Merkel backs Obama push for 1967 Israel border deal

BERLIN (Reuters) - German Chancellor Angela Merkel said on Friday that she supported U.S. President Barack Obama's policy speech on the Middle East, and that basing a peace agreement on Israel's 1967 borders could be the way forward.

"I think the proposal of taking the 1967 border and of considering the exchange of territory -- considering it and not dogmatically adhering to it -- would be a good and manageable path," Merkel told a news conference.

Obama outlined his Middle East strategy in a major address on Thursday and set out his vision of the principles of an Israeli-Palestinian peace accord.

He called for a deal resulting in two states, Israel and Palestine, largely sharing the border that existed before Israel captured the West Bank, Gaza and East Jerusalem in the 1967 Middle East war.

Germany is a strong backer of Israel but Merkel, on a visit to Israel in February, urged Israel to accommodate Palestinian demands for a halt to Jewish settlement building.

Her comments on Obama's speech were unlikely to be welcomed by Israeli Prime Minister Benjamin Netanyahu, who has rejected the idea of a total pullback to 1967 borders.

Merkel said the situation with regard to the peace process had changed since this year's wave of popular uprisings in the Arab world.

"The peace process in the Middle East and the developments in the Arab area are very closely linked," she said.

(Reporting by Stephen Brown and Peter Dinkloh; Writing by Peter Dinkloh; Editing by Kevin Liffey)