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U.S. Secretary of State Hillary Clinton. rebuked the United Nations General Assembly's vote to recognize a. Palestinian state, calling it an ‘unfortunate and counterproductive’ move. The U.N. voted overwhelmingly Thursday. to recognize the Palestinian state, a long-sought victory for the. Palestinians and an embarrassing diplomatic defeat for the United States. Others who had watched the vote on. outdoor screens and television sets hugged, honked and set off fireworks. before dancing in the streets.

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assistant: By. Associated Press Reporter. PUBLISHED:. 20:17 EST, 29 November 2012. |. UPDATED:. 07:11 EST, 30 November 2012. U.S. Secretary of State Hillary Clinton rebuked the United Nations General Assembly's vote to recognize a Palestinian state, calling it an ‘unfortunate and counterproductive’ move that further obstructs the path to a peaceful agreement between Palestine and Israel. ‘We have been clear that only through direct negotiations between the parties can the Palestinians and Israelis achieve the peace they both deserve: two states for two people with a sovereign, viable independent Palestine living side by side in peace and security with a Jewish and democratic Israel,’ Clinton said on Thursday in a speech in Washington on foreign policy trends. The U.N. voted overwhelmingly Thursday to recognize the Palestinian state, a long-sought victory for the Palestinians and an embarrassing diplomatic defeat for the United States. Scroll down for video. Opposing vote: U.S. Ambassador to the United Nations Susan Rice explains the U.S. position opposing a resolution on Palestinians at a meeting of the General Assembly on November 29, 2012 in New York City. Angered diplomat: Secretary of State Hillary Rodham Clinton called rebuked the United Nations' vote to recognize a Palestinian state ¿unfortunate and counterproductive¿. The resolution upgrading the Palestinians' status to a non-member observer state at the U.N. was approved by a vote of 138-9, with 41 abstentions, in the 193-member world body. A Palestinian flag was quickly unfurled on the floor of the General Assembly, behind the Palestinian delegation. In the West Bank city of Ramallah, hundreds crowded into the main square waved Palestinian flags and chanted ‘God is great.’ Others who had watched the vote on outdoor screens and television sets hugged, honked and set off fireworks before dancing in the streets. Real independence, however, remains an elusive dream until the Palestinians negotiate a peace deal with the Israelis, who warned that the General Assembly action will only delay a lasting solution. State Secretary: Clinton speaking at the Brookings Institute in Washington, DC on Thursday. Israel still controls the West Bank, east Jerusalem and access to Gaza, and it accused the Palestinians of bypassing negotiations with the campaign to upgrade their U.N. status. The Palestinians still face enormous limitations. They don't control their borders, airspace or trade, they have separate and competing governments in Gaza and the West Bank and they have no unified army or police. The United States immediately criticized the historic vote. ‘Today's unfortunate and counterproductive resolution places further obstacles in the path peace,"’ U.N. Ambassador Susan Rice said. The United States and Israel voted against recognition, joined by Canada, the Czech Republic, the Marshall Islands, Micronesia, Nauru, Palau and Panama. Palestine's leader: Palestinian President Mahmoud Abbas gathers his papers after speaking during a U.N.General Assembly meeting prior to the vote. Israeli Prime Minister Benjamin Netanyahu called the speech by Palestinian President Mahmoud Abbas to the General Assembly shortly before the vote ‘defamatory and venomous,’ saying it was ‘full of mendacious propaganda’ against Israel. Netanyahu called the vote meaningless. Abbas had told the General Assembly that it was ‘being asked today to issue the birth certificate of Palestine.’ Abbas said the vote is the last chance to save the two-state solution. After the vote, Netanyahu said the U.N. move violated past agreements between Israel and the Palestinians and that Israel would act accordingly, without elaborating what steps it might take. Celebration: Palestinians gather next to a section of Israeli separation barrier at the entrance to the west bank city of Bethlehem to watch a large screen showing the U.N. General Assembly vote. Thursday's vote came on the same day that the U.N. General Assembly in 1947 voted to recognize a partitioned state in Palestine, with the jubilant revelers then Jews. The Palestinians rejected that partition plan, and decades of tension and violence followed. Just before Thursday's vote, Israel's U.N. ambassador, Ron Prosor, warned the General Assembly that 'the Palestinians are turning their backs on peace' and that the U.N. can't break the 4,000-year-old bond between the people of Israel and the land of Israel. The vote had been certain to succeed, with most member states sympathetic to the Palestinians.Several key countries, including France, this week announced they would support the move to elevate the Palestinians from the status of U.N. observer to non-member observer state. Independence day: Palestinians celebrate as they watch a screen showing the U.N. General Assembly vote. Unlike the more powerful U.N. Security Council, there are no vetoes in the General Assembly, and the resolution to raise the Palestinian status only required a majority vote for approval. The vote grants Abbas an overwhelming international endorsement for his key position: establishment of a Palestinian state in the West Bank, Gaza Strip and east Jerusalem, the territories captured by Israel in the 1967 Mideast war. With Netanyahu opposed to a pullback to the 1967 lines, this should strengthen Abbas' hand if peace talks resume. The overwhelming vote also could help Abbas restore some of his standing, which has been eroded by years of standstill in peace efforts. His rival, Hamas, deeply entrenched in Gaza, has seen its popularity rise after an Israeli offensive on targets linked to the Islamic militant group there earlier this month. Israel has stepped back from initial threats of harsh retaliation for the Palestinians seeking U.N. recognition, but government officials warned that Israel would respond to any Palestinian attempts to use the upgraded status to confront Israel in international bodies. The Palestinians now can gain access to U.N. agencies and international bodies, most significantly the International Criminal Court, which could become a springboard for going after Israel for alleged war crimes or its ongoing settlement building on war-won land. However, in the run-up to the U.N. vote, Abbas signaled that he wants recognition to give him leverage in future talks with Israel, and not as a tool for confronting or delegitimizing Israel, as Israeli leaders have alleged. Big day: Palestinians celebrate on a street in Gaza City.