In a wide ranging speech that hit on all of the key issues that face Israelis today, US President Barack Obama on Thursday saught to reassure the Israeli people that the United States is a firm ally on the peace process, Syria and Iran's nuclear ambitions.

Directing his remarks to the primarily young crowd at the International Convention Center in Jerusalem, Obama urged them to push for peace, saying that only when the people demand action do the leaders act.

"Peace is necessary. Indeed, it is the only path to true security," he said, and stressed that the only way to achieve peace is through negotiations. Obama asserted that Israel has partners for these negotiations in Palestinian Authority President Mahmoud Abbas and Prime Minister Salam Fayyad, and reiterated his belief that only a two-state solution will solve the Israeli-Palestinian conflict.

"There is no question that Israel has faced Palestinian factions who turned to terror, and leaders who missed historic opportunities. That is why security must be at the center of any agreement. And there is no question that the only path to peace is through negotiation," he said.

The president said he recognizes the "frustrations and sacrifices that come with the pursuit of peace" but asked his listeners to consider three main points: Peace is necessary, just and possible.

"Given the demographics west of the Jordan River, the only way for Israel to endure and thrive as a Jewish and democratic state is through the realization of an independent and viable Palestine," Obama stressed.

He urged Israelis to shift from relying on defensive practices, such as the border fence and Iron Dome missile defense system, to forging permanent peace by solving the problem once and for all.

"The only way to truly protect the Israeli people is through the absence of war – because no wall is high enough, and no Iron Dome is strong enough, to stop every enemy from inflicting harm," he said.

He encouraged the people of Israel, and not just its leaders, to pursue peace. "Peace must be made among peoples, not just governments. No one step can change overnight what lies in the hearts and minds of millions. But progress with the Palestinians is a powerful way to begin, while sidelining extremists who thrive on conflict and division," he said.

He also encouraged his listeners to put themselves in the Palestinians' shoes.

"It is not fair that a Palestinian child cannot grow up in a state of her own, and lives with the presence of a foreign army that controls the movements of her parents every single day. It is not just when settler violence against Palestinians goes unpunished. It is not right to prevent Palestinians from farming their lands; to restrict a student’s ability to move around the West Bank; or to displace Palestinian families from their home," he added.

"The Palestinian people’s right to self-determination and justice must also be recognized," he said.

At the same time, Obama insisted that continued settlement activity was "counterproductive" to peace. "Neither occupation nor expulsion is the answer. Just as Israelis built a state in their homeland, Palestinians have a right to be a free people in their own land," he said.

"Israelis must recognize that continued settlement activity is counterproductive to the cause of peace, and that an independent Palestine must be viable, that real borders will have to be drawn," Obama continued.

But he also insisted that now was the time for the Arab world to start normalizing relations with Israel.

"Arab states must adapt to a world that has changed. The days when they could condemn Israel to distract their people from a lack of opportunity are over. Now is the time for the Arab world to take steps toward normalized relations with Israel," he said.

To further stress the importance of Arab states abandoning their rejectionist policies towards Israel, Obama continued: "Make no mistake: those who adhere to the ideology of rejecting Israel’s right to exist might as well reject the earth beneath them and the sky above, because Israel is not going anywhere."

The president also related his overarching message of peace to the Iranian nuclear threat, underlining that there is still time to pursue a diplomatic resolution to the conflict.

"All of us have an interest in resolving this issue peacefully. Strong and principled diplomacy is the best way to ensure that the Iranian government forsakes nuclear weapons," he said. "Moreover, peace is far more preferable to war, and the inevitable costs – and unintended consequences – that would come with it," he added.

At the same time, Obama clarified that "all options are on the table" and that the United States will do whatever it takes to prevent a nuclear-armed Iran.

"The Iranian government is now under more pressure than ever before, and that pressure is increasing. It is isolated. Its economy is in a dire condition. Its leadership is divided. And its position – in the region, and the world – has only grown weaker," he said.

Obama, coupling his push for a more conciliatory Israeli approach to the Palestinians with a reaffirmation of his commitment to Israel's security, also promised that Washington will "do what me must to prevent a nuclear-armed Iran."

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Reuters contributed to this report.

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