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The Israeli government praised U.S. President Barack Obama's speech to the Muslim world Thursday, saying it shared his hopes for Middle East peace, but stressed that Israel's security interests remained paramount.

"We share President Obama's hope that the American effort heralds the opening of a new era that will bring an end to the conflict and to general Arab recognition of Israel as the nation of the Jewish people that lives in security and peace in the Middle East," an official statement said after Obama's address in Cairo.

The statement made no mention of settlements, which Obama said should not be expanded, nor Palestinian statehood.

At odds with Obama, Prime Minister Benjamin Netanyahu has said that construction would continue in existing settlements in the West Bank and he has not publicly endorsed a two-state solution to the Israeli-Palestinian conflict.

Netanyahu's bureau also released a statement Thursday affirming Israel's desire to pursue peace, but in accordance with its national interests.

"Israel is committed to peace and will do all it can to expand the circle of peace while considering its national interests, first and foremost being security," the statement said.

Later Thursday, Defense Minster Ehud Barak echoed the comments in welcoming Obama's address and reiterated Israel's desire to pursue peace talks.

"In the speech there is reinforcement and encouragement for moderate elements and supporters of peace; there is also outspoken criticism of terrorism and [its] origins of violence and extremism that are threatening the stability of our region and the entire world," said Barak in a statement.

He added that Israel lauded Obama's commitment to its existence and security, and his calls for the country's integration in Middle East.

"Israel is committed to advancing negotiations with the Palestinians, based on agreements that have previously been committed to," he said. "We hope that the Arab world will heed the calls of President Obama to put an end to terror and violence and forge peaceful relations with Israel."

Earlier in the day, Daniel Hershkowitz, chairman of the rightist Habayit Hayehudi party, said that Obama ignored the fact that the Palestinians have yet to renounce terror.

"The Israeli government is not an American surplus," he said during a tour of Hebron. "Our relations are based on friendship, not domination, and we've got to draw a line when it comes to natural growth in the settlements."

Kadima MK Ze'ev Boim said that "Obama's speech is yet another proof that Netanyahu miscalculated the foreign policy of the new American administration."

"The president's take on the Palestinian question is similar to Kadima's, and it's a shame that narrow political considerations prevented the Israeli government from espousing the two-state solution which is the only one that can ensure a Jewish and democratic existence in Israel."

Kadima MK Yohanan Plesner said that "Israel could benefit from the America's improved image in the Arab world and leverage it to forge a regional coalition, together with the moderate Arab countries, to counter Iran, but instead the government is engaged in marginal debates on outposts."

Minority Affairs Minister Avishay Braverman (Labor) said that Obama was right that the world's common enemy is extremism and that finding a common strategy is the way to defeat it.

"We should adopt a similar strategy in Jewish-Arab and religious-secular relations, as well as vis-à-vis the Palestinians," Braverman said. "We are committed to the two-state solution."

Meretz leader Haim Oron, for his part, welcomed Obama's speech. He said it was filled with inspiration, optimism and vision.

"The speech is the feat of enlightenment," he said.

An Israeli settler spokeswoman dismissed Obama's speech in Cairo as naive and out of touch with reality.

Aliza Herbst, a resident of the Ofra settlement, said modern history has shown that the Muslim world is at war with the West. She added that Obama's vision of peace sounded nice but was not realistic.

Peres: Obama visit is a rare opportunity for peace

President Shimon Peres praised Obama's Mideast speech as a historic opportunity in a guest column in The Times.

Obama's journey to Saudi Arabia and Egypt, Peres wrote, "reflects both the need for an historic change in the Middle East and a unique chance of achieving it."

Peres said that the international options that are being discussed - the Saudi peace initiative as well as the so-called "57-state solution" proposed by King Abdullah of Jordan - could create a favorable momentum that would lead to the resolution of the Israeli-Arab conflict.

He called on Arab countries to engage in bilateral negotiations with Israel while espousing a regional process of normalization.

"Support from the entire Arab world will provide legitimacy for the Palestinian Authority as it approaches the difficult task of making and then implementing historic compromises. At the same time it may reassure Israel that the painful concessions it will make will be rewarded by a broader, more enduring comprehensive peace across the region," Peres wrote.

Peres said Obama's fervent commitment to changing American foreign policy in the Middle East is a rare opportunity.

"The regional leaders have to treat these options seriously - not as another photo-opportunity but in a substantive discussion aimed at opening the door towards comprehensive peace and regional economic development," he concluded.