WASHINGTON - Secretary of State John Kerry says that if Israel rejects a two-state solution for peace with the Palestinian people, "it can be Jewish or it can be democratic."

Kerry was responding to withering Israeli criticism of the United States' abstention from a vote condemning Israeli settlement construction. He reiterated the American position that a two-state solution giving both Israelis and Palestinians a home state is the best roadmap to peace. He also made it clear that despite recent differences in policy, the United States continues to be Israel's closest ally.

Israel has been furious at the United States since the UN vote late last week. But Kerry said in a farewell speech at the State Department on Wednesday that the vote was "in keeping with" American values for democracy.