In a widely anticipated speech from Cairo Thursday, US President Barack Obama vowed continued support for Israel, but was uncompromising in his demand for the establishment of a Palestinian state, and called for a stop to settlements.

Obama says threatening Israel with destruction is deeply wrong

"America's strong bonds with Israel are well known. This bond is unbreakable. It is based upon cultural and historical ties," said the US president. He also spoke of the history of the Jewish people and their pursuit of a Jewish homeland.

"Around the world, the Jewish people were persecuted for centuries, and antisemitism in Europe culminated in an unprecedented Holocaust," Obama said. "Tomorrow, I will visit Buchenwald, which was part of a network of camps where Jews were enslaved, tortured, shot and gassed to death by the Third Reich. Six million Jews were killed - more than the entire Jewish population of Israel today."

"Denying that fact is baseless, ignorant, and hateful," he told the Arab and Muslim world, in which Holocaust denial is not rare. "Threatening Israel with destruction - or repeating vile stereotypes about Jews - is deeply wrong, and only serves to evoke in the minds of Israelis this most painful of memories while preventing the peace that the people of this region deserve."

Read the full text of Obama's Cairo address

Obama strongly reiterated Israel's right to exist, saying "Threatening Israel with destruction - or repeating vile stereotypes about Jews - is deeply wrong, and only serves to evoke in the minds of Israelis this most painful of memories while preventing the peace that the people of this region deserve."

US President Barack Obama, right, tours the Sultan Hassan Mosque with Secretary of State Hillary Rodham Clinton, left, in Cairo, Egypt, Thursday.
Photo: AP

Click 'play' below to watch summary of address

"On the other hand," Obama went on, "it is also undeniable that the Palestinians... have suffered in pursuit of a homeland."

"For more than 60 years they have endured the pain of dislocation. Many wait in refugee camps in the West Bank, Gaza, and neighboring lands for a life of peace and security that they have never been able to lead."

"They endure the daily humiliations - large and small - that come with occupation," he said.

"The situation for the Palestinians," he stressed, "is intolerable."

"The Palestinian Authority must develop its capacity to govern, with institutions that serve the needs of its people," he noted, as well as citing the Middle East Quartet's conditions for Hamas, that the terrorist group must "put an end to violence, recognize past agreements, and recognize Israel's right to exist."

"At the same time, Israelis must acknowledge that just as Israel's right to exist cannot be denied, neither can Palestine," he said. "It is time for these settlements to stop."

He demanded that Israel "live up to its obligations to ensure that Palestinians can live, and work, and develop their society… Progress in the daily lives of the Palestinian people must be part of a road to peace, and Israel must take concrete steps to enable such progress."

Moving on to speak about Iran, Obama said, "For many years, Iran has defined itself in part by its opposition to my country, and there is indeed a tumultuous history between us."

He said that dealing with the Iranian issue was "about preventing a nuclear arms race in the Middle East that could lead this region and the world down a hugely dangerous path."

He defended Teheran's right to peaceful nuclear energy, saying that "any nation - including Iran - should have the right to access peaceful nuclear power if it complies with its responsibilities under the nuclear non-proliferation treaty."

Nonetheless, he said that the US would not hesitate to be tough in upcoming talks with the Islamic republic.

The US, he went on, would "proceed with courage, rectitude and resolve" to solve the Iranian nuclear issue. His vision, as he laid it out in the speech, was for "a world in which no nations hold nuclear weapons."

Obama called for a "new beginning between the United States and Muslims" and said together, they could confront violent extremism across the globe and advance the timeless search for peace in the Middle East.

"This cycle of suspicion and discord must end," Obama said. He said the US seeks a new beginning with the Muslim world but "change cannot happen overnight."

In a gesture, Obama conceded at the beginning of his remarks that tension "has been fed by colonialism that denied rights and opportunities to many Muslims, and a Cold War in which Muslim-majority countries were often treated as proxies without regard to their own aspirations."

Obama said some people in the United States view Islam as hostile to Western countries, but that this was not the case, despite fear and mistrust.

"And I consider it part of my responsibility as president of the United States to fight against negative stereotypes of Islam wherever they appear," he said.

At the same time, he said the same principle must apply in reverse. "Just as Muslims do not fit a crude stereotype, America is not the crude stereotype of a self-interested empire."

He stepped lightly on one issue that former US president George W. Bush had made a centerpiece of his second term - the spread of democracy.

Obama said he has a commitment to governments "that reflect the will of the people." And yet, he said, "No system of government can or should be imposed upon one nation by any other."