The first year of Palestinian self-rule in Gaza and Jericho was dogged by difficulties. Bomb attacks by Palestinian militants killed dozens of Israelis, while Israel blockaded the autonomous areas and assassinated militants. Settlement activity continued. The Palestinian Authority quelled unrest by mass detentions. Opposition to the peace process grew among right-wingers and religious nationalists in Israel.
Against this background, peace talks were laborious and fell behind schedule. But on 24 September the so-called Oslo II agreement was signed in Taba in Egypt, and countersigned four days later in Washington.
The agreement divided the West Bank into three zones: Zone A comprised 7% of the territory (the main Palestinian towns excluding Hebron and East Jerusalem) going to full Palestinian control;
Zone B comprised 21% of the territory under joint Israeli-Palestinian control;
Zone C stayed in Israeli hands. Israel was also to release Palestinian prisoners. Further handovers followed.
Oslo II was greeted with little enthusiasm by Palestinians, while Israel's religious right was furious at the "surrender of Jewish land". Amid an incitement campaign against Israeli Prime Minister Yitzhak Rabin, a Jewish religious extremist assassinated him on 4 November, sending shock waves around the world. The dovish Shimon Peres, architect of the faltering peace process, became prime minister.