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“If the only way to begin [negotiations] is to get everything right at the outset, we’re never going to get to the broader issue — to provide sovereignty and dignity for the Palestinian people and security for Israel,” Mr. Obama said.

His remark angered Palestinian President Mahmoud Abbas, who said that settlement building was clearly illegal.

“We are not claiming anything that is illegitimate or illegal,” he said in Arabic. “Therefore, we demand that the Israeli government first stop its activity in order to discuss all our issues and their concerns.”

This position has meant that for years there have been no negotiations while tens of thousands of settlement homes have been built.

Mr. Obama’s hosts had wanted him to deliver his address in Jerusalem from the podium of the Knesset, the Israeli legislature, but Mr. Obama insisted on a nonpolitical venue and a young, nonpartisan audience whom he called “the next generation” that will decide the country’s direction.

“As a politician, I can tell you that political leaders never take risks if the people do not push them,” he said, calling on his audience to press the country’s leadership.

Only through peace, he told the students, could true and lasting security be achieved. “You have the opportunity to be the generation that permanently secures the Zionist dream.”

Attempting to assuage concerns about restarting talks with Palestinian leaders, Mr. Obama said that Israel is by far the strongest country in the region and it has the backing of the most powerful country in the world — the United States.

“America will do what it must to prevent a nuclear-armed Iran,” he said.