President Obama and Israeli PM Netanyahu Optimistic About Peace Process

He rejected an Israeli reporter's thesis that his outreach would embolden militants, adding that the strategy adopted so far has not worked.

"It's not clear to me why my outstretched hand would be interpreted as weakness," the president responded.

Obama said the United States should be able to assess, by the end of the year, how talks between the United States and Iran are developing.

"I don't want to set an artificial deadline," Obama said, when asked whether United States had set a timeframe. "I think it's important to recognize that Iran is in the midst of its own elections. ... Election time is not the best time to get business done...I believe it is not only in the interests of the international community that Iran not develop nuclear weapons; I firmly believe it is in Iran's interest not to develop nuclear weapons, because it would trigger a nuclear arms race in the Middle East and be profoundly destabilizing in all sorts of ways."

Netanyahu said Iran's potential nuclear capability threatens not only Israel's security, but interests worldwide.

The two leaders praised each other profusely after the meeting, with Obama dubbing Netanyahu one with "both youth and wisdom," and the Israeli PM calling the president "a great leader."

But in the runup to the leaders' first meeting since taking on their respective posts, both came in with varying agendas. For Obama, differences about Palestinian statehood and a two-state solution was a top priority. He sees the creation of a Palestinian state alongside Israel as a crucial goal that's in America's interests.

Even if Netanyahu were inclined to support a two-state solution, his hands may be politically tied. A wide majority of parliament members in Netanyahu's conservative Likud party oppose such a move, according to the Jerusalem Post. At least seven Likud ministers are on record against a Palestinian state, according to the newspaper.

As for what was on Netanyahu's plate, the front page of a leading Israeli daily newspaper Ma'ariv summed it best: "Iran First."

Two-State Solution Viable?

An unnamed aide to Netanyahu said this weekend that the Israeli leader, despite the growing clamor, will not commit himself to the creation of a Palestinian state during this visit.

Today, Netanyahu was careful not to mention statehood for Palestinians, even though he said his country was willing and ready to negotiate with them. He also was mute on the issue of settlements.

Since the beginning of the year, orders to demolish Palestinian homes in East Jerusalem have escalated and plans to expand settlements have been widely published.

Plans for a new settlement in the occupied Jordan Valley were published just today. It would be the first new settlement in the area since 1982.

For moderate Palestinian peace partners, a settlement freeze is an essential first step. From his office in Jericho, peace negotiator Saeb Erekat sounded an explicit warning in a recent conversation with ABC News.

"It's no longer relevant to say whether you are pro-Israel or pro-Palestine; this world view is now divided between those who are pro-peace and those who are against peace. Settlements are against peace," he said.

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