(Photo via Creative Commons)

Netanyahu responded harshly to President Obama's speech about the Middle East last week, where Obama called for Israel and Palestine to return to their borders that existed in 1967, before the Six Day War. In Tuesday's speech, however, the Prime Minister seemed more willing to compromise.

From The UK Telegraph:

"I am willing to make painful compromises to achieve this historical peace," the Likud leader said in comments that will enrage some right-wing members of his coalition government. "As the leader of Israel, it is my responsibility."

While "the status of the settlements will be decided only in negotiations", he said, Israelis had "to be honest" about the nature of any final settlement.

"So I'm saying today something that should be said publicly by all those who are serious about peace. In any real peace agreement, in any peace agreement that ends the conflict, some settlements will end up beyond Israel's borders."

Most of Netanyahu's concessions were related to the West Bank, but he insisted that Jerusalem must not be divided between Israel and Palestine. Many Palestinians want East Jerusalem to be their new capital.

The Israeli Prime Minister was also insistent on a more open mind on the Palestinian side going into further U.S.-moderated talks.

From Reuters:

[His expectations] included Palestinian recognition of Israel as the homeland of the Jewish people and the scrapping of Western-backed Palestinian President Mahmoud Abbas' unity accord with the Islamist movement Hamas.

"Tear up your pact with Hamas. Sit down and negotiate. Make peace with the Jewish state," Netanyahu said.

President Obama, who was visiting London, had no direct response Tuesday. An Obama aide said Netanyahu "reaffirmed the strength of the U.S.-Israeli relationship."

Palestinian reaction to Netanyahu's speech was lukewarm, and top officials said it did nothing but delay any peace in the future.

From the AFP:

Officials in the West Bank city of Ramallah said the speech offered nothing new and only added more "obstacles" on the path to peace, while Gaza's Islamist Hamas rulers said Netanyahu had laid down conditions which were "impossible" for the Palestinians to meet.

"There is nothing new in Netanyahu's speech except that he is adding obstacles on the road towards a genuine, serious, lasting and comprehensive peace," said Nabil Abu Rudeina, spokesman for Palestinian president Mahmud Abbas.

Peace, he said, required international benchmarks such as the recognition of the borders of 1967 as the basis for any peace negotiations -- an idea which has been repeatedly rejected by Netanyahu in a series of addresses over the past four days.

Jibril Rajoub, a senior official of Abbas's Fatah movement, told AFP the address revealed the "true face" of Netanyahu and his ruling right-wing Likud party, which he described as "a danger to regional stability and international peace."

Palestinian officials also said they still plan to take their case to the United Nations in September, in search of recognized statehood, peace talks continuing or not.