Here, Obama briefly acknowledges his controversial statement about starting talks based on the de facto border that existed before the 1967 Six-Day War — a policy announcement that infuriated the Israeli government — but he does not restate his position. In diplomatic terms, that is significant because it suggests he is no longer wedded to that formula.
"Palestinians must recognize that Israel will be a Jewish state and that Israelis have the right to insist upon their security."
While Obama has routinely referred to Israel as a "Jewish state" — The Fact Checker once traced the history of this diplomatic term of art — here the president explicitly accepts Israel's demand that the Palestinians must acknowledge this fact as part of peace negotiations. Palestinian officials have long rejected this proposal, because they believe it eliminates any possibility that at least some Palestinian refugees might return to Israel.
"Israelis must recognize that continued settlement activity is counterproductive to the cause of peace."
This is quite possibly the weakest statement on Israeli settlements that Obama has made in a presidential speech. It is a far cry from his phrasing in the 2009 Cairo speech: "We continue to emphasize that America does not accept the legitimacy of continued Israeli settlements."