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			 U.S. relations with Israel have been strained by the interim 
			agreement, reached between Iran and major world powers including the 
			United States, which was designed to halt advances in Iran's nuclear 
			program and buy time for negotiations on a final settlement. 
 			The United States says the agreement will give the international 
			community time to see if Tehran is serious about curbing its nuclear 
			ambitions, while providing some relief from sanctions that have 
			crippled its economy.
 			Israel believes any sanctions relief is a dangerous gift to a 
			country that threatens its very existence, and Israeli Prime 
			Minister Benjamin Netanyahu has called the deal reached in Geneva a 
			"historic mistake."
 			Obama, speaking at forum hosted by Haim Saban, a major political 
			donor, made a point of referring to Netanyahu as "my friend Bibi," 
			while acknowledging they occasionally had "significant tactical" 
			disagreements.
 			Obama said the interim deal, negotiated with Iran by the United 
			States, China, Russia, Britain, France and Germany, would provide 
			space for a longer-ranging agreement to curb Iran's nuclear 
			ambitions, which Tehran says are peaceful. 			
			
			 
 			The president said he viewed the likelihood of a satisfactory "end 
			state" as a 50/50 proposition, and repeated that all options 
			remained on the table if Iran did not follow through with its 
			obligations.
 			"If we cannot get the kind of comprehensive end state that satisfies 
			us and the world community ... then the pressure that we've been 
			applying on them and the options that I have made clear I can avail 
			myself of, including a military option, is one that we would 
			consider and prepare for," he said.
 			Obama said it was unrealistic to believe that Iran would halt and 
			dismantle its nuclear program if the sanctions regime were 
			strengthened and talks were not given a chance to succeed.
 			"One can envision an ideal world in which Iran said, 'We'll destroy 
			every element and facility and you name it, it's all gone.' I can 
			envision a world which Congress passed every one of my bills that I 
			put forward. I mean, there are a lot of things that I can envision 
			that would be wonderful," he said to laughter from the audience.
 			"But precisely because we don't trust the nature of the Iranian 
			regime, I think that we have to be more realistic and ask ourselves: 
			What puts us in a strong position to assure ourselves that Iran's 
			not having a nuclear weapon ... what is required to accomplish that 
			and how does that compare to other options that we might take?"
 			BACK AND FORTH WITH ISRAEL
 			Israeli Strategic Affairs Minister Yuval Steinitz, in reaction to 
			Obama's remarks, said the two countries needed to resolve their 
			differences on the issue.
 			"It must be made clear: In the final agreement, Iran must not have 
			the capability to produce nuclear weapons. In order to ensure this, 
			Iran must not have any capability to enrich uranium or to produce 
			plutonium," Steinitz said.
 			Obama suggested any enrichment capacity left in Iran would be 
			limited.
 			"It is my strong belief that we can envision an end state that gives 
			us an assurance that even if they have some modest enrichment 
			capability, it is so constrained and the inspections are so 
			intrusive that they, as a practical matter, do not have breakout 
			capacity," he said.
 			The United States says it will confer closely with Israel about 
			crafting a permanent Iran agreement after the six-month 
			confidence-building period laid out by the Geneva deal.
 			
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			While pursuing that path, Washington has sought to reinforce its 
			commitment to protecting Israel. 
			"We will not abide by any threats to our friends and allies in the 
			region, and we've made that perfectly clear. And our commitment to 
			Israel's security is sacrosanct," Obama said.
 			Secretary of State John Kerry, who spoke at the forum later in the 
			day, said disagreements with Iran would continue on issues including 
			Tehran's support for Lebanese Hezbollah, which the United States 
			deems a "terrorist" group, and for Syrian President Bashar al-Assad.
 			"A comprehensive (nuclear) agreement wouldn't solve all our problems 
			with Iran," Kerry said. "Whatever the outcome of the upcoming 
			negotiations, Iran will still have much work to do."
 			MIDDLE EAST PEACE
 			Although the discussion at the Washington-based Brookings 
			Institution focused primarily on Iran, Obama also touched on the 
			Middle East peace process aimed at ending conflict between Israelis 
			and Palestinians.
 			Israeli and Palestinian officials resumed U.S.-brokered peace talks 
			on July 29 after a nearly three-year hiatus. At the time, Kerry said 
			the aim was to reach "a final status agreement over the course of 
			the next nine months."
 			That in effect set the end of April 2014 as a deadline, although 
			U.S. officials have said that was not hard and fast.
 			"I think it is possible over the next several months to arrive at a 
			framework that does not address every single detail but gets us to a 
			point where everybody recognizes (it's) better to move forward than 
			move backwards," Obama said.
 			In their remarks, both Obama and Kerry made clear that if a 
			framework agreement were reached next year, there would still be 
			more work to do. 			
			
			 
 			Noting that he returned from his eighth trip this year to Israel and 
			the Palestinian territories on Friday night, Kerry said wryly: "Now 
			I am not a masochist. I am undertaking this because I believe in the 
			possibilities."
 			Obama said the outlines of a potential peace agreement were clear 
			and he left the door open for a pact that excluded the Gaza Strip, 
			which is now controlled by Hamas Islamists opposed to peace moves by 
			Palestinian President Mahmoud Abbas, who controls the West Bank.
 			"If there is a model where young Palestinians in Gaza are looking 
			and seeing that in the West Bank, Palestinians are able to live in 
			dignity ... that's something that the young people of Gaza are going 
			to want," Obama said.
 			(Additional reporting by Arshad Mohammed, Elvina Nawaguna, and Ori 
			Lewis; editing by Christopher Wilson and Peter Cooney) 
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