Obama's speech stuns Israelis. Netanyahu rejects 1967 lines

US President Barack Obama's declaration in his policy speech Thursday, May 19, that Israel should withdraw to the 1967 lines with mutually agreed territorial swaps caused consternation in Jerusalem. Before flying to Washington, Prime Minister Binyamin Netanyahu stated: The 1967 lines are indefensible. Israeli security demands an IDF presence on the Jordan River. Israel appreciates the US president's commitment to peace but a Palestinian state cannot rise at the expense of Israel's existence.
This demand was not agreed in the exchanges between the White House and the Prime Minster's Office ahead of the speech. It also contradicts the guarantee the Bush presidency gave Prime Minister Ariel Sharon in 2004 not to force Israel to return to the indefensible borders of 1967.
The US president stated repeatedly that the Palestinian state was entitled to "a sovereign, contiguous state" bordering on Egypt, Jordan and Israel. This would give the Palestinian state sole control of its borders without regard to Israeli's security requirements. Israel was advised to be satisfied with America's "unshakeable commitment" to its security.
The "Palestinian state" is entitled?  By whose definition and demand?