US Secretary of State John Kerry said Friday that a permanent peace agreement must ultimately involve the full withdrawal of Israeli troops from Palestinian territories, and warned that the failure of the current round of talks to yield an accord would be catastrophic for both parties.

In a far-ranging speech to participants at the World Economic Forum in Davos, Switzerland, Kerry dismissed claims that the US was withdrawing from the Middle East, called for Syrian President Bashar Assad’s removal from power, and said Iran must back up its words with actions if it truly seeks better relations with the world. “If you are serious about a peaceful [nuclear] program,” he said of Iran, “it is not hard to prove to the world that your intentions are peaceful.”

The bulk of his address, however, focused on the US commitment to resolving ”this intractable conflict [that] has confounded administration after administration,” and the “unprecedented” efforts made by the US in the past year toward reaching an Israeli-Palestinian peace accord.

Everyone knows what the endgame to the conflict looks like, Kerry said, hinting at the outline of a possible framework agreement: “An independent state for Palestinians wherever they may be; security arrangements for Israel that leave it more secure, not less; a full, phased, final withdrawal of the Israeli army; a just and agreed solution to the Palestinian refugee problem; an end to the conflict and all claims and mutual recognition of the nation-state of the Palestinian people and the nation-state of the Jewish people.”

For their part, Kerry said, the Palestinians need assurances ”that at the end of the day their territory is going to be free of Israeli troops, that occupation ends.”

“But the Israelis rightfully will not withdraw unless they know the West Bank will not become a new Gaza, and nobody can blame any leader of Israel for being concerned about that reality,” he said. Hamas took over the Gaza Strip in 2007, two years after Israel withdrew unilaterally from the Strip.

While the top American diplomat did not detail the content of the current negotiations between the two sides, which he has been brokering since last July, he said that a central obstacle in the way of an accord was the resolution of security issues. US President Barack Obama shared his view, Kerry said, “that there cannot be peace unless Israel’s security and its needs are met.”

“Security is a priority, because we understand that Israel has to be strong to make peace. But we also believe that peace will make Israel stronger,” he said.

Kerry mentioned that the US, Israel, Jordan and the Palestinians have discussed the creation of a high-tech “security structure that meets the highest standards anywhere in the world” along the border with Jordan, capable of thwarting “an individual terrorist or a conventional armed force.”

But Prime Minister Benjamin Netanyahu has stated that an agreement with the Palestinians must involve Israeli security forces stationed along the strategically critical Jordan Valley even after Palestinian statehood; Netanyahu said earlier Friday that he would not dismantle settlements either. And Israel’s Defense Minister Moshe Ya’alon has derided Kerry’s high-tech security package as inadequate to fight terrorism on the ground.

Critical to an agreement, said Kerry on Friday, was managing to get the leaders on either side to make the “courageous decisions necessary to embrace what would be fair and what would work.”

Kerry warned that a breakdown in talks would be catastrophic. According to recent reports, the Palestinian leadership has already decided in principle to reject Kerry’s framework proposals for a deal and instead launch a global diplomatic and legal assault on Israel.

“The benefits of success and the dangers of failure are enormous for the United States, for the world, for the region and, most importantly of all, for the Israeli and Palestinian people,” he said.

Kerry lauded Palestinian Authority President Mahmoud Abbas’s commitment to nonviolence and negotiations, and warned that failure “will only embolden extremists and empower hardliners at the expense of the moderates.” He said a deterioration in security would jeopardize Israel’s economic juggernaut and increase isolation, and bring the Palestinians no closer to the independence they seek.

“If they fail to achieve statehood now, there’s no guarantee another opportunity will follow anytime soon,” he said.

Kerry added that “this issue cannot be resolved at the United Nations,” a path the Palestinians have attempted previously by seeking international recognition of statehood. “It can only be resolved between the parties.” He warned that unilateral acts by either side would precipitate a spiraling return to conflict.

The secretary of state emphasized the benefits both sides stood to gain through a peace agreement, pointing out that the Palestinians would achieve statehood and economic prosperity.

“For Israel, the benefits of peace are enormous as well, perhaps even more significant,” he said, stating that Israel would have immediate diplomatic recognition and economic ties with the Arab and Muslim world. It would potentially see a six percent increase in GDP per year, he argued.

“There are some people that assert this may be the last shot,” Kerry said of the current talks. “I don’t know the answer to that. I don’t want to find out the hard way.”