UNITED NATIONS (Reuters) - President Barack Obama on Wednesday rejected Palestinian plans to seek U.N. blessing for statehood as he tried to avert a looming crisis that could erode Washington's global standing and further isolate its close allyIsrael.
Obama's last-ditch diplomatic effort won praise from Israel, which will rely on Washington to block the Palestinian U.N. membership bid, but drew a bitter response from the Palestinians, who said it violated the spirit of the "Arab spring" revolts and showed no sign of backing down.
Addressing the U.N. General Assembly, Obama -- whose earlier peace efforts accomplished little -- insisted that Middle East peace "will not come through statements and resolutions" at the world body and put the onus on the two sides to break a yearlong impasse and return to peace talks.
"There is no short cut to the end of a conflict that has endured for decades," Obama told an annual gathering of world leaders in New York, though he offered no new prescriptions for relaunching negotiations.
Grappling with economic woes and low poll numbers at home and growing doubts about his leadership abroad, Obama is wading into Middle East diplomacy at a critical juncture for his presidency and America's credibility around the globe.
He faced the daunting test of Washington's already diminished influence in the region in his bid to dissuade the Palestinians from going ahead with a push for statehood in the U.N. Security Council on Friday in defiance of Israeli objections and a U.S. veto threat.
Obama attempted to strike a delicate balance as he took the U.N. podium. He sought to reassure Palestinians he was not abandoning his pledge to help them end Israeli occupation and achieve eventual statehood while also placating any Israeli concerns about Washington's commitment to their security.
Members of the General Assembly, where pro-Palestinian sentiment is high and Israel has often felt ostracized, listened politely but without enthusiasm to Obama's 36-minute speech.
There was widespread skepticism on Obama's chances of success in Middle East peace diplomacy and he may only be able to contain the damage from the U.N. statehood drive.
The Obama administration says that only direct peace talks can lead to peace with the Palestinians, who in turn say almost two decades of fruitless negotiation has left them no choice but to turn to the world body.
NETANYAHU ECHOES OBAMA
Obama followed his speech with a round of talks with Israeli Prime Minister Benjamin Netanyahu, who echoed the president's assertion that negotiations were the only path to a peace deal but offered no new ideas on how to restart talks.
Netanyahu, who has a strained relationship with Obama, predicted the Palestinians' U.N. bid "will not succeed."
Obama was considered unlikely to lean too hard on the hawkish Israeli leader for concessions to the Palestinians, mindful he cannot afford to alienate Israel's broad base of support among American voters as he seeks re-election in 2012.
Ahead of Obama's talks with Palestinian President Mahmoud Abbas, a key aide,Yasser Abed Rabbo, voiced disappointment over Obama's speech.
"There is a gap between praising the struggle of Arab peoples for the sake of freedom and between an abstract call for negotiations between us and the Israelis ... Freedom should cover the (whole) region." ,"
Signaling European patience was also wearing thin after years of halting U.S.-led diplomacy, French President Nicolas Sarkozy proposed an ambitious timetable to resume peace talks within a month and achieve a definitive deal in a year.
The White House had no immediate comment on Sarkozy's initiative.
The drama over the Palestinian U.N. bid is playing out as U.S., Israeli and Palestinian leaders all struggle with the fallout from Arab uprisings that are raising new political tensions across the Middle East.
It also comes as Israel finds itself more isolated than it has been in decades and confronts Washington with the risk that, by again shielding its close ally, the United States will inflame Arab distrust when Obama's outreach to the Muslim world is already faltering.
Taking note of deep frustrations over lack of progress on the Israeli-Palestinian front, he said: "Israelis must know that any agreement provides assurances for their security. Palestinians deserve to know the territorial basis of their state."
With the looming showdown overshadowing the rest of Obama's U.N. agenda, failure to defuse the situation will not only mark a diplomatic debacle for Obama but also serve as a stark sign of the new limits of American clout in the Middle East.
Obama also used his wide-ranging speech to tout his support for democratic change sweeping the Arab world, laud the U.S. killing of Osama bin Laden, urge further sanctions against Syrian leader Bashar al-Assad and call on Iran and North Korea to meet their nuclear obligations -- twin standoffs that have eluded his efforts at resolution.
Senior diplomats from the United States, Russia, the European Union and the United Nations -- the "Quartet" of Middle East mediators -- were scrambling for a compromise but with little sign of a breakthrough.
The speech offered no new prescriptions for Israeli-Palestinian peace from Obama.
But he made clear that he was not backing away from his speech in May when he angered Netanyahu -- and sparked an Oval Office clash -- by declaring that negotiations for any final peace deal should be based on Israel's pre-war 1967 borders plus mutually-agreed land swaps.
(Additional reporting by Arshad Mohammed, Andrew Quinn, Lou Charbonneau, Alistair Lyon; Editing by Doina Chiacu)
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