Also Sunday, police said a Palestinian stabbed several Israelis before he was shot and killed, the latest incident in more than two months of Palestinian attacks.
"If the Israelis don't hurry up to implement the two-state solution on the ground, they will lose", said Ahmed Qurei, a longtime Palestinian negotiator.
Kerry said that the distrust between the two sides has never been more profound.
He also condemned the building of settlements by Israel and said that almost all of Area C, which makes up about 60 per cent of the West Bank, was "effectively restricted" for Palestinian development. "Unfortunately, this is not what we are seeing".
"We have to be honest about what a one-state solution looks like", Kerry said, warning that Israel couldn't maintain its character as Jewish and democratic, asking rhetorically what the global reaction would be to such a scenario, and saying that true peace with its neighbors will not be possible under such conditions.
Israeli Prime Minister Benjamin Netanyahu said the core of the Israeli-Palestinian conflict is the Palestinian refusal to recognize Israel as a Jewish state and rejected USA warnings that Israel was devolving toward a single state.
"First of all, the Palestinian Authority incitement is continuing - it must stop".
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There is nothing Graham loves more than issuing apocalyptic warnings about foreign policy, and the cable news networks are always willing to lend an eager ear.
He noted that during a recent trip to Ramallah, Abbas had told him that the level of Palestinian despair about the future was unprecedented. He cited troubling school textbooks, maps, speeches and media reports that have to be revised. "We want both to show that they are serious, and we will be there every step of the way, and in every way possible to support them in that effort", Kerry said. "That's the problem today".
U.S. Secretary of State spoke of the halt in diplomatic contacts between Israelis and Palestinians on Saturday during the annual Saban Forum in Washington, where officials from both countries discuss the U.S.-Israeli relations and burning topics.
Netanyahu's comments were made as response to a rebuke by U.S. Secretary of State John Kerry, who accused the Israeli and Palestinian leaderships for the long-stalled peace process that blocks the two-state solution.
"It is important that it doesn't become a slogan, a throw-away phrase, that it becomes a policy, which is what it is meant to be", said the secretary of state.
Since then, 19 Israelis have been killed in Palestinian attacks, mostly stabbings and shootings.
Netanyahu phoned Swedish Prime Minister Stefan Lofven following comments Swedish Foreign Minister Margot Wallstrom made Friday in parliament accusing Israel of extrajudicial executions and disproportionality in responding to the current wave of terrorist attacks.
