Secretary of State John Kerry outlined a series of principles he said could form the basis of a future peace accord between Israel and the Palestinians.

Speaking December 28, Kerry said there must be a two-state solution that includes a “secure and recognized border” between Israel and the new nation of Palestine. And that any agreement must help Palestinian refugees, designate Jerusalem as a capital for both states and satisfy Israel’s security needs.

Kerry also defended the Obama administration’s decision to allow the U.N. Security Council to declare Israeli settlements illegal and warned that Israel’s future as a democracy is at stake.

“The United States did in fact vote in accordance with our values, just as previous administrations have done,” Kerry said at the State Department. “The vote in the United Nations was about preserving the two-state solution. That’s what we were standing up for.”

Kerry also emphasized the role that Israel’s settlements play in the peace talks. “Settlements are not the cause of the conflict,” he said, “but no one can ignore the reality of the threat they pose to peace.”

For years, Israel has expanded its settlements in the West Bank and East Jerusalem despite calls to rein them in. Israel’s government has argued that previous settlement freezes have failed to spur progress toward a peace deal and that stopping or removing them mustn’t be a precondition for future talks.

Kerry rebutted the arguments Israel has used to defend the settlements, declaring that “the settler agenda is defining the future of Israel.” He warned that unless something happens soon, Israel was at risk of a permanent occupation of Palestinian territory, and that that was an untenable outcome.

“Separate and unequal is what you would have, and nobody can explain how that works,” Kerry said.

Kerry reiterated that the Obama administration’s commitment to Israel was as strong as that of previous presidents, and that “no American administration has done more for Israel’s security than Barack Obama’s.”

ShareAmerica’s Leigh Hartman contributed to this report.