Obama set up an open conflict with Netanyahu in his speech on the "Arab Spring" revolts

US President Barack Obama and Israeli Prime Minister Benjamin Netanyahu were on a collision course over the shape of an elusive peace with the Palestinians ahead of Oval Office talks Friday.
  
Obama set up an open conflict with Netanyahu on Thursday in his long-awaited speech on the "Arab Spring" revolts, by saying that territorial lines in place before the 1967 Arab-Israeli war should be the basis for a peace deal.
  
Netanyahu has long opposed such a formulation, and his office issued a blunt statement saying “such a scheme would leave it "indefensible" and would isolate major Israeli settlements in the West Bank.”

"The borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states," Obama said in the speech at the State Department.
  
Netanyahu's statement, however, urged Obama to commit to assurances laid out in 2004 by then-president George W. Bush, who said "new realities on the ground," meant a "full and complete return" to 1967 borders was "unrealistic."
  
"Prime Minister Netanyahu expects to hear a reaffirmation from President Obama of US commitments made to Israel in 2004, which were overwhelmingly supported by both houses of Congress," Netanyahu's statement said.
  
Netanyahu appeared to be playing a political card ahead of Obama's 2012 reelection race, as top Republican White House contenders slammed the president's speech as a betrayal of “Israel”.
  
The New York Times reported late Thursday that Netanyahu had called US Secretary of State Hillary Clinton prior to the speech to angrily demand that the language on the 1967 borders be dropped.

Quoting the NYT, Israeli daily Ynet said the cold relationship between Obama and Netanyahu seems to have noted a new drop in temperature following Obama's speech, adding that tensions between Washington and Tel Aviv are at an all-time high.

Obama has reportedly told close aides and allies that he does not believe Netanyahu will ever be willing to make the kind of big concessions that will lead to a “peace deal” between Israel and the Palestinians.

Obama was due to hold closed door talks with Netanyahu at the White House before they make statements to the press and then have a working lunch.

Commentators across the political spectrum said Israeli officials were caught off-guard by the content of Obama's address.

"The speech was brought down on Netanyahu's head like a sledgehammer," wrote commentator Ben Caspit in Maariv daily, calling it "an ambush planned in advance" by Washington.

He lamented that Israeli officials were not given details of the speech ahead of time, interpreting it as a sign of cool relations with Washington.

Writing in the left-leaning Haaretz, commentator Yossi Verter also dubbed the address "Obama's revenge." "This is what American displeasure looks like, in retribution for two years of diplomatic inaction," he wrote.