The UN General Assembly, which reconvenes in September, voted overwhelmingly in November to upgrade the Palestinians from UN observer to non-voting member state.
The Palestinians have said that if attempts at reaching an accord between the two sides fail, they would pursue a strategy of international recognition on their own, which would make finding peace in the decades-long conflict more elusive.
"The time is getting near where we need to make some judgments. Last time, I was here, I said it's time for leaders to make some hard decisions," Kerry said. "That stands. It is time. Why is it urgent? It's urgent because time is the enemy of a peace process."
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But he added: "Long before September we need to be showing some kind of progress in some way. ... That's why I'm here for this visit and I hope it can be productive."
Kerry has been shuttling between the Israelis and the Palestinians in search of a formula to restart talks. So far, there have been no signs of a breakthrough.
Palestinian President Mahmoud Abbas is being propelled toward a stark choice that could come as soon as next week, define his legacy and set the course for his people in their conflict with Israel.
Israeli settlements are at the heart of the heart of the nearly five-year impasse in Mideast peace efforts. The Palestinians say they will not negotiate while Israel continues to construct settlements in territory they seek for a future state.