"Peace will not come through statements and resolutions at the U.N. - if it were that easy, it would have been accomplished by now," the president said. "Ultimately, it is Israelis and Palestinians who must live side by side. Ultimately, it is Israelis and Palestinians - not us - who must reach agreement on the issues that divide them."
But in the speech before the U.N. General Assembly, Obama stopped short of directly calling on the Palestinians to drop their plan to seek statehood recognition from the U.N. Security Council.
U.S. officials were working furiously behind the scenes to persuade the Palestinians. With the limits of U.S. influence on the moribund peace process never more clear, Obama had no new demands for the Israelis, either, beyond saying that both sides deserved their own state and security.
"Peace depends upon compromise among peoples who must live together long after our speeches are over, and our votes have been counted," Obama said.
"That is the path to a Palestinian state."
The push by the Palestinians threatens to isolate Israel even further, and divide the U.S. from allies in the Arab world who support the statehood resolution. Obama was to follow up his speech with separate meetings with Israeli and Palestinian leaders as he seeks to coax both parties back to direct peace talks.
At the same time, U.S. officials are conceding that they probably cannot prevent Palestinian leader Mahmoud Abbas from moving forward with a request to the U.N. Security Council for full Palestinian membership.
The Obama administration has pledged to veto any Palestinian statehood bid, arguing that only direct peace negotiations, not a U.N. vote, would allow the Palestinians to achieve the benefits of statehood.
It's a much different outcome than Obama hoped for a year ago, when he wanted to herald by now a negotiated agreement between the Israelis and the Palestinians. U.S. persuasion and pressure failed to achieve that result and now peace again looks distant. Obama put the blame for that on Israel and the Palestinians.
"Despite extensive efforts by America and others, the parties have not bridged their differences," Obama said.