With the end of the Cold War and the dissolution of the Soviet Union, the PLO once more became diplomatically isolated. It had also sided with Saddam Hussein in the Gulf War (1990-1991), during which the Iraqi army had invaded Kuwait. Funding from donor states such as Saudi Arabia, Kuwait, and the Gulf States stopped.
American President George H.W. Bush and Secretary of State James Baker succeeded in forming a coalition of 34 nations, including eight Arab countries: Bahrain, Egypt, Morocco, Oman, Saudi Arabia, and Qatar, the United Arab Emirates, and Syria, and units of the Kuwaiti Armed Forces that had escaped across the border to Saudi Arabia. Conversely, Jordan, Yemen, and the PLO supported Saddam Hussein politically. On 17 January 1991, the coalition commenced with air operations against Iraqi positions in Kuwait and Iraq, followed on 23 February by a massive ground assault over an extensive front, Operation Desert Storm. One hundred hours later, the battle was over. During this so-called Gulf War, Iraq launched Scud missiles on targets in Saudi Arabia and Israel to provoke Israeli retaliation, which could have divided the coalition. Under American pressure, Israel did not retaliate.
Shortly after the liberation of Kuwait, Washington considered the time right (also in return for the Arab support) to organize a multilateral Middle East peace conference in Madrid (Spain, 30 October – 1 November 1991). Besides the United States and (formal host) the Soviet Union, delegations from Israel, Jordan, Syria, and Lebanon attended the meeting and representatives of Egypt, the Gulf Cooperation Council (as an observer delegation), and the European Union. The PLO – which experienced a severe drop in funding and political backing following its support of Iraq during the Gulf War – was not invited. Instead, prominent personalities from the West Bank (except occupied East Jerusalem) and the Gaza Strip – all close to the PLO – were added to the Jordanian delegation, which became twice the size of the other Arab delegations present.
Multilateral and bilateral talks and negotiations continued for months, without much result. Israel failed in achieving a separate peace agreement with Jordan. The talks with Syria became deadlocked on the issue of total Israeli withdrawal from the Golan Heights. The Palestinian delegation stuck to its demand of recognition by Israel of the right of self-determination of the Palestinian people, total Israeli withdrawal from the West Bank (including East Jerusalem) and the Gaza Strip, the dismantlement of the Jewish settlements, the establishment of a Palestinian state, and a solution for the refugees.
In late August 1992, Israeli Foreign Minister Shimon Peres briefed his American counterpart, Warren Christopher, about a ‘breakthrough’ in Oslo, where Israel and the Palestinian Liberation Organization (PLO), through Norwegian mediation, were on the brink of signing an agreement ‘on principles.’
In 1992, the stagnation in the Madrid negotiations prompted the new Labour government in Israel to look for alternatives. It found a willing partner in the once again diplomatically marginalized PLO leadership in Tunis. After months of secret diplomacy through Norwegian mediation, Israel and the PLO signed the Declaration of Principles on Interim Self-Government in Washington on 13 September 1993, followed by the widely publicized handshake of Israeli Prime Minister Yitzhak Rabin and PLO leader Yasser Arafat on the lawn of the White House, under the watchful eye of American President Bill Clinton. In accompanying letters, the PLO recognized ‘the right of the State of Israel to exist in peace and security.’ In contrast, Israel recognized the PLO as ‘the representative of the Palestinian people.’
The Declaration of Principles was followed by a series of agreements, referred to as the Oslo Accords. However, all major issues – such as the borders, East Jerusalem, the Jewish settlements, the position of the refugees – were postponed to so-called Final Status Negotiations, which would be initiated within two years, at the latest, after the formal start of the Interim Phase (4 May 1994-4 May 1999).
For Jordan, the Oslo Process had removed the last obstacle to striking a peace deal with Israel. On 14 September 1993 – one day after the Declaration of Principles – the Israel-Jordan Common Agenda was announced. Finally, and President Clinton’s presence, the Israel-Jordan Peace Treaty was signed in the Arava Valley/Wadi Araba (Israel) on 26 October 1994, close to the border with Jordan.