DRESDEN // The US President Barack Obama expressed hope of making serious progress this year in Middle East peacemaking and said Israelis and Palestinians had to "get serious" about making tough compromises. Mr Obama repeated his call on Israel to halt settlement expansion in the West Bank but also said Palestinians would have to improve security and root out corruption. If these and other issues were not solved, the Israelis would have "trouble moving forward," he said. "The Palestinians have to get serious about creating the security environment that is required for Israel to feel confident. Israelis are going to have to take some difficult steps," he said. Mr Obama, who sees Israeli-Palestinian progress as crucial to repairing the tarnished US image in the Muslim world, was speaking a day after delivering an address in Cairo in which he offered Muslims a "new beginning" with the United States. "I am confident that if we stick with it ... we can make some serious progress this year," Mr Obama told a news conference in Dresden with the German Chancellor Angela Merkel on the third leg of a four-nation trip to the Middle East and Europe. "The moment is now for us to act on what we all know to be the truth, which is that each side is going to have to make some difficult compromises," Mr Obama said. Mr Obama was in Germany on the third stop of his trip, which has already taken him to Saudi Arabia and Egypt. Tomorrow he will attend commemorations in France marking the 65th anniversary of the World War Two D-Day landings. Mr Obama will pay homage to the victims of World War Two and the Holocaust, in which six million Jews died, when he tours the Buchenwald concentration camp later with Chancellor Merkel. Mr Obama's great uncle helped liberate a satellite camp of Buchenwald which was created by the Nazis near Weimar. An estimated 56,000 people were killed in Buchenwald. Mr Obama has made finding a solution to the Israeli-Palestinian conflict a top foreign policy priority and has plunged into Middle East politics, often a quagmire for his predecessors, early in his presidency. The former president, George W Bush, was seen as taking a hands-off approach to Middle East peacemaking until late in his administration. Muslims saw Mr Bush as biased toward Israel. "I believe with the new US administration, with President Obama there is a unique opportunity to see to it that the negotiation process is revived," Ms Merkel said. The Israeli prime minister Benjamin Netanyahu, facing political pressure from both the left and the right at home, has rebuffed Mr Obama's call for a settlement freeze and shied away from endorsing a two-state solution, a cornerstone of US policy. "We have still not seen a firm commitment from the Palestinian Authority that they can control some of the border areas that Israel is going to be concerned about if there was going to be a two-state solution," he said. Along with the Middle East crisis, Mr Obama and Ms Merkel also discussed the nuclear stand-off with Iran, the global financial crisis, climate change and the fate of prisoners at the US military prison at Guantanamo Bay. Mr Obama is hugely popular in Germany, but relations between Washington and Berlin have been less than smooth since Mr Obama took office in January. Ms Merkel prevented Mr Obama from speaking at the Brandenburg Gate last summer during his presidential campaign and, facing an election in September, has resisted US pressure to take on inmates from Guantanamo Bay and send more troops to Afghanistan. The brevity of Mr Obama's stay in Germany and his decision not to come to Berlin led to speculation of a rift, but the president dismissed this as "wild speculation." "The truth of the matter is, the relationship between our two countries and governments is outstanding," Mr Obama said. * Reuters