President Obama's push for 1967 borders with land swaps reverses American policy set by the previous administration, which called those borders "unrealistic".

The shift angered the Israeli government, just as Prime Minister Benjamin Netanyahu arrived in Washington for talks.

Netanyahu called the proposal "indefensible" because it would leave a vast number of Israelis in hostile territory outside of Israel's borders.

The borders of Israel have been controversial since the United States, Great Britain and other winners of World War II got together to redraw the map of Europe and the Middle East.

In 1947, the United Nations carved up the former British protectorate of Palestine into two sections and created a religious nation to protect Jews who had been targeted by European anti-Semitism and the Nazis in the Holocaust.

However, the formation of a Jewish state displaced the people who were living in the area, many of whom were Arab and Muslim.  The surrounding Arab nations immediately declared war on the new country.

The 1967 war began when Israel, fearing an invasion, launched a preemptive attack on Egypt. In quick succession, the Israelis seized Gaza and the Sinai from Egypt, the Golan Heights from Syria, and the West Bank of the Jordan River and East Jerusalem from Jordan, a monumental victory for Israel and a catastrophe to Arabs.

Over time, Israel made peace with Egypt and Jordan, and gave back some of what it captured. At the same time, however, more than 300,000 Jewish settlers created walled-off settlements in Palestinian land as a political and religious attempt to expand the land they claim God promised them.

Meanwhile, the Palestinians and their allies are pushing for a vote in the United Nations in September that would recognize a Palestinian state for the very first time.  Any formal recognition would have to pass the Security Council, where the U.S. has the power to veto it, but the vote would be a moral victory for the Palestinians.

"For the Palestinians, efforts to delegitimize Israel will end in failure. Symbolic actions to isolate Israel at the United Nations in September will not create an independent state," he said.

He also criticized a recent agreement between the Fatah and Hamas factions of the Palestinian leadership. The Hamas political wing was elected to power in 2006, but the organization is on the U.S. terrorist list because it endorses violence against civilians as a legitimate way to fight Israel.

"Palestinian leaders will not achieve peace or prosperity if Hamas insists on a path of terror and rejection. And Palestinians will never realize their independence by denying the right of Israel to exist," President Obama said, adding that America would support a "demilitarized" Palestine.

What is not acceptable, President Obama concluded, is to continue the status quo.

"That is the choice that must be made -- not simply in this conflict, but across the entire Middle East -- a choice between hate and hope; between the shackles of the past, and the promise of the future," he said.