Jackson Diehl explains it well:
The basic question is this: By saying that a division of territory between Israel and Palestine should be “based on” the “1967 lines” between Israel and the West Bank, with agreed “swaps” of land, did Obama move beyond the previous U.S. position on the subject?
The short, technical answer to this question is: no. The longer, political response is that by stating the principle, Obama gave a boost to Palestinian President Mahmoud Abbas, who has tried to make Israeli acceptance of it a condition for peace talks, and a slap to Israeli Prime Minister Binyamin Netanyahu, who has resisted it.
That Obama would do this on the eve of Netanyahu’s arrival in Washington for a White House meeting — and apparently without warning the Israeli leader — is a gaffe that has understandably angered Netanyahu and many of his U.S. supporters.
…The idea that Obama has proposed that Israel “return to the 1967 borders,” as various GOP hopefuls are claiming, is simply untrue.
That doesn’t mean that Netanyahu doesn’t have reason to be fuming as he heads for his meeting with Obama today. For months, Washington has been privately pressing the Israeli leader to endorse the 1967-lines-principle as a way of jump-starting moribund talks with Abbas. Netanyahu has resisted, though he inched toward the position in a speech last Monday. Now Obama has publicly sprung the principle on him — even though there is next to no prospect that negotiations can be started anytime soon.
In the end this looks like another instance in which Obama’s insistence on pushing his own approach to the peace process will backfire. The president was urged by several senior advisers not to delve deeply into Israeli-Palestinian affairs in this speech, just as he was warned last year not to continue insisting on a freeze of Israel’s West Bank settlements. Apparently at the last minute, Obama chose to include the 1967-lines idea in his speech. The result has been the draining of attention from the speech’s central discussion of Arab democracy, a cheap talking point for GOP opponents — and yet another pointless quarrel with Bibi Netanyahu.
And here is a video that shows why Israelis say the 1967 lines are indefensible:
(h/t David G)
Palestinians: Israel must accept 1967 border as basis for negotiations | JTA – Jewish & Israel News
JERUSALEM (JTA) — Palestinian officials said they would not resume peace negotiations unless Israeli Prime Minister Benjamin Netanyahu accepts President Obama’s 1967 border guidelines.
“If Netanyahu agrees, we shall turn over a new leaf. If he doesn’t then there is no point talking about a peace process. We’re saying it loud and clear,” Saeb Erekat was quoted as saying Sunday in Ynet.
Erekat, a member of P.A. President Mahmoud Abbas’ Fatah party central committee and chief Palestinian negotiator, repeated similar statements to the KUNA Kuwaiti news agency and others, some rebroadcast on Israel Radio.
“Once Netanyahu says that the negotiations will lead to a Palestinian state on the 1967 borders, then everything will be set,” Erekat said according to Palestinian news agency WAFA.
Erekat said that Israel showed it had rejected Obama’s premise of negotiation from the 1967 borders when it approved the construction of 1,500 housing units in eastern Jerusalem a day before Netanyahu left for the United States.
Obama and Netanyahu are both set to speak this week before the United States pro-Israel lobby, the American Israel Public Affairs Committee. On May 19, in a speech at the State Department on his Middle East policy, Obama called for peace negotiations on the basis of the 1967 borders with mutually agreed upon land swaps.