President Shimon Peres met on Sunday evening with Palestinian Authority President Mahmoud Abbas on the sidelines of the World Economic Forum on the Jordanian side of the Dead Sea.
Peres stressed the importance of quickly renewing peace talks between Israel and the Palestinians.
"The agreement will be based on the principle of two states to two nations - a Jewish state, Israel, that will live in peace and security alongside Palestine as an Arab state," President Peres said.
The president also remarked on US Secretary of State John Kerry's economic initiative, noting it is serious and extensive and gives an economic cover to the diplomatic process.
"We mustn't squander the opportunity for peace. We must find a way to return to the negotiating table, only there can we resolve our differences," he urged.
Abbas said the Palestinian people want peace, and that this can only be achieved when an independent Palestinian state is formed. He repeated calls to the Israeli public to accept the Arab Peace Initiative.