On 4 May 1994 Israel and the Palestinian Liberation Organisation reached an agreement in Cairo on the initial implementation of the 1993 Declaration of Principles. This document specified Israel's military withdrawal from most of the Gaza Strip, excluding Jewish settlements and land around them, and from the Palestinian town of Jericho in the West Bank. Negotiations were difficult and were almost derailed on 25 February when a Jewish settler in the West Bank town of Hebron fired on praying Muslims, killing 29 people.
The agreement itself contained potential pitfalls. It envisaged further withdrawals during a five-year interim period during which solutions to the really difficult issues were to be negotiated - issues such as the establishment of a Palestinian state, the status of Jerusalem, Jewish settlements in the Occupied Territories and the fate of more than 3.5 million Palestinian refugees from the 1948 and 1967 upheavals.
Many critics of the peace process were silenced on 1 July as jubilant crowds lined the streets of Gaza to cheer Yasser Arafat on his triumphal return to Palestinian territory. The returning Palestinian Liberation Army deployed in areas vacated by Israeli troops and Arafat became head of the new Palestinian National Authority (PA) in the autonomous areas. He was elected president of the Authority in January 1996.