Clinton said on ABC's "This Week" that Israel and the Palestinians should and were continuing to seek an agreement even though current progress has been limited.
Clinton said Mideast peace talks have reached a serious level with a new sense of urgency created by Iran's nuclear program.
"Israel today is under tremendous security pressure, and they can look over the horizon and see even more when you've got a country like Iran standing by saying, 'We want to wipe you from the face of the Earth and annihilate you.'" Clinton said. "I mean, that does concentrate your mind."
The Palestinians, Clinton said, were also under pressure to develop their economy and civil infrastructure, which would only be accomplished if tensions with Israel were defused.
"Many Israelis are quite skeptical, just as many Palestinians are quite skeptical," Clinton said. "But … what's the alternative? I mean, what is the alternative?"