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Jason Reed/Reuters/Jason Reed/Reuters

Israeli Prime Minister Benjamin Netanyahu dispensed the bitter pills Palestinians must swallow if they hold out any hope of an independent homeland as he concluded a sometimes testy American tour with a tough speech to Congress.

Jerusalem must remain undivided and in Israeli hands; there will be no return of Palestinian refugees nor their millions of descendants to Israel; and the sprawling suburbs east of Jerusalem, home to hundreds of thousands of Jewish settlers, must be ceded to Israel.

"Israel will be generous on the size of a Palestinian state," Mr. Netanyahu insisted in his Tuesday speech to a joint session of Congress, one interrupted by dozens of standing ovations and a lone protester, who was quickly dragged out and arrested.

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But the reality was that the hard-line Israeli leader, head of a fragile and fractious coalition at home, gave no ground, neither to U.S. President Barack Obama, who had urged a symbolic acknowledgment that the prewar 1967 borders should be a starting point for peace talks, nor to Palestinians, whose hopes for a state remain mired in poverty, despair, weakness and violence.

The speech, billed by Israeli officials as one that would herald change, left Palestinians dismayed. Mr. Netanyahu is "not a man of peace and did not bring anything new," said Saeb Erekat, a Palestinian negotiator. He dismissed the Israeli leader's American visit, which included rapturous receptions both in Congress and at the annual meeting of the powerful American Israel Political Action Committee.

Mr. Netanyahu offered only the tiniest glimmers of hope for the long-stalled peace process. "I'm willing to make painful compromises to achieve this historic peace," he said, but gave no hint as to what they might be.

Instead, he was very clear about what wasn't on the table.

"Israel will not return to the indefensible boundaries of 1967," he said, the third time in five days he explicitly rejected Mr. Obama's qualified call for those lines, redrawn with "mutually agreed swaps" of territory, to be a starting point for negotiations.

He was equally blunt about Palestinian refugees. Jews anywhere in the world have somewhere to go, they are welcome in Israel, he said. As for the Palestinian refugees who fled, or were driven out by advancing and victorious Israeli forces in the 1948 and 1967 wars, they have no right of return. "Here is what this means," Mr. Netanyahu said. "It means that the Palestinian refugee problem will be resolved outside the borders of Israel."

As for Jerusalem, holy to Christians, Jews and Muslims, Mr. Netanyahu flatly rejected calls for it to be an internationalized or shared city, the capital of both Israel and a nascent Palestinian state. "Jerusalem must never again be divided," he said. "Jerusalem must remain the united capital of Israel." Most governments, including Canada's, regard East Jerusalem and the West Bank as unlawfully occupied by Israel. Israeli troops and settlers were pulled out of Gaza - also internationally regarded as unlawfully occupied - in 2005, and from Sinai in 1982 after the 1979 peace deal with Egypt.

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In essence, Mr. Netanyahu was echoing long-held Israeli positions. But to put them so bluntly and to so publicly disparage Mr. Obama's call for a symbolic return to "1967 lines" as a basis for talks insured that his five-day, sometimes-testy trip ended with no movement and no new hopes for resumption of Israeli-Palestinian peace talks.

By disagreeing with Mr. Obama, and voicing crowd-pleasing lines to Congress and AIPAC, Mr. Netanyahu was essentially playing to an audience back home.

Talking tough to the American President, refusing to budge on emotive issues such as Jerusalem and returning triumphant with the showered accolades of adoring U.S. legislators will all play well as he struggles to hold together a right-wing governing coalition.

Mr. Netanyahu's tough talk was more than matched by some Palestinians.

The speech is "a declaration of war against the Palestinians," said Nabil Shaath, a senior official on the West Bank.

Mr. Obama's latest effort to urge both sides to resume peace negotiations, suggesting that the change sweeping the Arab world has added new urgency, seems to have failed to move Mr. Netanyahu.

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Rather, the Israeli leader mocked the lack of democracy in the Arab world and warned that change might bring new threats.

The only truly free Arabs living in the Middle East are the one million who live in Israel, Mr. Netanyahu told a joint session of the U.S. Congress, convened in his honour.

"Less than one-half of 1 per cent" of the region's 300 million Arabs "are truly free, and they all live in Israel," he said.

Although only a handful of legislators declined to repeatedly rise to their feet for the many ovations that punctuated his speech, one loud demonstrator, Rae Abileah, 28, from the peace group Code Pink, stood and yelled: "Stop Israeli war crimes." She was wrestled to the floor, initially by Netanyahu supporters, and then arrested by police.

"Netanyahu says that the 1967 borders are indefensible," Ms. Abileah said in a statement released by Code Pink. "What is really indefensible is the occupation of land, the starvation of Gaza, the jailing of dissenters and the lack of equal rights in the alleged Israeli democracy."

Unperturbed by the outburst, Mr. Netanyahu joked it was evidence of the democracy that Israel and the United States share, adding that such protests couldn't occur in the sham parliaments of the Arab world.

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He laid the blame squarely on Palestinian leaders for the failure of peace talks.

"President Abbas must do what I have done," Mr. Netanyahu said, referring to the head of the Palestinian Authority. "I stood before my people, and I told you it wasn't easy for me, and I said I will accept a Palestinian state," Mr. Netanyahu said.

"It is time for president Abbas to stand before his people and say: 'I will accept a Jewish state,' " Mr. Netanyahu said. "Those six words will change history."

Mr. Netanyahu also painted a grim picture of a malevolent Iran, calling it a tyrannical theocracy determined to build nuclear warheads to pursue a publicly stated policy for annihilation of Israel.

"Those who dismiss it are sticking their head in the sand," Mr. Netanyahu said of the threat posed by a nuclear-armed Iran.

(Editor's note: Israel ceased its occupation of Gaza in 2005. Incorrect information appeared in Wednesday's Globe and in an earlier online version of this story. This version has been corrected.)

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