THE MIDEAST SPEECH: Weighing in for the first time on the Fatah-Hamas deal, President Obama says the agreement "raises profound and legitimate questions for Israel."

"How can one negotiate with a party that has shown itself unwilling to recognize your right to exist?" Obama asks. "In the weeks and months to come, Palestinian leaders will have to provide a credible answer to that question." (12:55 p.m.)

Obama wraps up his speech, on an optimistic note. He says the push for peace -- a choice between "hate and hope," he says -- is evident not just between Israelis and Palestinians but across the entire "region."

"For all the challenges that lie ahead, we see many reasons to be hopeful," Obama says. He names Egyptian, Syrian and Libyan protesters.

And he takes a local angle: "For the American people, the scenes of upheaval in the region may be unsettling, but the forces driving it are not unfamiliar. Our own nation was founded through a rebellion against an empire. Our people fought a painful civil war that extended freedom and dignity to those who were enslaved. And I would not be standing here today unless past generations turned to the moral force of nonviolence as a way to perfect our union." (12:58 p.m.)

The last paragraph: "Those words must guide our response to the change that is transforming the Middle East and North Africa, words which tell us that repression will fail, that tyrants will fall, that every man and woman is endowed with certain inalienable rights. It will not be easy. There's no straight line to progress. Hardship always accompanies a season of hope. But the United States of America was founded on the belief that people should govern themselves. Now, we cannot hesitate to stand squarely on the side of those who are reaching for their rights, knowing that their success will bring about a world that is more peaceful, more stable, and more just."

Obama thanks his audience and walks off as the State Department crowd claps. (12:59 p.m.)

Read on, after the jump ...
 
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FROM THE TOP -- At 12:10 p.m., a half hour after President Obama was set to speak about the Middle East, Secretary of State Hillary Clinton walks out to give an intro. She notes that administration officials and Sen. John Kerry are there.

She tells Obama that State Department workers "translate your vision" into results. "America’s leadership is more essential than ever," she says. (12:11 p.m.)

Clinton says change "continues to sweep" across the Middle East. She says it's "fitting" that Obama will speak at the State Department. (12:13 p.m.)

President Obama takes the stage, thanking Secretary of State Hillary Clinton for the intro. He says she's approaching 1 million frequent flier miles.

Getting to his remarks, Obama talks about the Middle East and North Africa. "Two leaders have stepped aside," he says. "More may follow. And though these countries may be a great distance from our shores, we know that our own future is bound to this region." (12:16 p.m.)

Just a few minutes in, Obama mentions the killing of Osama bin Laden. "After years of war against Al Qaeda and its affiliates, we have dealt Al Qaeda a huge blow, by killing its leader, Osama bin Laden," he says. For perhaps the first time in public, nobody applauds as Obama refers to the killing of bin Laden.

"Bin Laden and his murderous vision once had adherence," he says. "But even before his death, Al Qaeda was losing its struggle for relevance." (12:18 p.m.)

President Obama recalls the vendor who lit himself on fire in Tunisia, sparking the protests that would sweep throughout North African and the Middle East.

He says that in many countries, "power has been concentrated in the hands of a few." To countries rich in oil and gas, he says that while their resources have "led to pockets of prosperity," he cautions that "no development strategy can be based solely on what comes out of the ground." (12:21 p.m.)

Obama praises the use of technology to show the uprisings to the world. But he laments that in a "24-hour news cycle," which he often derides, "people expect the transformation to be resolved in a matter of weeks."

"But it will be years before this story reaches its end," he says. (12:24 p.m.)

President Obama asks: What will the United States' role be as the Middle East changes? In his answer, he makes a passing reference to peace between Israelis and Palestinians: "Standing up for Israel’s security and pursuing Arab-Israeli peace."

More broadly, Obama says the "status quo," another favorite term of his, is unsustainable. "A failure to change our approach threatens a deepening spiral of division between the United States and the Arab world," he says. "And that's why, two years ago in Cairo, I began to broaden our engagement based on mutual interests and mutual respect."

Obama says that "it's not America" that spurred protests in North Africa, but rather the people who live there. "We can, and we will, speak out for a set of core principles," he says. (12:27 p.m.)

The first applause at the State Department is heard as President Obama speaks out against violence brought on by Middle Eastern governments on their people.

Obama then speaks to Tunisia and Egypt: "Both nations can set a strong example through free and fair elections." He notes that Tunisia saw the first wave of protests, and that Egypt is a "longstanding partner."

Then, on Libya, Obama says the name of Muammar Qadhafi and reminds his audience that the dictator sought to hunt down Libyans "like rats." He says that in Libya, "we had a mandate for action and heard the Libyan people's call for help."

"Now, time is working against Qadhafi," he says. "When Qadhafi inevitably leaves or is forced from power, decades of provocation will come to an end."

On Syria: He says the regime "has chosen the path of murder" and arresting its citizens. (12:31 p.m.)

Noting that he sanctioned Syria's president yesterday, Obama says the Syrian government "must stop shooting demonstrators." (12:32 p.m.)

About 15 minutes into President Obama's speech, the White House released the text of it, as prepared for delivery. Obama, likening Syria's decisions to Iran's, recalls the protests in Tehran when Mahmoud Ahmadinejad won in a disputed election.

"We will continue to insist that the Iranian people deserve their universal rights, and a government that does not smother their aspirations," he says. "But if America is to be credible, we must acknowledge that our friends in the region have not all reacted to the demands for change consistent with the principles that I have outlined today." (12:36 p.m.)

Obama addresses Bahrain: "The only way forward is for the government and opposition to engage in a dialogue, and you can’t have a real dialogue when parts of the peaceful opposition are in jail." More applause.

"Indeed, one of the broader lessons to be drawn from this period is that sectarian divides need not lead to conflict," Obama says. "Iraq is poised to play a key role in the region if it continues its peaceful progress. As they do, we will be proud to stand with them as a steadfast partner." (12:37 p.m.)

After going through countries in the Middle East, President Obama returns to speaking more broadly. "America must use all our influence to encourage reform in the region," he says.

Obama mentions the freedom of the press -- he says that must be given to either a "big news organization" or lone bloggers.

"What we will oppose is an attempt by any group to restrict the rights of others, and to hold power through coercion – not consent," he says. "Because democracy depends not only on elections, but also strong and accountable institutions, and respect for the rights of minorities." (12:39 p.m.)

President Obama stresses the freedom of religion. He mentions Muslims and Christians, and he cites the "three world religions."

"Intolerance can lead only to suffering and stagnation," he says.

He then moves on to women's rights. "History shows that countries are more prosperous and peaceful when women are empowered," he says. (12:40 p.m.)

More clapping from the State Department crowd as Obama says that the Middle East "will never reach its potential when more than half its population is prevented from achieving their potential." (12:41 p.m.)

President Obama says "it's not coincidence" that a leader in the Cairo protests was a Google executive. "That energy now needs to be channeled, in country after country, so that economic growth can solidify the accomplishments of the street," he says.

On to economics. On Tunisia and Egypt, Obama says the World Bank and the IMF will have a plan for stabilizing their economies. He talks about the news announced last night: $1 billion in debt relief for Egypt, and $1 billion in borrowing. And he says he's "working with Congress" to establish "enterprise funds" for investments. (12:45 p.m.)

With the economics over, President Obama talks about what the White House wouldn't address specifically before today: the peace process.

"For decades, the conflict between Israelis and Arabs has cast a shadow over the region," he says. "For Israelis, it has meant living with the fear that their children could get blown up on a bus or by rockets fired at their homes, as well as the pain of knowing that other children in the region are taught to hate them."

"For Palestinians, it has meant suffering the humiliation of occupation, and never living in a nation of their own," he continues. "Moreover, this conflict has come with a larger cost to the Middle East, as it impedes partnerships that could bring greater security and prosperity and empowerment to ordinary people." (12:47 p.m.)

Obama says he's worked "for over two years" to end the conflict, but to no avail. "Israeli settlement activity continues," he says. "Palestinians have walked away from talks."

But he says he disagrees with skeptics. "At a time when the people of the Middle East and North Africa are casting off the burdens of the past, the drive for a lasting peace that ends the conflict and resolves all claims is more urgent than ever," he says. (12:49 p.m.)

President Obama says Palestinian efforts to "delegitimize" won't work. And he says of Israel:"Our friendship is rooted deeply in a shared history and shared values. Our commitment to Israel’s security is unshakable. And we will stand against attempts to single it out for criticism in international forums."

"But precisely because of our friendship, it is important that we tell the truth: The status quo is unsustainable, and Israel too must act boldly to advance a lasting peace," he says. (12:50 p.m.)

President Obama says the world is "tired of an endless process that never produces an outcome" among Israelis and Palestinians. He says, "The dream of a Jewish and democratic state cannot be fulfilled with permanent occupation."

While it's "up to Israelis and Palestinians to take action," he says, "America and the international community can ... state frankly what everyone knows: A lasting peace will involve two states for two peoples."

Obama lays out his terms: "We believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps, so that secure and recognized borders are established for both states. The Palestinian people must have the right to govern themselves, and reach their full potential, in a sovereign and contiguous state." (12:52 p.m.)

On security, Obama says both sides have "the right" to defend themselves. He adds: "The full and phased withdrawal of Israeli military forces should be coordinated with the assumption of Palestinian security responsibility in a sovereign, non-militarized state."

Acknowledging sticking points -- "the future of Jerusalem, and the fate of Palestinian refugees" -- Obama says that "moving forward now on the basis of territory and security provides a foundation to resolve those two issues in a way that is just and fair." (12:54 p.m.)