WASHINGTON, Dec 28 (Reuters) - U.S. Secretary of State John Kerry warned on Wednesday that Israel's building of settlements was endangering Middle East peace, expressing unusually frank frustration with the long-time American ally.
Israeli Prime Minister Benjamin Netanyahu shot back at Kerry and accused him of showing bias against the Jewish state.
In a 70-minute speech just weeks before the Obama administration hands over to President-elect Donald Trump, Kerry said Israel "will never have true peace" with the Arab world if it does not reach an accord based on Israelis and Palestinians living in their own states.
His remarks added to strain in the U.S.-Israeli relationship -- characterized by personal acrimony between President Barack Obama and Netanyahu -- after the United States cleared the way for a U.N. resolution last week that demanded an end to Israeli settlement building.
"Despite our best efforts over the years, the two-state solution is now in serious jeopardy," Kerry said at the State Department. "We cannot, in good conscience, do nothing, and say nothing, when we see the hope of peace slipping away."
"The truth is that trends on the ground - violence, terrorism, incitement, settlement expansion and the seemingly endless occupation - are destroying hopes for peace on both sides and increasingly cementing an irreversible one-state reality that most people do not actually want."
Kerry condemned Palestinian violence which he said included "hundreds of terrorist attacks in the past year."
His parting words are unlikely to change anything on the ground between Israel and the Palestinians or salvage the Obama administration's record of failed Middle East peace efforts.
In a statement, Netanyahu said Kerry's speech "was skewed against Israel." The Israeli leader said Kerry "obsessively dealt with settlements" and barely touched on "the root of the conflict - Palestinian opposition to a Jewish state in any boundaries."
The Israelis are looking past Obama and expect they will receive more favorable treatment from Trump, who takes office on Jan. 20. The Republican used his Twitter account on Wednesday to denounce the Obama administration, including its U.N. vote and the nuclear accord it reached with Iran last year.
"We cannot continue to let Israel be treated with such total disdain and disrespect. They used to have a great friend in the U.S., but not anymore," Trump said in a series of tweets. "Stay strong Israel, January 20th is fast approaching!"
Trump had openly lobbied against the U.N. resolution and would be expected to veto any further ones deemed anti-Israel.
He has vowed to move the U.S. Embassy from Tel Aviv to Jerusalem and has appointed as ambassador a lawyer who raised money for a major Jewish settlement, has cast doubt on the idea of a two-state solution and even advocated for Israel's annexation of the West Bank, a notion even further to the right than Netanyahu's own stance.
Kerry's speech provided some insights into an issue that he personally feels passionate about and had hoped to resolve during his years as secretary of state.
He defended the U.S. decision to allow the passage of a U.N. resolution demanding an end to Israeli settlements, saying it was intended to preserve the possibility of a two-state solution.
The United States abstained in the Dec. 23 U.N. resolution, in what many see as a parting shot by Obama who had an acrimonious relationship with Netanyahu.
Kerry vigorously defended the U.N. resolution and rejected criticism "that this vote abandons Israel."
"It is not this resolution that is isolating Israel. It is the permanent policy of settlement construction that risks making peace impossible."
In a pointed reply to Netanyahu who said last week that "Friends don't take friends to the Security Council," and who has insisted the Obama administration had orchestrated the resolution, Kerry hit back, saying: "Friends need to tell each other the hard truths, and friendships require mutual respect."
Kerry defended Obama's commitment to Israel's security and U.S. support for Israel in international platforms. Earlier this year, the United States and Israel agreed a $38 billion in military assistance over the next decade.