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President Shimon Peres, relating a conversation he had with Barack Obama, said yesterday that when Obama asked him what he could do for Israel, Peres replied, "Be a great president of the United States."

Speaking to the United Jewish Communities General Assembly in Jerusalem, Peres dismissed fears that traditionally strong U.S. Israeli-relations would change under the Obama administration.

"People say: Will he be nice to Israel or not? I am not an expert, but I want to tell you that I don't have the slightest doubt that the relations between the United States and Israel will remain warm, profound, responsible," Peres said, to prolonged cheers.

"When Obama asked me what can he do for Israel, I told him: Be a great president of the United States. Because a president of the United States, by definition, has to fight terror, has to fight pollution, has to fight poverty, has to fight wars."

The president said no one in the world except the United States was leading that struggle. "America is not the policeman of the world. America is the country that tells other people to remain free," he said.

There was no reason to believe that Israel and the United States should be in conflict, he added. "What the United States wants, we want as well. They want peace in the Middle East - so do we. There is no [other] candidate to make peace in Middle East but Israel."

Peres, noting that the United States would like to see a democratic Middle East, remarked, "I don't know if it's that simple, because there are some Muslims who think that democracy is another religion, not a different system. They think: I am a Muslim, why should I be a democrat?'

"But when it comes to democracy, Israel has shown the strength of democracy even when you are outnumbered and you are outgunned and you are under pressure. We didn't do this for America, we did it for ourselves, as America, too, does it for itself."

Peres recalled that when Obama visited Israel during the campaign, "when he asked for some advice, I told him: I shall talk from a young man to a young man. Though, I am a young man senior and you are a young man junior, but I want to tell you that if someone will come to you and say, 'The future belongs to the young men,' if you hear this old phrase said, throw him out. Because the present belongs to the young men. The future belongs to people like myself. We have time for the future. The young people don't have much time."

Peres also told delegates to the General Assembly that one reason Israel should make peace with the Palestinians and end the occupation was to show the Sunnis that they need not be dominated by Iran and submit to a fanatic Shi'ite minority.

He said he believed there was a chance for peace, one that would probably not include Iran, Hezbollah or Hamas, but which might include most Arab and Muslim countries.

He added that this would require courageous decisions and concessions.

"Some of the Arab intellectuals have told me: 'You are worried about Iran. We are worried about Iran. More than you. You can stand your ground. But Iran is the greatest danger for us - not because of their bombs or their long-range missiles, but because of their ambitions.'

"This is the only country in the world today that has imperial ambitions. Actually, they want to run the Middle East," Peres said.

Peres went on to say that the Middle East's Sunni majority is closely watching what Israel does, to see if Israel "can conclude an agreement with the Palestinians on an accepted basis - which is two states for the two peoples: none of us wants to have one state and two states warring with each other, we've had enough of it."

He said that although some say negotiations are moving slowly, "we have concluded some important parts."

"When you negotiate with the other side, you begin to negotiate with your own people. They say: Why do you offer so much? Why do you give away so much? Why are you so soft? And you can't convince anybody that you're not soft."

"Peace is a little bit like marriage. You have to close your eyes and accept what is possible to accept," Peres said, to laughter and applause. "And the nation that is like a good mother telling a girl she could have a better boy, and a boy that he could have a better girl. So the mothers and the fathers themselves compromise."