Palestinian Authority Prime Minister Salaam Fayad warned Friday that peace talks could collapse unless Israel changes course and accepts a more conciliatory approach. Fayad, who was in London for diplomatic talks, said Israel has not complied with any of the obligations set out at the Annapolis peace conference in November. "Israel has failed to meet any of its obligations from the 'road map,' including a freeze in settlement activity," he said. "That is most troubling. Unless that changes, the political process is being stripped of its meaning." Fayad gave an extremely pessimistic progress report after meeting with Foreign Minister Tzipi Livni. "The progress that started in Annapolis has been slow and does not suggest the likelihood of meeting the objectives from Annapolis of ending the conflict and launching a Palestinian state." Fayad said the Palestinian government has met its commitments The Middle East peace Quartet held talks in London on Friday and called on Israel to cease all settlement activity to prevent the collapse of the peace process. Senior diplomats from the US, Russia, the EU and the United Nations, which make up the Quartet, issued a statement calling for more Israel-Palestinian negotiations and an end to attacks from both sides. UN Secretary-General Ban Ki-moon, reading the statement after the Friday morning meeting, said the Quartet "expressed its deep concern" at Israel's continued settlement building on the West Bank and called for all outposts built since March 2001 to be dismantled. He also expressed concern over worsening humanitarian conditions in the Gaza Strip. The diplomats did not report any substantial progress during the Quartet meeting, but special envoy Tony Blair and US Secretary of State Condoleezza Rice said intense efforts are ongoing behind the scenes - and may bear fruit later this year. Blair, focusing on economic development in the West Bank, said he has been trying to convince the Israeli government to take a number of steps to ease checkpoints for the Palestinians so economic activity can speed up. "These past few months, we've been working on a series of proposals to improve conditions on the West Bank in particular," he said. "We're talking about trying to build a better life for ordinary Palestinians. I hope in the next few weeks to get a response from Israel." Thus far, Blair's efforts to spur Palestinian economic growth have been largely stymied. However, he said some growth was seen this year despite ongoing problems. Rice said there is still hope that agreement on a Palestinian state will be reached by the end of 2008 despite the lack of obvious progress. "This is difficult work with a long and painful history," she said. "But as a veteran of another long and painful conflict, in Northern Ireland, Tony would probably say: 'There is a lot of skepticism right up until there is a breakthrough.' " The Quartet meeting gave the Quartet a chance to discuss the limited progress since a US-sponsored meeting in Annapolis, Maryland, late last year tried to restart the Middle East peace process. A separate meeting was held Friday afternoon to discuss the crisis over Iran's continuing nuclear development program. Prior to the meeting, diplomats said they would discuss what to do next in an effort to persuade the Iranian government to drop its nuclear ambitions. Ban also met with foreign ministers from a number of Arab states in an effort to develop economic institutions in the West Bank and Gaza. A Paris donor meeting last year netted $7.7 billion in aid pledges to the Palestinians over three years. The money was earmarked both for the Palestinian budget and reform and development programs. The optimism that surrounded the pledges has long since faded, but diplomats hope an initiative to attract private sector investors may bear fruit. Blair, working as a Quartet envoy since he left Downing Street last summer, is working on the plan to spur economic development inside the Palestinian territories. He and Fayad met with investors Thursday night to talk up prospects there.