US President Barack Obama told aides that he does not believe Prime Minister Binyamin Netanyahu will be able to make a peace deal, The New York Times reported on Thursday night.

Obama reportedly said that Netanyahu can not make the concessions necessary for peace.

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The Times also reported that the timing of Obama's speech was planned intentionally to preempt Netanyahu's address to Congress on Tuesday.

A day before their scheduled meeting in Washington, Netanyahu and Obama staked out dramatically conflicting positions Thursday as to the path for resolving the Israeli-Palestinian conflict.

Netanyahu issued a quick, bitter response on Thursday night to Obama’s landmark Middle East speech, saying that the establishment of a Palestinian state could not come “at Israel’s expense.”

“The Palestinians, and not only the US, must recognize Israel as the nation state of the Jewish people,” he said.

Obama, in his address earlier in the day on the changes sweeping the Middle East, called for a demilitarized Palestinian state along the 1967 lines with agreed upon land swaps.

While thanking Obama for his commitment to peace, Netanyahu said he “expects to hear from President Obama a reconfirmation of commitments to Israel from 2004 that received wide support in both houses of Congress.” This was a reference to a letter from president George W. Bush to prime minister Ariel Sharon that did not call for a return to the 1967 lines, and that recognized that any agreement would take into account the changed realities on the ground – a line interpreted by Israel to mean a recognition that it would hold on to the large settlement blocs.

The Bush commitments, said Netanyahu, “deal with Israel not being asked to withdraw to the 1967 lines, which are not defensible, and which place large population centers in Judea and Samaria outside of these borders.”

Netanyahu’s statement also said that the Bush letter made clear that Palestinian refugees would be absorbed in a future Palestinian state, something that was not explicitly mentioned in Obama’s speech.

“Without a solution to the refugee issue by settling them outside of Israel, no territorial concessions will end the conflict,” the statement read.

In a wide-ranging address at the State Department, Obama devoted considerable attention to the Israeli-Palestinian issue, whose peaceful resolution he called “more urgent than ever,” and pushed back against those who have said the current tumult precluded a serious peace process.

“While the core issues of the conflict must be negotiated, the basis of those negotiations is clear: a viable Palestine, a secure Israel,” the president declared. “We believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states.”

Though he stressed that the United States can’t impose a solution, “what America and the international community can do is to state frankly what everyone knows – a lasting peace will involve two states for two peoples: Israel as a Jewish state and the homeland for the Jewish people, and the state of Palestine as the homeland for the Palestinian people.”

Obama fleshed that out further by saying that Palestinians should have “a sovereign, nonmilitarized state” and that there must be provisions for stopping terrorism and weapons smuggling, and ensuring border security. He called for a “full and phased withdrawal” of the IDF to be coordinated with the Palestinians during a transition period with a clear duration and demonstrated security effectiveness.

“These principles provide a foundation for negotiations,” Obama said. “Palestinians should know the territorial outlines of their state; Israelis should know that their basic security concerns will be met.”

He pointedly skipped making any prescriptions on the “wrenching and emotional” issues of Jerusalem and Palestinian refugees but argued that “moving forward now on the basis of territory and security provides a foundation to resolve those two issues in a way that is just and fair.”

Obama’s comments codify long-standing American policy in a more explicit and detailed format than his predecessors offered. George W. Bush was the first to call for a Palestinian state, and later referred to “mutually agreed changes” to the 1949 armistice lines as its basis, in the 2004 letter to Sharon.

The greater significance of Obama’s comments is likely to come in how they are perceived by both parties, as well as what they indicate about the United States’ intentions on shepherding the peace process.

Though the US has not been engaged in active diplomacy since the Palestinians left the talks last year, this could signal an effort to raise the profile of US involvement in the issue.

It comes at a time when the Palestinians are threatening to go to the UN with a unilateral declaration of statehood, a move that concerns Israel and is sure to be a subject of discussion when Netanyahu arrives at the White House on Friday.

Obama strongly rebuked the Palestinians for this tactic on Thursday, saying, “Symbolic actions to isolate Israel at the United Nations in September won’t create an independent state.”

He warned Palestinians that “efforts to delegitimize Israel will end in failure” and that they would “never realize their independence by denying the right of Israel to exist.”

He chastised both sides for taking steps that don’t help the peace process.

“Israeli settlement activity continues. Palestinians have walked away from talks,” Obama said. “The world looks at a conflict that has grinded on and on and on, and sees nothing but stalemate.”

Israel has expressed doubt that any progress toward negotiations can be made for the time being with the recent announcement of a Palestinian unity government that will include Hamas.

Obama acknowledged these concerns when he referred to the unity deal as raising “profound and legitimate questions for Israel” and emphasized that “in the weeks and months to come, Palestinian leaders will have to provide a credible answer to that question.”

Elsewhere, he said, “Palestinian leaders will not achieve peace or prosperity if Hamas insists on a path of terror and rejection.”

He stressed American support for Israel: “Our friendship is rooted deeply in a shared history and shared values. Our commitment to Israel’s security is unshakeable. And we will stand against attempts to single it out for criticism in international forums.”

He continued, “But precisely because of our friendship, it’s important that we tell the truth: The status quo is unsustainable, and Israel too must act boldly to advance a lasting peace.”

Obama added, “The dream of a Jewish and democratic state cannot be fulfilled with permanent occupation.”

Referring to Obama’s statement about Israel as the nation state of the Jewish people, the Prime Minister’s Office said the Palestinians and not only the US need to recognize that as a fact.

Netanyahu also said that he will make clear in his meeting with Obama that Israel will need to remain on the Jordan River, and that he was disappointed by Fatah’s reconciliation with Hamas.

While Obama noted the emotive nature of the Palestinian issue for the broader Arab world, he also criticized dictators for deflecting attention from their autocratic rule by focusing on Israel.

“Antagonism toward Israel became the only acceptable outlet for political expression,” he said.

His speech was delivered in response to the Arab uprisings against these autocracies, and Obama pledged American support for those who sought democracy and freedom.

“There must be no doubt that the United States of America welcomes change that advances self-determination and opportunity,” he said.

“Yes, there will be perils that accompany this moment of promise. But after decades of accepting the world as it is in the region, we have a chance to pursue the world as it should be.”

He stressed, “The status quo is not sustainable. Societies held together by fear and repression may offer the illusion of stability for a time, but they are built upon fault lines that will eventually tear asunder.”

Obama criticized Syrian leader Bashar Assad for firing on his own citizens, who have taken to the streets to demand such self-determination.

But he didn’t refer to Assad as illegitimate, much less call on him to go, as he has with other Arab leaders in similar positions, as some had speculated he would before the speech.

Instead, Obama said, “President Assad now has a choice: He can lead that transition, or get out of the way. The Syrian government must stop shooting demonstrators, and allow peaceful protests.”

He also called on Assad to “start a serious dialogue to advance a democratic transition,” warning that “otherwise, President Assad and his regime will continue to be challenged from within and will continue to be isolated abroad.”

He spoke of significant American aid to help Egypt and Tunisia reach democracy, and spoke of the need for religious freedom and rights for women throughout the Arab world.

Obama concluded with his comments on the peace process, and used the experience of bereaved Israelis and Palestinians who chose to seek reconciliation rather than violence as a message for the greater region.

“That is the choice that must be made – not simply in the Israeli-Palestinian conflict, but across the entire region – a choice between hate and hope; between the shackles of the past and the promise of the future,” he said. “It’s a choice that must be made by leaders and by the people, and it’s a choice that will define the future of a region that served as the cradle of civilization and a crucible of strife.”

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