President Donald Trump directly called on Israeli Prime Minister Benjamin Netanyahu to curtail Jewish home building in the West Bank, and backed away from long-standing US support for the idea of a sovereign Palestinian state alongside Israel.
The new US president confidently predicted that he can help broker an end to the decades-long Israeli-Palestinian conflict, and started the negotiations immediately.
"I'd like to see you hold back on settlements for a little bit," Trump said as he welcomed Netanyahu to the White House for their first meeting since the Republican president took office.
"We'll work something out," he added.
In his most extensive remarks as president about the chances for peace in the Middle East, Trump said he "could live with" either a separate Palestinian state or a unitary state as a peaceful outcome.
"I want the one that both parties want," he said.
That is a significant departure from past US policy supporting the goal of an independent Palestine. Both Republican and Democratic presidents have backed a future Palestine on West Bank land that is now mostly under Israeli military occupation.
For years, US officials have endorsed "two states for two peoples, living side by side in peace and security" as a matter of course.
"I would like to see a deal be made. I think a deal will be made," Trump said.
"I know that every president would like to. Most of them have not started until late, because they never thought it was possible, and it wasn't possible because they didn't do it."
Trump gave no timetable for the larger effort but suggested it will come soon. He flattered Netanyahu but also pressured him.
"Bibi and I have known each other a long time," Trump continued, using the Israeli leader's nickname. "Smart man. Great negotiator. And I think we're going to make a deal. It might be a bigger and better deal than people in this room even understand, so that's a possibility."
Then, with his body turned toward Netanyahu, Trump put him on the spot.
"So let's see what we do," Trump invited.
"Let's try," Netanyahu replied.
He did not look pleased, but Trump laughed it off.
"That doesn't sound too optimistic," Trump said. "Good negotiator."
At that, Netanyahu brightened.
"That's the art of the deal," he said to laughter.
Both leaders seemed to indicate that what was once an accepted formula of two sovereign states is now open to a broader scope of ideas about what could bring about a peace deal. They each pointed to a regional approach that would involve a broad spectrum of Middle Eastern states and by default, eventually, the Palestinians.
"The Israelis are gonna have to show some flexibility, which is hard, it's hard to do," Trump said.
"They're gonna have to show the fact that they really want to make a deal. I think our new concept that we've been discussing actually for a while is something that allows them to show more flexibility than they have in the past, because we have a lot bigger canvas to play with."
Netanyahu said that first the Palestinians must recognise Israel as the Jewish state and stop calling for its destruction. He insisted that Israel to retain security of the western banks of the Jordan River, a sliver of land that would allow Israel to encircle any future Palestinian state.
"I want to deal with substance, not labels. The world is fixated on labels and not on the substance," Netanyahu said in response to a question about the future of two states.
"But if anyone believes that I, as prime minister of Israel, responsible for the security of my country, would blindly walk into a Palestinian terrorist state that seeks the destruction of my country, they're gravely mistaken."
Netanyahu's caution stems partly from his scepticism about a peace deal and partly from political pressure at home.
The Israeli political far right, elements of which Netanyahu needs as part of his governing coalition, reportedly urged him to make no concessions in Washington and not to even utter the words "two-state solution."
Although Trump did not reject the two-state idea, many Palestinians would view any US shift away from it as a virtual abandonment of a principle also adopted by the European Union and the United Nations. The United States remains a part of the international negotiating body known as the Quartet, which is pledged to two states achieved through negotiations.
"We believe undermining the two-state solution is not a joke," said Saeb Erekat, a top Palestinian official and former peace negotiator. "It's a disaster and a tragedy for Israelis and Palestinians."
Erekat, a veteran of seven US-brokered peace talks with Israel, said the Palestinian Authority remains committed to the two-state idea. He said it was the Israeli leaders and supporters of the Jewish settlements in the West Bank who were opposed to a Palestinian state.
CIA chief Mike Pompeo held secret talks with Palestinian President Mahmoud Abbas in the West Bank on Monday, according to a senior Palestinian official.
Erekat said the alternative to two states was "a single democratic secular state for Jews, Muslims and Christians," with full rights for all. Such a single state, from the Jordan River to the Mediterranean Sea, would hold almost equal numbers of Jewish and Muslim voters.
Palestinians in the West Bank live under an almost 50-year military occupation. In the separate Gaza Strip, the population lives under severe trade and travel controls.
"To those who think the current system today is acceptable, having one state with two systems, which is apartheid, I don't think they can sustain it," Erekat said. "Not in the 21st century."
Netanyahu has warned that a new Palestinian state could quickly be taken over by the Islamist militant movement Hamas, which controls the Gaza Strip and is committed to Israel's destruction.
Netanyahu publicly backed the idea of two states for two peoples in 2009. It was partly a gesture to the then-new US president, Barack Obama, but their relations quickly soured.
The last time Netanyahu ran for office in 2015, he promised voters a Palestinian state would never be created under his watch. He later walked the statement back.
The Israeli minister for public security and member of Netanyahu's Likud Party, Gilad Erdan, told Israel's Army Radio earlier this week that "all the cabinet ministers oppose a Palestinian state, including Netanyahu."
UN Secretary General António Guterres, speaking in Cairo on Tuesday, warned: "There is no alternative solution for the situation between the Palestinians and Israelis, other than the solution of establishing two states, and we should do all that can be done to maintain this."
The Trump-Netanyahu press conference, part of a nearly day-long White House visit, was the public face of a new chapter in US-Israeli relations after the testiness and rancour of Netanyahu's dealings with Obama. But there were hints of potential problems for Trump and Netanyahu, too, despite their friendship and Trump's fiercely pro-Israel stance.
Trump's insistence that a deal can be done, and his suggestion that he will move quickly to seek one, puts Netanyahu in the middle, between a powerful political constituency and his most important ally.
"If we work together, we have a shot," he told Trump.
He did not publicly commit to rein in settlements.
Trump was not more specific about settlements, which have become one of the main obstacles to a comprehensive peace agreement between Israel and the Palestinians, but his administration had previously called on Israel not to expand existing settlement blocs. Trump has also said that he views expanded settlements as unhelpful as he tries to inaugurate a peace effort.
Speaking to Israeli journalists later yesterday, Netanyahu acknowledged that he and Trump do not see eye to eye on the settlement issue.
"We spoke about the settlements and we agreed to continue talking about this issue in order to reach an agreement," said Netanyahu.
During the past few weeks, Netanyahu's government has announced the creation of some 5500 additional housing units within Israeli settlements, as well as the creation of a new settlement to soften the blow of a community the Israeli authorities were forced to raze on February 2 after the Supreme Court ruled that it had been built illegally on private Palestinian land.
Netanyahu said that the new housing units would go ahead as planned but held back on saying whether an entirely new settlement would indeed be created.
"There is always the question of what to do in the future but we do not second-guess what has happened in the past," he said.
At the news conference, Trump was asked about his campaign promise to quickly move the US Embassy from Tel Aviv to Jerusalem. Trump said he supports the idea but is considering it "with great care." Arab allies have urged Trump to slow down or cancel that pledge for fear of inflaming anti-Israel sentiment and lessening Arab governments' leverage over the Palestinians in a peace negotiation.
Trump said Jared Kushner, his son-in-law and close aide, would be his chief envoy for a peace push. Trump's choice for US ambassador to Israel, New York lawyer David Friedman, is expected to be another main player in a US-sponsored peace push. Friedman is a public supporter of West Bank settlements and has suggested the two-state option is no longer realistic.
William Booth contributed from Jericho, West Bank.