Israel faces two existential threats, Kerry warns

"We approach this challenge believing that Israel has to be strong to make peace," Kerry said, "but that peace will make Israel stronger."

In a passionate speech, Kerry spoke to a crowd that included the top echelons of the Israeli and American diplomatic corps. US special envoy to the Middle East Martin Indyk and his team were in the audience, as well as Israel's ambassador to the US Ron Dermer, his staff and his predecessor, Michael Oren; former prime minister Ehud Olmert; Minister of Justice Tzipi Livni and Foreign Minister Avigdor Lieberman, among others.

The secretary said that the first half of a committed nine-month process, with the goal of achieving a final-status agreement by this spring, has been committed to "groundwork" preparations.

Waiting for a final accord "leaves things to mischief," history tells us, Kerry charged. "Unilateral is not the answer. You've got to resolve the fundamentals of this conflict."

Addressing Israeli concerns over a deal cut between world powers and Iran in Geneva last month over its nuclear program, Kerry said that the prospect of a weaponized Islamic Republic posed a "real" existential threat to the Jewish State that the Obama administration takes seriously.

But the Geneva interim deal, supported by the US, halts all progress in exchange for a modest relief in sanctions, Kerry said.

"You think $4 billion will make a difference?" Kerry asserted, noting that the most effective financial penalties would continue to take a toll, and that relief would be rolled out in increments over the six-month timeframe allotted by the deal.

Israel faced not one, but two existential threats, Kerry concluded: Iran, and the "demographic time bomb" that is the Palestinian question.

"Force cannot defeat or defuse the demographic time bomb. The only way to secure Israel’s long term future is through negotiations,” he said.

Should Netanyahu decide to move forward with a final peace accord, he added, the Arab League stands ready to fully recognize Israel within borders that accommodate "realities" on the ground that have shifted since 1967.

And Israel's gross domestic product could jump by as much as 6 percent should a deal be reached, Kerry claimed.

Earlier in the day, US President Barack Obama spoke to the forum and took questions on what he considers the two greatest foreign policy priorities of his presidency: the Middle East peace process and the prevention of a nuclear Iran.

"If, in fact, we can create a pathway to peace, even if initially it’s restricted to the West Bank, if there is a model where young Palestinians in Gaza are looking and seeing that in the West Bank Palestinians are able to live in dignity, with self-determination, and suddenly their economy is booming," he said, "that’s something that the young people of Gaza are going to want."

Implying that an initial peace accord might be tailored specifically to the West Bank, Obama said that such a comprehensive peace "is probably going to take place during the course of some sort of transition period."