* Turkish PM backs Palestinian UN bid
* Says Israel has lost legitimacy
* Tells Arab leaders to embrace democracy
CAIRO - Turkish Prime Minister Tayyip Erdogan told Arab states on Tuesday it was time toraise the Palestinian flag at the United Nations and accused Israel of obstructing peace in theMiddle East.
Erdogan, addressing Arab foreign ministers in Cairo at the start of a Middle Eastern tour, saidbacking a bid for recognition of a Palestinian state at the United Nations later this month was"not an option but an obligation" for Arab states.
He accused the United States, a close ally of Israel whose relations with Turkey have beenfrayed in recent months, of demonstrating prejudice in opposing the move as a potential irritantin a volatile area.
"While Israel is trying to secure its legitimacy in our region on one hand, it is takingirresponsible steps which unsettle its legitimacy on the other," Erdogan said.
Erdogan's recent criticism of Israel has drawn strong support in the Arab world, buttressing hiscampaign to promote Ankara's blend of Islam and democracy as a model for movements thathave toppled several Arab autocrats, including Egypt's former president Hosni Mubarak.
At a speech at a Cairo opera house later on Tuesday to set out Turkey's vision for the MiddleEast, Erdogan said popular uprisings jolting Arab nations were a "light of hope" for theoppressed.
"Democracy and freedom is as basic a right as bread and water for you, my brothers," Erdogansaid in a speech interrupted several times with standing ovations and chants of "Erdogan,Erdogan! and "Allahu Akbar!" (God is Greatest)
In another swipe at Israel he said its government's mentality was "inhumane and lacks all legalbasis".
"Every Jewish settlement is a wall that blocks peace. We hope that the Israeli people are awareof the walls of isolation their government builds around them," he said.
Israel's offensive against Gaza in 2008 largely spelt the end of a close alliance between Turkeyand Israel, but ties nose-dived last year after nine Turks were killed in an Israeli raid on a shipheading for the Palestinian enclave, controlled by the Islamist group Hamas and underblockade by Israel.
POPULIST TOUCH
Erdogan's tour will include Tunisia and Libya, which have all witnessed the fall of entrenchedleaders to grassroots revolts this year, challenging the old order across the region.
Displaying a populist touch, Erdogan stopped as he left the Arab League headquarters in Cairowhere he had been speaking and shook the hands of demonstrators demanding change inSyria, whose military is trying to crush an uprising.
"It's time to raise the Palestinian flag at the United Nations," he told the Arab ministers. "Let'sraise the Palestinian flag and let that flag be the symbol of peace and justice in the MiddleEast."
Palestinians will bid for full membership of the United Nations later this month, a move opposedby the United States, which has a veto. Arab states endorsed it at the Cairo meeting, whereErdogan accused the United States of bias.
"The United States should reconsider the statement it made in relation to the bid Palestine isgoing to make to the United Nations. This prejudice is not befitting to the foreign policy of acountry like the United States," he said.
Erdogan said Turkey offered help to Arab nations facing turmoil but, in an apparent referenceto Syria, he said some had turned down the offer. "However, we continue to insist they meettheir people's demands."
Arab League Secretary-General Nabil Elaraby introduced the Turkish prime minister saying: "All the Arab peoples appreciate what you are doing. We consider that there is a strong friendlystate who is always standing on the side of justice."
Outside the League, Syrian protester Samer Zaher, 30, said: "Erdogan has turned into an Arabhero ... We have not found a leader as powerful as him addressing (Syrian President Basharal-Assad) and asking him to quit."
Erdogan later addressed the Syrian issue directly, saying in a public speech before severalthousand Cairenes that he like most Syrians had lost faith in Assad.
"As civilian deaths increase in Syria we see that reforms have not materialised and they did notspeak honestly. It is not possible to believe this. And the Syrian people do not believe in Assad,nor do I. We also do not believe him," he said in the grounds of the Cairo opera house.
WINNING OVER ARABS
While winning over ordinary Arabs, particularly with non-Arab Turkey's tough line towardsIsrael, Erdogan's growing popularity and clout could be a headache for more cautious Arableaders who could see their own influence overshadowed.
"Turkey wants to play a regional role, especially when Egypt is busy with the revolution," saidAdel Soliman, head of Cairo's International Centre for Future and Strategic Studies.
Egypt has traditionally seen itself as the leading diplomatic player in the Arab region. But itsposition has been eroded by wealthy Gulf countries, such as Qatar, and lately overshadowedby Turkey, with its fast-expanding economy.
Erdogan met Egypt's Field Marshal Mohamed Hussein Tantawi, who heads the military councilthat took over after Mubarak was ousted by mass street demonstrations in February.
Egypt's generals have faced popular criticism for not taking a firmer line with Israel after it shotdead five Egyptian border guards in repelling cross-border raiders it said were Palestinianmilitants. Cairo said it would expel Israel's ambassador but did not follow through with thethreat.
Protesters attacked Israel's embassy in Cairo last week, prompting the ambassador to fly homeand an embarrassed Egyptian government to affirm to Washington, its major aid donor, that itremained committed to a 1979 peace treaty with Israel.
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