Published on 12:00 AM, September 22, 2016

Israel 'can't permanently occupy Palestinian land': Obama

Barack Obama has told Israel it cannot permanently occupy and settle on Palestinian land in a speech to the United Nations.

The US president said both sides would benefit if Israel recognised it cannot permanently occupy the land and if Palestinians rejected incitement and recognised Israel's legitimacy.

"Surely Israelis and Palestinians will be better off if Palestinians reject incitement and recognize the legitimacy of Israel," he said on Tuesday.

"But Israel must recognise that it cannot permanently occupy and settle Palestinian land."

He added: "We all have to do better as leaders in tamping down, rather than encouraging, a notion of identity that leads us to diminish others."

Following his speech, the president was set to raise concerns about Israeli settlement activity in Arab lands during a meeting with Israeli Prime Minister Benjamin Netanyahu in New York yesterday.

Last week, Obama endorsed Israel's record 10-year, $38 billion US military aid contract -- a predictable deal, but one which emphasized tensions.

Earlier, Obama used his farewell UN address to castigate strongmen and populists, taking aim at Vladimir Putin's Soviet nostalgia and Donald Trump's rise at home.

Obama told the UN General Assembly that democracy remains the "firmest foundation for human progress" as he repudiated "crude populism" that has mushroomed in the United States and around the world.

But he admitted there were "deep fault lines in the existing international order," not least in the Middle East where "basic order has broken down" and fundamentalists prey on social unease.

He admitted too that a "course correction" was needed to smooth the serrated edges of globalization.

"A world in which one percent of humanity controls as much wealth as the other 99 percent will never be stable," he warned.

Obama had a more direct message for his Russian counterpart, accusing Putin -- who has invaded Ukraine and deployed forces to Syria -- of using the military to gain global clout.

"In a world that left the age of empire behind, we see Russia attempting to recover lost glory through force," Obama said.

By the same token, Obama warned China's increasingly powerful leader Xi Jinping that adhering to the rule of law offers "far greater stability than the militarization of a few rocks and reefs" in the South China Sea.

Eight years ago at his first UN General Assembly -- with America's reputation tattered by the Iraq war and George W Bush's unilateralism -- Obama promised a "new era of engagement."

After two terms in the Oval Office, Obama restated the case for multilateralism and an America that knows the limits of its own might.

And even as a Syrian ceasefire brokered by Washington lay in tatters, Obama insisted diplomacy -- not force -- is the only way to end the brutal five-year conflict.

"There's no ultimate military victory to be won, we're going to have to pursue the hard work of the diplomacy that aims to stop the violence and deliver aid to those in need," Obama said.