PARIS -- France on Friday hosted top diplomats from the West and the Arab world Friday to work on organizing a peace conference by year's end that would launch long-dormant Israeli-Palestinian negotiations -- despite slim chances of success.

France has said it felt compelled to act because the opportunities for setting up a Palestinian state alongside Israel are slipping away, while the situation in the region is deteriorating.

U.S. Secretary of State John Kerry and U.N. Secretary-General Ban Ki-moon attended, along with representatives from the Arab League, the European Union and key Arab states. Israeli and Palestinian representatives were absent.

The participants called on the two sides to genuinely commit to the two-state solution. They "are alarmed that actions on the ground, in particular continued acts of violence and ongoing settlement activity, are dangerously imperiling the prospects for a two-state solution", a joint statement said.

The diplomats also reaffirmed "their support for a just, lasting and enduring peace, with two states, Israel and Palestine, living side by side in peace and security" and welcomed "the prospect of convening before the end of the year an international conference".

French President Francois Hollande acknowledged that "we cannot substitute for the parties." He told the gathering that "our initiative aims at giving them guarantees that the peace will be solid, sustainable and under international supervision.".

Participants decided to set up teams by the end of the month to work on economic and security incentives for the Israelis and Palestinians for reaching a deal, French foreign minister Jean-Marc Ayrault said at a news conference.

Asked if he would support an international conference later this year with the Israelis and Palestinians attending, Kerry told reporters: "We're just starting, let's get into the conversations."

Israeli Prime Minister Benjamin Netanyahu has rebuffed the French initiative and said a deal can only be reached in direct negotiations.

Palestinian President Mahmoud Abbas has welcomed France's efforts, in part because it could potentially end a two-decade-old U.S. monopoly on mediation. Palestinians have long complained that the U.S. heavily favours Israel and cannot serve as an honest broker.

The Palestinians seek to establish a state in the West Bank, Gaza Strip and east Jerusalem, lands Israel captured in 1967. In 2012, the U.N. General Assembly overwhelmingly recognized a state of Palestine in these boundaries, though setting up an actual state would requires a deal with Israel.

For now, chances of reviving negotiations appear remote because of lack of common ground.

Unlike his predecessors, Netanyahu refuses to recognize the pre-1967 lines as a starting point for border talks, with agreed upon land swaps -- the internationally backed formula for a peace deal.

Abbas says there's no point going back to talks without ground rules and a timeline for a deal.

Continued Israeli settlement expansion on occupied lands and several months of renewed Israeli-Palestinian violence have also undermined trust.

It's not clear how the French efforts would bridge those gaps.

The last high-level Israeli-Palestinian negotiations were held in 2008 between Abbas and then-Prime Minister Ehud Olmert. Subsequent efforts to restart meaningful talks have failed, most recently in 2014 when Kerry aborted a mediation mission following a year of low-level Israeli-Palestinian meetings.

Abbas aides have said they want other world powers to get involved, like in last year's deal on Iran's nuclear program. The existing model of Israeli-Palestinian talks brokered by the U.S. has failed because of the power gap between an occupying power and those it occupies, they have said.

Israel has rejected the French initiative.

Dore Gold, the director general of Israel's Foreign Ministry, predicted Thursday that the Paris conference will "completely fail" and that the "only way to make peace" is through direct talks.

Israel has indicated an openness recently to some elements of an Arab peace proposal from 2002, which promised peace and recognition of Israel by the Arab and Muslim world in exchange for the creation of a Palestinian state. Gold gave no indication of any movement on that proposal.