By Ross Colvin and David Alexander

CAIRO (Reuters) – President Barack Obama sought a “new beginning” in relations between the United States and the Muslim world on Thursday, addressing grievances over the Arab-Israeli conflict, two U.S.-led wars and tensions over Iran.

Addressing the world’s more than 1 billion Muslims, Obama pledged to pursue Palestinian statehood and made an unusually blunt call by a new U.S. president for both sides to declare in public Middle East realities he said they accept in private.

Some Muslims welcomed Obama’s fresh tone in Cairo after George W. Bush’s departure even as others expressed frustration that he failed to outline specific changes to U.S. policy, reflecting skepticism in the region Obama must still overcome.

In his keynote speech, occasionally interrupted by shouts of “we love you,” Obama also said he did not want U.S. troops to stay in Iraq or Afghanistan forever and offered mutual respect in dealings with long-time foe, Tehran.

“We meet at a time of tension between the United States and Muslims around the world — tension rooted in historical forces that go beyond any current policy debate,” Obama said in the address that included quotes from Islam’s holy book, the Koran.

“I have come here to seek a new beginning between the United States and Muslims around the world, one based upon mutual interest and mutual respect,” he said. “America and Islam are not exclusive, and need not be in competition.”

“This cycle of suspicion and discord must end,” he added.

Highlighting hostility the U.S. leader faces from some quarters, al Qaeda leader Osama bin Laden, in a message on a website, warned Muslims against alliance with Christians and Jews, saying it would annul their faith.

The supreme leader of Washington’s regional arch foe, Iran’s Ayatollah Ali Khamenei, said before Obama spoke that America was “deeply hated” and only action, not “slogans,” could change that.

The choice of Cairo for the speech underscored Obama’s focus on the Middle East, where he faces big foreign policy challenges, from trying to restart Israeli-Palestinian peace talks to curbing Iran’s nuclear plans that Washington says is to build atomic bombs. Tehran denies any such aims.

PATIENCE

Although the administration tried to lower expectations in recent days about what the speech would accomplish, there were high hopes in the region that he would take a tougher line on Israel and follow up his words with actions.

He offered few specifics on democracy, rule of law and human rights in the Arab world, issues many hoped he would spell out.

“He should have been outspoken about democracy and the universal principles of human rights,” said Syrian lawyer Mohannad al-Hassani.

Obama, who wants to build a coalition of Muslim governments to back his diplomatic moves, affirmed his commitment to a two-state solution to the Israeli-Palestinian conflict, saying it was in the interest of all concerned parties.  Continued…