RIYADH - U.S. President Barack Obama will urge Arabs and Israelis to say publicly what they acknowledge in private about Middle East peace moves and Iran when he speaks to the Muslim world on Thursday.

Obama, who visited Saudi Arabia and said he sought King Abdullah's advice before the speech to be delivered in Egypt, outlined its themes in an interview with the New York Times on Wednesday.

Obama's trip and scheduled speech in Cairo on Thursday drew condemnation from al Qaeda leader Osama bin Laden, who said in a taped message aired by Al Jazeera television that the U.S. leader had planted seeds for revenge and hatred toward the United States in the Muslim world.

Obama told the New York Times a key part of his message in Cairo would be: Stop saying one thing behind closed doors and saying something else publicly.

There are a lot of Arab countries more concerned about Iran developing a nuclear weapon than the 'threat' from Israel, but won't admit it, Obama told the paper.

There are a lot of Israelis, he said, who recognize that their current path is unsustainable, and they need to make some tough choices on settlements to achieve a two-state solution -- that is in their long-term interest -- but not enough folks are willing to recognize that publicly.

Obama and Israeli Prime Minister Benjamin Netanyahu are at odds over a push by Obama for Israel to halt Jewish settlement expansion in the West Bank. About half a million Jews live in settlements among nearly 3 million Palestinians in the occupied West Bank and Arab East Jerusalem.

There are a lot of Palestinians, he said, who recognize that the constant incitement and negative rhetoric with respect to Israel has not delivered a single benefit to their people and had they taken a more constructive approach and sought the moral high ground they would be much better off today -- but they won't say it aloud.

There are a lot of Arab states that have not been particularly helpful to the Palestinian cause beyond a bunch of demagoguery, and when it comes to ponying up money to actually help the Palestinian people, they are not forthcoming, he said in the interview.

BIN LADEN MESSAGE

Obama's trip to Saudi Arabia and meeting with King Abdullah on a farm near Riyadh coincided with bin Laden's message, which the White House dismissed as an unsurprising attempt to distract attention away from Obama's message to the Muslim world.

I am confident that, working together, the United States and Saudi Arabia can make progress on a whole host of issues of mutual interest, Obama said.

Obama, whose father was Muslim and who lived in Indonesia as a boy, hopes to mend a U.S. image damaged by Bush's wars in Iraq and Afghanistan and the treatment of U.S. military detainees.

I am confident that we're in a moment where in Islamic countries, I think there's a recognition that the path of extremism is not actually going to deliver a better life for people, Obama told NBC News before he left Washington.

King Abdullah was expected to express his worries that Obama's diplomatic outreach to Iran may rejig regional relationships at Riyadh's expense, diplomats and analysts say.

Saudi Arabia wants Obama to get tough with Israel's Netanyahu. Obama has hinted he would like Saudi Arabia to offer some confidence-building measures to Israel.

I think we have not seen a set of potential gestures from other Arab states, or from the Palestinians, that might deal with some of the Israeli concerns, he told the BBC.

King Abdullah sponsored a 2002 peace plan offering Israel collective Arab recognition in return for an Israeli withdrawal from land occupied in the 1967 war, a Palestinian state with Jerusalem as its capital and a just solution for refugees.

The Saudi adviser said it was completely unrealistic to expect any concession from Riyadh, at least until Israel stopped all settlement expansion and accepted the Arab peace plan.

Obama has said he would discuss oil with King Abdullah and would argue that price spikes are not in Saudi interests.

Saudi Arabia, the world's biggest crude exporter, has a nearly 60-year-old bond with the United States based on assured oil supplies in return for U.S. protection for the kingdom.

(Writing and additional reporting by Alistair Lyon in Beirut and David Alexander in Riyadh; Editing by Charles Dick)

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