With the collapse of the Soviet Union and the end of the Cold War in the late 1980's and early 1990's, unequivocal U. S. diplomatic support for Israel came to an end. U. S. diplomats began to bring pressure to bear on the Israelis to make concessions to the Palestinians and other Middle Eastern states to achieve a lasting peace in the region. In 1991 war again interrupted the peace process. The Persian Gulf War resulted from Iraq's invasion of the tiny oil-rich nation of Kuwait.
Encouraged by mixed signals from U. S. diplomats, Iraqi armed forces under Saddam Hussein occupied Kuwait, a region Hussein considered to be legally part of Iraq. U. S. trading partners in Europe and Asia received much of their oil from Kuwait. Consequently, U. S. president George Bush secured a United Nations condemnation of Iraqi actions and a Security Council resolution calling for the expulsion of Iraqi forces from Kuwait by force of arms. A military force made up overwhelmingly of American troops landed in Kuwait, while American aircraft bombed Iraqi military targets and cities.
During the brief conflict, the Iraqis launched guided missile attacks on Saudi Arabia and Israel. The American-led U. N. forces quickly overwhelmed the Iraqis and drove them out of Kuwait, forcing Hussein to capitulate. U. S. military forces remained stationed in Saudi Arabia and Kuwait at the beginning of the twenty-first century to guard against renewed Iraqi attempts to incorporate Kuwait into Iraq.
After the war, U. S. diplomats renewed their pressure on the government of Israel to reach a general settlement with the Palestinians and the other nations of the Middle East. In 1994 the Israelis agreed in principle to the formation of an independent Palestinian state. Again under U. S. pressure, they agreed to negotiate with the PLO as the representative of the Palestinian people and allowed Arafat to return to Palestine. Formerly the Israelis had refused to talk to the PLO, dismissing it as a terrorist organization.
The negotiations for full autonomy for the Palestinians dragged on into the late 1990's, frequently interrupted by outbreaks of violence between Palestinians and Israelis. The chief stumbling blocks in the negotiations seemed to be the exact territorial boundaries between Israel and Palestine and the disposition of the city of Jerusalem, holy to both the Jews and the Muslims. Both sides wanted Jerusalem to become their capital city. At the end of the twentieth century no solution to these problems seemed to be in sight.