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By Matt Spetalnick
WASHINGTON, March 17 (Reuters) - President Barack Obama told Palestinian President Mahmoud Abbas on Tuesday that it will require tough decisions and risks to achieve peace with Israel and said now is the time for leaders on both sides to "embrace this opportunity."
In White House talks overshadowed by the Ukraine crisis, Abbas said "time is not on our side" in U.S.-brokered negotiations with Israel and called on Israeli Prime Minister Benjamin Netanyahu to go ahead with the scheduled release of a final group of Palestinian prisoners by the end of March.
Obama, who met Netanyahu two weeks ago, made clear that he was not giving up on the troubled U.S.-led peace process despite widespread pessimism about reaching a "framework" deal that would extend talks beyond an April deadline.
"It's very hard," Obama said. "We're going to have to take some tough political decisions and risks if we're able to move it forward, and I hope that we can continue to see progress in the coming days and weeks."
Obama insisted that, after decades of on-off negotiations between Israel and the Palestinians, the likely parameters of any elusive final peace agreement are well known.
"Everybody understands what the outlines of a peace deal would look like, involving a territorial compromise on both sides based on '67 lines with mutually agreed upon swaps that would ensure that Israel was secure but would also ensure that the Palestinians have a sovereign state," Obama said.
Abbas agreed that a solution should entail a Palestinian state built on borders that existed before the 1967 Middle East war, though Netanyahu has declared that Israel would never completely return to earlier lines it considered indefensible.
Abbas insisted that the Palestinians, in past international agreements, had already "recognized the state of Israel."
But he stopped short of reiterating his position on Netanyahu's demand that Abbas explicitly recognize Israel as a Jewish state if he wanted peace - something the Palestinian president has previously said he will not do.
Looming over the peace effort is the question of whether Israel this month will carry out the release of a final batch of Palestinian prisoners, which it agreed in order restart negotiations last year. U.S. officials fear that if Israel scraps the release the peace talks could break down.
"Mr. President, we have an agreement with Israel that was brokered by Mr. Kerry concerning the release of the fourth batch of prisoners," Abbas told Obama. "We are hopeful that the fourth batch will be released by the 29th of March because this will give a very solid impression about the seriousness of these efforts to achieve peace."
Secretary of State John Kerry brought Israel and the Palestinians back into negotiations on July 29 after a three-year gap, and said at the time that "our objective will be to achieve a final status agreement over the course of the next nine months."
As the April 29 deadline approaches, U.S. officials have scaled back their ambitions, saying they are now trying to forge a non-binding "framework for negotiations" by then. Kerry himself suggested on Feb. 26 a full peace deal could take a further nine months but even that prolonged timeframe faces widespread skepticism.
The two sides do not appear to have made much visible progress on narrowing their gaps on the major issues in the more than six-decade dispute, which include borders, security, the fate of Palestinian refugees and the status of Jerusalem.
"I believe that now is the time for not just the leaders of both sides but also the people of both sides to embrace this opportunity," Obama said. (Additional reporting by Susan Heavey and Steve Holland; Editing by Tom Brown)