JERUSALEM – When he spoke of the Israeli-Palestinian conflict Wednesday, President Barack Obama's speech in Cairo went where no US president has gone in previous speeches.

Not only did he say that the only solution to the problem was to form two states, side-by-side, but he referred twice to a would-be state as "Palestine," a term American politicians usually avoid, instead preferring terms like "the Palestinians" or "The Palestinian Authority."

Mr. Obama also said that the US could not accept the "legitimacy" of continued Israeli settlement building, using much stronger language than previous administrations.

Significantly, he referred to Hamas, the Palestinian political and militant group now in charge of a Gaza, in a very different tone than that used by the US and Israel in previous years. He suggested that the group – which is on the US State Department’s “terrorist” list – shift gears and assume its "responsibilities." But he did not call for the group's destruction or call it a terrorist group.

“The only resolution is for the aspirations of both sides to be met through two states, where Israelis and Palestinians each live in peace and security,” Obama said, setting off a ripple of applause. “That is in Israel's interest, Palestine's interest, America's interest, and the world's interest.”

Obama was also made a clear and bold statement against the expansion of Jewish settlements in the West Bank, the territory where about 250,000 Israelis now live and where Palestinians expect to build their future state. The Obama administration has been at odds in recent days with the Israeli prime minister, Benjamin Netanyahu, who has rejected calls for a settlement freeze.

"At the same time, Israelis must acknowledge that just as Israel's right to exist cannot be denied, neither can Palestine's," Obama said. "The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop."

Settlers react to the speech

The Israeli settlers' movement reacted to Obama's speech by blaming it on the "defeatism" of previous Israeli leaders who "capitulated" in peace talks.

"Today, the State of Israel is paying the price of its leaders' defeatism," Yesha Council, the settlers' lobby, said in a statement. "Hussein Obama gave priority to Arab lies, which have always been told with determination and daring, at the expense of the Jewish truth, which has been said in a weak and unconfident voice."

The council called on Mr. Netanyahu to emulate former prime ministers Menachem Begin and Yitzhak Shamir and "stand up like a proud Jew and reject Obama's fabricated history."

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