Story highlights President Obama receives Israel's highest civilian honor

Obama calls on young Israelis to pressure their leaders to work for peace

Secretary of State John Kerry will stay on to hold talks with Israeli leaders

Palestinian leader Abbas says Israeli settlements threaten a two-state solution

President Barack Obama tried Thursday to invigorate the stalled Middle East peace process, urging young Israelis to pressure their leaders to seek peace with Palestinians while acknowledging the Jewish state's historical right to exist and defend itself from continuing threats.

In a speech in Jerusalem that Obama had said would lay out his vision for the region, the president urged Israelis to look at the world through the eyes of Palestinians but also said enemies of Israel must change their rhetoric and tactics to reflect modern reality.

"You are not alone," Obama said in both English and Hebrew, prompting a standing ovation when he declared that "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."

Hours before the speech on the second day of a Middle East swing, two rockets fired from Palestinian-controlled Gaza landed in southern Israel.

They caused no injuries or major damage, but served as a symbolic welcome to Obama's visit to the West Bank on Thursday to meet with Palestinian President Mahmoud Abbas. A hardline group claimed responsibility.

Photos: Photos: Obama tours Middle East Photos: Photos: Obama tours Middle East Obama tours Middle East – President Barack Obama visits the Hall of Names at the Yad Vashem Holocaust memorial with Israeli Prime Minister Benjamin Netanyahu, left, Israeli President Shimon Peres, center, Rabbi Yisrael Meir Lau and Avner Shalev, the museum's director, on Friday, March 22, in Jerusalem. As part of his Mideast tour, Obama wrapped up his first trip to Israel as president and arrived in Jordan, another key ally, on Friday. Hide Caption 1 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama tours Yad Vashem with Israeli leaders on March 22. The stop was part of an effort to help bolster the U.S. president's standing with Israelis by showing his understanding of the history of the Jewish state. Hide Caption 2 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama pays his respects in the Hall of Remembrance at Yad Vashem on March 22 as Marines lay a wreath on his behalf. Hide Caption 3 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama visits Yad Vashem on March 22. The president turned up the "eternal flame" of remembrance for the millions of Jewish victims of Nazi death camps. Hide Caption 4 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama and Palestinian Authority President Mahmud Abbas review the honor guard during an official arrival ceremony at the Muqata, the Palestinian Authority headquarters in the West Bank city of Ramallah, on Thursday, March 21. Obama arrived in Ramallah on his first visit as president. It's part of his sweep across the Middle East, which also includes visits to Israel and Jordan. Hide Caption 5 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama and Abbas shake hands during a joint press conference following meetings at the Muqata on March 21. Obama has asked for Israelis and Palestinians to discuss a two-state solution to the long-running conflict. Hide Caption 6 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama and Salam Fayyad, prime minister of the Palestinian Authority, greet a young dancer following a performance at the al-Bireh Youth Center in Ramallah on March 21. Hide Caption 7 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Final preparations are made before Obama's speech to Israeli students on March 21 in Jerusalem. Hide Caption 8 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Israeli Prime Minister Benjamin Netanyahu, center right, hosts Obama at a dinner on Wednesday, March 21, Jerusalem, Israel. Obama is making his first trip to Israel as president. Hide Caption 9 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Israeli President Shimon Peres welcomes Obama to his residence on Wednesday, March 20, in Jerusalem. Hide Caption 10 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama and Peres listen to children sing before meeting on March 20. Hide Caption 11 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama and Peres head into the Israeli president's house in Jerusalem on March 20. Hide Caption 12 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Netanyahu greets Obama at Israel's Ben Gurion Airport on March 20. Hide Caption 13 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – A boy waves a Palestinian flag at a camp Palestinians set up to demonstrate against Obama's visit on March 20. Activists erected the tent city outside Jerusalem in the West Bank to protest the Obama trip and continued Israeli construction of settlements in what they consider an occupied territory. Hide Caption 14 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Palestinians in Gaza City hold up placards demonstrating against Obama's visit on March 20. Hide Caption 15 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama arrives at Ben Gurion Airport near Tel Aviv, Israel, on March 20. Hide Caption 16 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama greets Israeli officials during the welcome ceremony at the airport on March 20. Israeli President Shimon Peres, second from right, and Prime Minister Benjamin Netanyahu, right, are by Obama's side. Hide Caption 17 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama shares a laugh with Israeli President Shimon Peres during the official welcoming ceremony at Ben Gurion Airport on March 20. Hide Caption 18 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Obama accompanies Israeli President Benjamin Nethanyahu at Ben Gurion Airport on March 20 in a handout image from the Government Press Office of Israel. Hide Caption 19 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – Air Force One waits at Ben Gurion Airport on March 20 after Obama's arrival. Hide Caption 20 of 21 Photos: Photos: Obama tours Middle East Obama tours Middle East – The official limousine awaiting Obama's arrival in Israel is towed after malfunctioning in Jerusalem on March 20. The limo failed to start after its driver refueled it using gasoline rather than diesel fuel, an official said. Hide Caption 21 of 21

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Israel honors Obama

In another symbolic moment, Obama received Israel's highest civilian honor -- the Presidential Medal of Distinction -- Thursday night from Israeli President Shimon Peres at a state dinner that emphasized the close ties between their countries.

Noting the similarity between the histories of Israelis and African-Americans as former slaves who endured hardship before gaining freedom in a new land, Obama said, "Our very existence, our presence here tonight, is a testament that all things are possible."

The earlier talks with Abbas served as a counterbalance to Obama's meetings the previous day with Israeli Prime Minister Benjamin Netanyahu, setting up the Jerusalem speech that addressed crucial issues of the stalled peace process as well as regional concerns such as the civil war in neighboring Syria and Iran's efforts to develop a nuclear weapon.

When Obama mentioned the name of Abbas in his speech Thursday, some boos erupted in the Jerusalem Convention Center among the audience of mostly young Israelis. He also was interrupted at one point by a protester's shouts, causing the president to joke that the heckling "made me feel at home" in reference to the caustic political climate in Washington.

Obama acknowledged the difficulty in resolving the Israeli-Palestinian impasse, but insisted that "peace is possible" and called on young Israelis to make it happen.

"Political leaders will not take risks if the people do not demand that they do," Obama said to applause, adding a familiar theme from his U.S. campaign speeches in declaring "you must create the change that you want to see."

Such a direct appeal to young Israelis was a "bold and courageous" move by Obama, according to Martin Indyk, a former U.S. ambassador to Israel who now is vice president and director of foreign policy at the Brookings Institution in Washington.

Noting that the president lowered expectations before his trip of what he could accomplish, Indyk told CNN that Obama now raised expectations "sky high" that he was going to personally work to make peace possible.

Kerry staying for more talks

Recently appointed Secretary of State John Kerry, who accompanied Obama on the trip that ends Friday in Jordan, will stay on to hold more talks with Israeli leaders, a senior administration official told reporters in a background briefing.

"We've done a lot of talking, a lot of listening over the course of the last two days, we'll do some more tomorrow, and then I think it'll be appropriate for Secretary Kerry to discuss next steps when he returns here," the official said.

Obama said in his speech that he believes "the Israeli people do want peace, and you have every right to be skeptical that it can be achieved," arguing that an end to the seemingly endless conflict is necessary and "the only path to true security" for Israel.

"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 said. "Given the frustration in the international community, Israel must reverse an undertow of isolation. And given the march of technology, 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. "

At the same time, he urged Israelis to empathize with the plight of Palestinians, using direct and harsh imagery to make his point.

"Put yourself in their shoes -- look at the world through their eyes," he said. "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 that "neither occupation nor expulsion is the answer," saying, "just as Israelis built a state in their homeland, Palestinians have a right to be a free people in their own land."

Arab states must seek normalized relations with Israel, and Palestinians must "recognize that Israel will be a Jewish state, and that Israelis have the right to insist upon their security," Obama also said.

Obama: Israeli settlements 'counterproductive'

He prompted applause from the young Israeli crowd when he criticized their government's controversial policy of building new settlements in disputed territories.

"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 said.

On a personal note, the president told how he met with young Palestinians before his speech and they differed little from his own daughters, adding that he believed Israeli parents would want Palestinian youths to succeed if they had a chance to talk to them.

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During his earlier visit to to Ramallah in the West Bank, Obama stressed the need for direct talks between Israelis and Palestinians for a two-state solution.

"The Palestinian people deserve an end to occupation and the daily indignities that come with it," he said at a news conference with Abbas, adding that Palestinians deserve "a future of hope" and a "state of their own."

Obama said he and Abbas discussed, among other things, the Israeli settlements and the issue of Palestinian prisoners. He called for shunning the old habits, arguments and formulas that have stymied the peace process and envisioned "two nations, two neighbors at peace, Israel and Palestine."

At the news conference and in his later speech, Obama said the foundation for a peace agreement exists if both sides can overcome internal and external obstacles and pressure, and can join together making the leap.

The core issues right now, Obama said, are achieving sovereignty for Palestinians and security for Israel.

"That's not to say settlements are not important," he told reporters. "It is to say that if we solve those two problems, the settlement problem will be solved. So I don't want to put the cart before the horse. I want to make sure that we are getting to the core issues and the substance."

During a news conference on Wednesday with Netanyahu, neither leader mentioned the settlements, showing the sensitivity of the issue for the conservative prime minister who just formed a new coalition government after a narrow election victory.

In Ramallah on Thursday, Obama praised the Palestinian Authority led by Abbas but said Hamas, which governs Gaza, "has the responsibility to prevent" violations of a cease-fire with Israel such as the two rockets fired in the morning.

Abbas: Peace 'is necessary'

Abbas, however, said the Israeli settlements are "more than a hurdle to peace," calling them illegal and saying it was Israel's duty to stop building them.

At the same time, Abbas said Palestinians believe peace "is necessary and inevitable," and it should not be made through violence, occupation, walls, denial of refugee rights or settlements -- reciting a list of Palestinian grievances against Israel.

He envisioned a Palestinian state based on 1967 borders with Jerusalem as capital -- a scenario unacceptable to Israel.

On Wednesday, Obama and Netanyahu offered a "good cop-bad cop" approach to Iran's nuclear ambitions.

Both countries have accused Iran of secretly working toward building a nuclear weapon, and Netanyahu made it clear Wednesday after his talks with Obama that he believes the president is equally committed to preventing a nuclear-armed Iran.

In comments to reporters Wednesday and in Thursday's speech, Obama called for more diplomacy on Iran while endorsing Israel's right to defend itself as it sees fit. He also insisted that "all options" remain open -- code for a military strike to disable the Iranian program.

That prompted a warning Thursday from Iran's supreme leader, Ayatollah Khamenei, that Tehran would destroy Tel Aviv if Israel were to attack its nuclear facilities.

Obama also warned the Syrian government that using chemical weapons against opposition forces or allowing such weapons to be obtained by terrorists would be a "game-changer" in terms of U.S. involvement in the conflict. His administration has been criticized for not providing military aid to the Syrian opposition.

On Wednesday, Obama sought to assure Netanyahu and Israelis of his commitment to their security and to strengthen what have been strained personal and working relationships between the two men.

In what Netanyahu called a key development, the leaders announced new talks on extending U.S. military assistance to Israel for another 10 years past the current agreement, which expires in 2017.