WASHINGTON (AP) -– Forcefully stepping into an explosive Middle East debate, President Barack Obama on Thursday endorsed a key Palestinian demand for the borders of its future state and prodded Israel to accept that it can never have a truly peaceful nation based on "permanent occupation."

Obama's urging that a Palestinian state be based on 1967 borders — before the Six Day War in which Israel occupied East Jerusalem, the West Bank and Gaza — was a significant shift in the U.S. approach and seemed certain to anger Israel.

Israel has said an endorsement of the 1967 borders would prejudge negotiations, and Obama took pains to show respect for Israel's views ahead of his meetings Friday with Prime Minister Benjamin Netanyahu.

The comments came in Obama's most comprehensive response to date to the uprisings sweeping the Arab world. Speaking at the State Department, he called for the first time for the leader of Syria to embrace democracy or move aside, though without specifically demanding his ouster.

As he addressed audiences abroad and at home, Obama sought to leave no doubt that the U.S. stands behind the protesters who have swelled from nation to nation across the Middle East and North Africa, while also trying to convince American viewers that U.S. involvement in unstable countries halfway around the world is in their interest, too.

Obama said the United States has a historic opportunity and the responsibility to support the rights of people clamoring for freedoms, and he called for "a new chapter in American diplomacy."

"We know that our own future is bound to this region by the forces of economics and security; history and faith," the president said.

He hailed the killing of al-Qaida terrorist leader Osama bin Laden and declared that bin Laden's vision of destruction was fading even before U.S. forces shot him dead.

Obama said the "shouts of human dignity are being heard across the region."

The president noted that two leaders had stepped down — referring to Egypt and Tunisia — and said that "more may follow." He quoted civilian protesters who have pushed for change in Egypt, Libya, Syria and Yemen but noted that among those nations, only Egypt has seen the departure of a long-ruling autocratic leader.

Obama said that while there will be setbacks accompanying progress in political transitions, the movements present a valuable opportunity for the U.S. to show which side it is on. "We have a chance to show that America values the dignity of the street vendor in Tunisia more than the raw power of a dictator," he said, referring to the fruit vendor who killed himself in despair and sparked a chain of events that unleashed uprisings around the Arab world.

On the Israeli-Palestinian peace process, the president cautioned that the recent power-sharing agreement between the mainstream Palestinian faction led by Mahmoud Abbas and the radical Hamas movement that rules Gaza "raises profound and legitimate" security questions for Israel. Netanyahu has refused to deal with a Palestinian government that includes Hamas.

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

Obama also rejected a push by the Palestinians for U.N. recognition of a state in the West Bank, Gaza and East Jerusalem this fall. "Symbolic actions to isolate Israel at the United Nations in September won't create an independent state," Obama said.

The president ignored many of the most divisive issues separating the two sides. He did not speak about the status of Jerusalem or the fate of Palestinian refugees. And, he did not discuss a way to resolve Israel's concerns about a Hamas role in a unified Palestinian government, telling the Palestinians that they would have to address the matter themselves.

On Syria, Obama said President Bashar Assad must lead his country to democracy or "get out of the way," his most direct warning to the leader of a nation embroiled in violence. Obama said the Syrian government "has chosen the path of murder and the mass arrests of its citizens." He praised the Syrian people for their courage in standing up to repression in a bloody crackdown that has killed hundreds.

Obama said that while each country in the region is unique, there are shared values in the push for political change that will define the U.S. approach.

"Our message is simple: If you take the risks that reform entails, you will have the full support of the United States," he said.

The speech was in some ways notable for what Obama did not mention.

While critical of autocracy throughout the Mideast, he failed to mention at the region's largest, richest and arguably most repressive nation, U.S. ally Saudi Arabia. Nor did he discuss Jordan, a staunch U.S. ally that has a peace deal with Israel. Also left out was the United Arab Emirates, the wealthy, pro-American collection of mini-states on the Persian Gulf. And he gave little attention to Iran, where U.S. attempts at outreach have gone nowhere.

Obama announced economic incentives aimed at steering a region roiling in violence toward democratic change that lasts.

Among the elements of his approach:

• The canceling of roughly $1 billion in debt for Egypt. The intention is that money freed from that debt obligation would be swapped toward investments in priority sectors of the Egyptian economy, likely to focus on entrepreneurship and employment for younger people. Unemployment rates are soaring in Egypt and across the region.

• The guaranteeing of up to $1 billion in borrowing for Egypt through the Overseas Private Investment Corporation, a U.S. government institution that mobilizes private capital.

• Promises by the U.S. to launch a new trade partnership in the Middle East and North Africa and to prod world financial institutions to help Egypt and Tunisia.