UNITED NATIONS - Secretary-General Kofi Annan warned Tuesday that tensions in the Middle East were "near the breaking point" and said the Israelis and Palestinians were equally responsible for fueling the conflict.

UN Secretary-General Kofi Annan speaks to the Security Council at the United Nations headquarters as they meet to discuss the situation in the Middle East Tuesday, Dec. 12, 2006. [AP]

In his last address to the Security Council as head of the world body, Annan offered tough words for both the Israelis and Palestinians, declaring that time was running out to negotiate a two-state solution to avoid a greater outbreak of violence.

Annan's criticism of Israel focused on its five-month-long military operation in the Gaza Strip, during which more than 300 Palestinians were killed, mostly militants. Israel launched the offensive after one of its soldiers was captured by Hamas-linked militants in June.

"The use of military force in densely populated civilian areas is a blunt instrument that only produces more death, destruction, recrimination and revenge," Annan said. "And as we have seen, it does little to achieve the desired goal of stopping terrorist attacks."

He said, however, the Palestinians will not achieve their goal of forming a sovereign state without renouncing violent acts. "No resistance to occupation can justify terrorism," he said.

Annan's speech was notably balanced in its criticism of both sides.

He noted that the Security Council has been accused of a "double standard" in applying sanctions to Arab and Muslim countries but not to Israel. But he warned those critics not to hold Israel to standards they wouldn't be willing to apply to other states.

Annan, whose 10-year stewardship of the United Nations ends Dec. 31, said the solution was an immediate return to talks on the stalled roadmap to a two-state solution backed by the so-called Quartet of Mideast peacemakers ¡ª the United Nations, the United States, the European Union and Russia.

"Tensions in the region are near the breaking point," he said. "The opportunity for negotiating a two-state solution will last for only so long.

"Should we fail to seize it, the people who most directly bear the brunt of this calamity will be consigned to new depths of suffering and grief. And extremists the world over would enjoy a boost to their recruiting efforts."

The Islamic militant Hamas group, which controls the Palestinian government, and President Mahmoud Abbas' moderate Fatah party have failed in recent attempts to form a national unity government, dimming hopes for renewed negotiations with Israel.

Hamas has thus far refused Israeli and Quartet demands to renounce violence, recognize Israel and honor past peace agreements. Prime Minister Ismail Haniyeh hardened the Hamas line on Friday when he said in Iran that his group will never recognize Israel or give up its "jihad-like movement until the liberation of Jerusalem."

However, in his speech to the Security Council on Tuesday, Palestinian U.N. observer Riyad Mansour said Abbas and senior PLO officials remain committed to the peace process with Israel.

"This is the cornerstone to solving any crisis in the region," he said.

Mansour, an Abbas supporter, attempted to downplay Hamas' role in peace talks by stressing they are the sole responsibility of the PLO, which is made up of Fatah members. A member of the PLO Executive Committee said Saturday the largely dormant group was reactivating its department that deals with Israeli negotiations.

A presidential statement adopted by the Security Council Tuesday also called for renewed peace talks between the two sides, but didn't refer directly to Hamas.

Israel's deputy UN Ambassador Daniel Carmon, meanwhile, rejected the assertion the Israeli-Palestinian conflict was the "source of all instability in our region," blaming extremist elements instead. He cited as an example Iran's hosting this week of a conference examining whether the Holocaust actually occurred.

"Iran's denial of the Holocaust, its pursuit of nuclear weaponry and its strategic backing of Hamas and Hezbollah - and who knows what next - threatens peace and security," Carmon said.