Washington's stunning announcement leads Yitzhak Shamir to form another national unity government, with Yitzhak Rabin again as defense minister and Shimon Peres as finance minister.

Rabin is convinced that Israel needs a political initiative to end the Intifada and deflect the PLO.

He persuades Shamir to revive the Camp David-era autonomy plan, but this time it is stripped of its Jordanian component and aimed specifically at the Palestinians.

Israel is also facing a new U.S. administration, led by President George H. W. Bush, which is determined to restrict Israeli settlement expansion.

Efforts by the United States to create an Israeli-Palestinian negotiation on autonomy, however, are rejected by Shamir, who insists that the Palestinian negotiating team be drawn exclusively from residents of Gaza and the West Bank and not from Jerusalem or the PLO.

Peres thereupon resigns from the unity government, only to be outmaneuvered by Shamir, who forms a Likud-dominated coalition that excludes Labor.

The prime minister decides to ride out the Intifada while concentrating on a sudden breakthrough with the Soviet Union: as part of Soviet leader Mikhail Gorbachev's reforms, a massive number of Soviet Jews are allowed to emigrate to Israel (the exodus will continue after the Russian Federation is created in the early 1990s.

Included among the hundreds of thousands of new arrivals are many highly trained doctors, engineers, and scientists.)