obama also built on his vow of an "eternal" defence of the Jewish state in the face of Iran's nuclear programme, which has been at the centerpiece of his first trip to the country as US president.

Obama declared that "Israel is at a crossroads" as he sought to convince young Israelis to reshape the internal political dynamics which have seen peace talks frozen for two years.

"Peace is necessary. Indeed it is the only path to true security," Obama told an exuberant audience at a Jerusalem conference centre, which recalled the heady enthusiasm of his "Yes We Can" 2008 campaign crowds.

"You can be the generation that permanently secures the Zionist dream," Obama said, warning that a two-state solution was the only way to ensure Israel remainined a Jewish state amid the changing demographics of years to come.

Hours after taking a helicopter ride into the West Bank, over barbed wire fences and the walls of Israel's anti-militant barrier, Obama urged his young Israeli audience to "look at the world through (Palestinian) eyes."

Earlier, Obama's edgy press conference with Palestinian president Mahmud Abbas in Ramallah, reflected Palestinian disappointment with his failure to live up to first term vows to help forge a Palestinian state.

The frosty atmosphere lacked the bonhomie of the bonding session he held with Israeli Prime Minister Benjamin Netanyahu on Wednesday, as the two leaders, both setting off on new mandates, sought to prove their prickly relationship was a thing of the past.

In front of Abbas, Obama said that the two-state solution was still a possibility, despite claims that Israeli settlement building had crushed Palestinian dreams of a contiguous state.

Although he singled out Israeli settlements, on lands Palestinians see as part of their future state, as a major impediment to reviving peace talks, Obama did not call for a new construction ban.

Abbas was less hazy on the question in private talks with Obama, 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.

Israel says it will not come back to talks with pre-conditions.

Obama came to the Middle East amid tepid expectations, promising not to table grand plans but to assess the prospects for progress.

Yet the striking ambition of his speech, will be sure to raise expectations of a new US intervention to revive the peace process.

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 moves crashed.

Officials said Obama had no concrete steps forward to announce, but will send Secretary of State John Kerry back to Israel on Saturday to follow up on his visit with Israeli leaders.

It was not clear how Obama's call, the kind of intervention in domestic politics that infuriates his aides when it comes from Netanyahu in Washington, would be received in Israel's newly shaken up politics.

A statement from the office of Netanyahu, who is atop a new governing coalition, thanked Obama for his "unreserved" support of Israel and agreed on the need for peace with the Palestinians.

The US leader also used the speech to bolster a sense of security among Israelis, and to address regional turmoil around the Jewish state, urging foreign states to blacklist Lebanon's Hezbollah 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.

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.

With Netanyahu on Wednesday, Obama warned that any use by Assad of chemical weapons would be a "game-changer" that would lead to international action.

And he issued a fresh warning to Iran, stressing 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, but again pressed for time for a diplomatic initiative, backed by tough sanctions, to work.