It was an attempt by the international community to revive the Israeli–Palestinian peace process through negotiations, involving Israel and the Palestinians as well as Arab countries, including Jordan, Lebanon and Syria.
On 28 January 1992, multilateral negotiations about regional cooperation were started in Moscow, attended by Israel, the Jordanian-Palestinian delegation and the international community, but without Lebanon and Syria.
[1][2] In addition to maintaining a permanent U.S. naval presence in the Gulf, providing funds for Middle East development, and instituting safeguards against the spread of unconventional weapons, Michael Oren notes "The centerpiece of his program, however, was the achievement of an Arab-Israeli treaty based on the territory-for-peace principle and the fulfillment of Palestinian rights.
[1] The Bush administration believed there was a window of opportunity to use the political capital generated by the U.S. victory in the Gulf War to revitalize the Arab-Israeli peace process.
A framework of objectives was formulated and the U.S., together with the Soviet Union, extended a letter of invitation, dated 30 October 1991 to Israel, Syria, Lebanon, Jordan, and the Palestinians.
From Washington's perspective, economic inducements would not be necessary, but in May, these entered the process with Israeli prime minister Yitzhak Shamir's request for $11 billion in U.S. loan guarantees, to help absorb immigrants on humanitarian grounds.
[4] Secretary Baker made frequent shuttle trips to the region between March and October 1991 in an attempt to find a procedural formula acceptable to all sides.
In light of Shamir's pro-settlement policy, Palestinians and many Arab governments viewed the request for Israeli loan guarantees as a test of America's credibility as mediator.
Israeli leaders opposed linking the loans to the political process; Shamir and the pro-Israel lobby in Washington decided to push forward with their request despite Bush's opposition.
With Bush's approval ratings high, and his unambiguous show of determination and will, he gained congressional support for the delay; following that, the diplomatic pieces soon fell into place and the parties convened in Madrid at the end of October.
Before the conference, Israel had threatened not to come if PLO representatives, or someone from outside the Gaza Strip and the West Bank, or someone from East Jerusalem would be part of the Palestinian delegation.
[8] The meetings were held in five separate forums each focusing on a major issue – water, environment, arms control, refugees or economic development.
[11] In The Palestine-Israel Conflict: A Basic Introduction, Gregory Harms and Todd Ferry argue that 'the symbolic significance of the Madrid conference far outweighed its accomplishments, which were thin indeed.'
The closing remarks presented below illustrate this hopeful sentiment: Israeli Prime Minister Yitzhak Shamir, 1 November 1991 "With an open heart, we call on the Arab leaders to take the courageous step and respond to our outstretched hand in peace"[13] Head of the Palestinian Delegation, Haydar Abd al-Shafi, 1 November 1991 "To the cosponsors and to the international community that seeks the achievement of a just peace in the Middle East, you have given us a fair hearing.