Addressing Obama's demand to halt all construction, he added, "The settlers are neither the enemies of the people nor the enemies of peace. Rather, they are an integral part of our people, a principled, pioneering and Zionist public."
He also took issue with a passage from Obama's Cairo speech that associated Israel's creation directly with the Holocaust. "Our right to form our sovereign state here in the land of Israel stems from one simple fact," Netanyahu said. "The land of Israel is the birthplace of the Jewish people."
But he added that Israel must recognize that millions of Palestinians live in the heart of the West Bank, and that continued control over them is undesirable.
"In my vision of peace, in this small land of ours, two peoples live side by side," he said. "Each will have its own flag, its own national anthem, its own government. Neither will threaten the security or survival of the other."
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boudreaux@latimes.com
Sobelman is a special correspondent. Special correspondent Maher Abukhater in Ramallah, West Bank, contributed to this report.
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Middle East milestones
Israel's declaration of statehood in May 1948 led to decades of conflict with the Palestinians over the land. In the 1990s, the goal of an independent Palestinian state alongside Israel became the basis for peace negotiations.
Here is how the conflict over statehood evolved:
November 1947: The United Nations approves a British plan to partition Palestine into Arab and Jewish states. The Arabs reject it.
May 1948: Israel declares its independence. An estimated 700,000 Palestinians are displaced.
June 1967: The 1967 Middle East War ends with Israel's capture of the West Bank and East Jerusalem from Jordan, the Sinai peninsula and Gaza Strip from Egypt, and the Golan Heights from Syria.
December 1988: Palestinian leader Yasser Arafat accepts the goal of an independent Palestinian state in the West Bank and Gaza Strip alongside Israel.
September 1993: As part of the Oslo peace accords, Arafat's Palestine Liberation Organization formally recognizes Israel's right to exist, laying the groundwork for talks on a Palestinian state.
July 2000: Prime Minister Ehud Barak makes Israel's first offer of statehood to the Palestinians in talks brokered by President Clinton. Arafat rejects the terms.
Source: Times reporting
