This would have to entail the end of Israel's occupation of the West Bank, conquered almost half a century ago in the 1967 Six Day War.
Obama's talk was enthusiastically punctuated with applause every second or third sentence by some 600 Israeli students in Jerusalem.
His speech made perfect sense had the dispute been between Belgium and Luxembourg.
Ending its colonization and military occupation of the West Bank to make room for an independent Palestinian state is anathema to Israeli Prime Minister Binyamin Netanyahu and his new coalition government.
In fact, his new Housing minister, Uri Ariel, a Jewish settler in the West Bank and a member of the pro-settler Jewish Home Party, lost no time to say in a TV interview that building will continue in the occupied West Bank "in accordance with what the government's policy has been thus far ... (to) build in Judea and Samaria."
Israeli colonization of the West Bank started shortly after Israel's victory in the 1967 Six Day War that this reporter covered for Newsweek.
Israeli Prime Minister Levi Eshkol, 73, told me in an interview in Feb. 23, 1969, that Israel had no claims or designs on the West Bank. He had his first heart attack three hours after the interview from which he didn't recover. He died two days later.
One of Eshkol's aides called me the day after the interview with what he said was a one-word insert requested by the prime minister. Israel, said the correction, had no designs on the "inhabited" areas of the West Bank.
The Russian-born Eshkol was in no condition to be reading and making corrections to an interview.
He first went to Palestine in 1914. It was then part of the Ottoman Empire. He volunteered with the Jewish Legion and in the 1948 Arab-Israeli war of independence he served in clandestine arms acquisition for Haganah.
There are now more than half a million Jewish settlers in what the United States and its allies, as well as China, Russia and the rest of the world have recognized as the future state of Palestine.
For Netanyahu and his coalition, the West Bank is Judea and Samaria, part of the ancient land of Israel.
Construction, expropriation and buyouts have preempted any possibility of Arab East Jerusalem ever functioning as a Palestinian capital.
Some 500,000 Jewish settlers have made their new homes in 130 settlements on Palestinian land; 350,000 in the West Bank, up 15,000 in 2012.
While Israelis have built their settlements on less than 5 percent of the West Bank, about 40 percent is taken up by modern Israeli roads that inter-connect military installations and Jewish settlements. These are banned to Palestinians.
The wall/barrier/fence between Israel and the West Bank runs 440-miles, four times the length of the pre-1967 war Green Line. It has drastically reduced Palestinian terrorist infiltrations but militants are now talking up a third intifada.
Palestinian Prime Minister Salam Fayyad said last July that violent attacks by Jewish settlers on Palestinians and their property, mosques and farmland had increased 150 percent in one year.
Even the "contiguous" Palestinian state pledged by Israel is no longer possible. E1 is an area of 12 square kilometers, which straddles the main artery between the northern and southern West Bank.
Alexander the Great couldn't untie the Gordian Knot so he severed it with his sword.
Obama felt more comfortable with Dr. Coue's method of autosuggestion, or self-hypnosis into positive thoughts. In the early 1920s, France's Dr. Emile Coue enjoyed a brief moment of fame as Europe emerged from the bloodletting of World War I.
This worked as Obama, a few minutes before he took off for Jordan, talked Netanyahu into picking up the phone to call Turkey's Prime Minister Erdogan to apologize for the Mavi Mara flotilla incident in 2010 that killed nine Turks.
Once close allies, Israel and Turkey will now resume military cooperation. They are both deeply concerned about Iran's emergence as a nuclear power. And the Israeli air force needs Turkey's vast air space to train for possible raids against some of Iran's nuclear installations.
In return for Obama's help on Turkey, Netanyahu agreed with Obama that negotiations with Iran should be given another 12 months coupled with a tighter trade embargo.
Beyond that, Obama decided he couldn't pressure Netanyahu on a Palestinian state. The dominant force in the West Bank isn't the Palestinian Authority but Gaza's Hamas, whose declared objective is a Palestinian state from the Jordan River to the Mediterranean.
Netanyahu's new coalition government is surrounded by hostile forces on its common borders with Gaza, the West Bank, Lebanon (where Hezbollah is a state within a state and acts as a surrogate for Iran) and Syria, where a civil war shows no sign of ending after two years of fighting and almost 80,000 killed.
Israel enjoys normal diplomatic relations with Jordan. But Jordan, heavily dependent on Saudi and U.S. aid, is reeling under the influx of 450,000 Syrian refugees -- the equivalent of 30 million destitute refugees arriving in the U.S. without visas.
Jordan's King Abdullah told Obama he expected the non-stop stream of Syrian refugees would soon soar to more than half a million. Obama offered $200 million for immediate relief.
Jordan's militant Palestinian population used the refugee crisis to pressure the king into abandoning the kingdom's absolute monarchy by holding a referendum for a constitutional one similar to Europe's powerless royal families.
Palestinians that are Jordanian nationals are the majority of the population. But they are not allowed to hold certain key positions -- e.g., army or air force general.
With a parliamentary democracy and a constitutional monarchy in Jordan, Israel could have yet another hostile neighbor.