WASHINGTON - (AP) - Exasperated by stalled Middle East peace talksin a season of tumultuous change, President Barack Obama joltedclose ally Israel Thursday by embracing the Palestinians' terms fordrawing the borders of their new nation next door. Prime MinisterBenjamin Netanyahu of Israel rejected the idea as "indefensible"on the eve of his vital White House meeting with Obama.

The U.S. president said that an independent Palestine should bebased on 1967 borders - before the Six Day War in which Israeloccupied East Jerusalem, the West Bank and Gaza - as adjusted bypossible land swaps agreed upon by both sides. He said Israel cannever live in true peace as a Jewish state if it insists on"permanent occupation."

Obama's effort to salvage a peace effort that is in shambles wasa major change in tactics for a president running out of patienceand reasons to be subtle. The Israeli-Palestinian stalemate hasremained immune to the popular uprisings and historic drives forfreedom that have swept much of the region.

He pushed both sides to accept his starting point - borders forPalestine, security for Israel - and get back to solving a deadlock"that has grinded on and on and on."

In a sweeping review of recent uprisings and authoritariancrackdowns across the Arab world, Obama was also unsparing in hiswords for the Palestinian leadership, repudiating its pursuit ofunilateral statehood through the United Nations and questioning itsalliance with a Hamas faction bent on Israel's destruction.

"At a time when the people of the Middle East and North Africaare casting off the burdens of the past, the drive for a lastingpeace that ends the conflict and resolves all claims is more urgentthan ever," Obama said, playing the rapid change of the past sixmonths against a standoff that has stymied the Mideast for decades.

More broadly, before a polite diplomatic audience at the StateDepartment, Obama sought to clarify the U.S. role toward a part ofthe world undergoing a transformation. He implored the Americanpeople to see that it is worth devoting U.S. might and money tohelp stabilize a dangerous region and help people fighting forfreedom.

"There must be no doubt that the United States of Americawelcomes change that advances self-determination and opportunity,"the president said. "Yes, there will be perils that accompany thismoment of promise. But after decades of accepting the world as itis in the region, we have a chance to pursue the world as it shouldbe."

In a cool statement released late Thursday in Jerusalem,Netanyahu rejected a full withdrawal from the West Bank, saying the1967 lines would leave major Jewish settlements outside Israel. Itwas unclear whether Obama's stand would be enough to persuade thePalestinians to drop their push for U.N. recognition of theirstatehood.