The 1991 Gulf War was a disaster for the PLO and its leader Yasser Arafat whose support for Iraq alienated his wealthy supporters in the Gulf.
With Kuwait liberated from Iraqi control, the US administration devoted itself to Middle East peacemaking - a prospect more appealing to the financially weakened and politically isolated Arafat than Israel's hard-line Likud prime minister Yitzhak Shamir.
Numerous visits by the US Secretary of State James Baker prepared the ground for an international summit in Madrid. Syria agreed to attend, hoping to negotiate a return of the Golan Heights. Jordan also accepted the invitation.
But Shamir refused to talk directly with PLO "terrorists", so a joint Jordanian-Palestinian delegation was formed with prominent Palestinian figures- who were not from the PLO - taking part. In the days before the summit, Washington withheld $10bn of loan guarantees from Israel in a rare moment of discord over the building of Jewish settlements in the occupied territories.
A worldwide audience watched the historic summit begin on 30 October. The old enemies were each given 45 minutes to set out their positions. The Palestinians spoke of a shared future of hope with Israel, Shamir justified the existence of the Jewish state, while Syrian Foreign Minister Farouq al-Shara dwelled on Mr Shamir's "terrorist" past.
After the summit the US set up separate bilateral meetings in Washington between Israel and Syria, and with the Jordanian-Palestinian delegations.