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* Obama tests waters. moves cautiously
* Appeals over heads of leaders to young people
* Palestinians a harder sell
By Matt Spetalnick and Steve Holland
JERUSALEM, March 21 (Reuters) - From old-fashioned schmoozing to "I feel your pain" appeals, President Barack Obama is wading into Middle East diplomacy with a personal touch he has rarely displayed on the world stage.
It is the kind of charm offensive he has been trying to pull off - with decidedly mixed results - with political opponents back home and which he now hopes will help advance peace prospects in a region mostly devoid of them.
Even though skepticism runs as deep as the distrust between Israelis and Palestinians over Obama's latest effort, he was intent on testing the waters anyway in his first official trip this week to Israel and the occupied Palestinian territories.
After all, his biggest risk is nothing more than failure - but that's something almost every recent U.S. president has experienced in Middle East peacemaking.
The upside is clear for a second-term president who will never again have to face an election: a potential boon to his presidential legacy.
For now, though, Obama is moving cautiously, with soothing rhetoric, friendly pressure and popular outreach marking his visits to Jerusalem and Ramallah this week.
American journalist Jeffrey Goldberg, an authority on the Middle East, described it as "Operation Desert Schmooze."
CHUMMY WITH NETANYAHU
Obama started out cozying up to Israeli Prime Minister Benjamin Netanyahu - politically weakened by January's election and looking for a boost from Israel's superpower ally - as soon as he hit the tarmac at Ben-Gurion Airport on Wednesday.
The cool, detached president, not known to enjoy glad-handing, was suddenly on a first-name basis with "Bibi," the prime minister's childhood nickname. Seemingly forgiven: Netanyahu's support for Obama's Republican rival, Mitt Romney, in the November election.
But the visit hit its peak with Obama's keynote speech on Thursday at Jerusalem's convention center. There he was given a rousing reception by university students - though his call for a more conciliatory approach to the Palestinians drew a much more divided response outside the conference hall.
Obama, known for his following among America's youth, is using a U.S.-tested strategy in the long-running Middle East conflict.
Trying a new tack after his first-term peace overtures flopped, Obama met leaders on both sides and also went over their heads. He appealed to young Israelis in particular to press their government to drop hidebound positions and embrace compromise.
"Speaking as a politician, I can promise you this: political leaders will not take risks if the people do not demand that they do," he exhorted young Israelis. He asked them to "put yourself in their (the Palestinians') shoes" and imagine what life is like living under the occupation of a foreign army.
"He is a rock star," gushed Gur Wallner, a 25-year-old media student, showing that Obama may have broken down some of the suspicions ordinary Israelis harbored toward him.
Tal Ginzberg, 25, said Obama had expressed "a lot of unrealistic optimism."
"The Palestinians deserve their own state but he ignores the fact that they are led by terrorist groups," she said.
On the Palestinian side, where disillusionment over Obama's failure to make progress on statehood is almost palpable, Obama faced deeper pessimism - especially after he told Palestinian President Mahmoud Abbas to drop his demand for a freeze on Israeli settlement activity before peace talks can resume.
"U.S. policy is biased toward the Israeli position," Tayseer Khaled of the PLO's executive committee said.
BACKSLAPPING WITH "BIBI"
With Netanyahu, Obama used old-fashioned backslapping to try to move past their confrontational past.
On Thursday night, the president sat side-by-side with Netanyahu at dinner at the residence of Israeli President Shimon Peres, and the two of them could be seen whispering to each other like old school chums.
On his visit, Obama may not have won the hearts of Israelis like former President Bill Clinton did in the 1990s, but he appeared to make a big dent in their suspicions about him ever since his 2009 speech to Muslim world in Cairo. On top of that, it was a chance to counter U.S. opposition Republican critics who have accused him of "throwing Israel under the bus" by being too soft on Iran and not supportive enough of the Jewish state.
Obama spent part of last year campaigning for re-election by engaging in "retail politics," spending face-time with voters - which was never his strong suit but ultimately helped him win.
This was part of what he practiced in Israel and the West Bank this week, appealing directly to the leaders and public alike to at least try to talk out their decades-old differences.
With the Israelis, he seemed to take advantage of the desire of many for outside acceptance at a time when the Jewish state faces growing international isolation.
"A bit of informality, a joke or a gentle tease, a few words in Hebrew, and we are immediately filled with great love for the man," Sima Kadmon, a political commentator for Israel's Yedioth Ahronoth newspaper, wrote with more than a hint of sarcasm.
But the Palestinians may be a harder sell.
At a Ramallah youth center, Obama nodded his head and clapped to the beat as young girls in traditional costumes danced before him. He even tried out a little Arabic on them.
But that was in stark contrast to a joint news conference earlier with Abbas at Palestinian Authority headquarters, where ministers said mostly stone-faced as Obama spoke at the podium beneath an image of the late Palestinian leader Yasser Arafat. (Reporting By Matt Spetalnick; additional reporting credits by Maayan Lubell, Noah Browning, Dan Williams, Nidal al-Mughrabi; Editing by Michael Roddy)