The year 1997 began violently when on 1 January, Israeli soldier Noam Friedmann opened fire in the Arab market in Hebron, injuring six Palestinians. In spite of Friedman’s attempt to "kill Arabs to prevent redeployment from Hebron," Israel finally withdrew from 80% of Hebron on 17 January, following the issuing of EU and US letters of assurance regarding negotiations on outstanding interim issues and a timetable for ‘further redeployments’ from unspecified West Bank areas. Throughout January, the Israeli authorities raided several Palestinian institutions in East Jerusalem that it claimed are related to the PNA whilst continuing the confiscation of Jerusalem ID cards, now with the support of a High Court ruling. Israel’s announcement that it intended to increase the number of settlements classified as priority ‘A’ development areas on 29 January and news of a plan to construct a Tel-Aviv-Jerusalem rail link passing through the West Bank did little to alleviate an already tense situation. Meanwhile, NGO delegations and individuals from Palestine, Israel, Jordan and Egypt, signed the Copenhagen Declaration in Denmark, in which they expressed their support for Palestinian independence and a freeze on settlement expansion.

The early February arrival in Hebron of the first international observers was followed by a partial reopening of Shuhada Street and the Arab market, closed since 1994. Palestinians rejoiced when in mid-February, 31 women prisoners were finally released by Israel, 18 months later than scheduled according to the Oslo Accords. The Palestinians of Jerusalem, however, had little to celebrate as Israeli officials continued to raid Palestinian homes in search of ‘illegal’ residents and Jerusalem ID card holders who resided beyond the city limits.

The 26 February announcement of Israeli plans to construct the new Har Homa settlement at Jabal Abu Ghneim and the breaking of ground some two weeks later preceded the injuring of 400 Palestinians in fierce confrontations that continued throughout the month of March, PLO refusal to attend the first final status negotiations, due to start on the 17th, PNA rejection of Benyamin Netanyahu’s proposal that all final status issues be settled in 1997, and, following Israeli cabinet approval of the first of three ‘further redeployments’ that would leave the PNA with control (Area A) of some 10% of the West Bank, a PLO decision to suspend talks with Israel, in addition to two US vetoes of a UN Security Council resolution criticizing Israel’s unilateral actions at Jabal Abu Ghneim and a UN decision to add Israel to a list of 29 countries where the use of torture is widespread. Important meetings held in March included a mini summit in Gaza and an emergency session of the Islamic Conference Organization in Islamabad. At the end of March, a suicide bomb attack in a Tel Aviv café killed three Israelis, while the US Middle East envoy headed home having failed to salvage the crumbling Israeli-PLO peace talks.

Tension increased at the beginning of April with Israeli Foreign Minster David Levy’s rejection of an EU demand to freeze settlements, aimed at preempting a positive outcome from the Washington summit between Netanyahu and President Bill Clinton. Throughout the month, several Palestinians were killed and hundreds wounded in fierce West Bank clashes with Israeli soldiers and settlers. Meanwhile, the strike by Palestinian teachers continued following the arrest and suspension by the PNA of some of their colleagues while, on 25 April, the UN General Assembly approved a resolution that called for a halt in construction at Har Homa and an end to all illegal settlement activity in the Occupied Territories.

May was a busy month for the media, beginning on 5 May with the news of a new PNA law that imposed the death penalty on anyone selling land to Israelis and, later in the month, with a report that PNA monitoring institutions had discovered that US$326 of public funds had been misused by the PNA. On May 28, the summit conference between Egypt and Israel in Sharm Al-Sheikh ended with no results. The next day, a new crisis evolved in the wake of reports that Israel was planning to withdraw from less than 40% of the occupied West Bank and had confiscated 30,000 dunums of Palestinian land in the West Bank since January 1997, including 20,000 dunums located in the Jerusalem area.

US support for Israel was confirmed yet again on 10 June when the US House of Representatives voted by an overwhelming majority to recognize Jerusalem as the capital of Israel, allocating US$100 million for transferring the US Embassy from Tel Aviv to Jerusalem. Despite the drawback, Israeli and Palestinian negotiators met on 8 June for the first time in more than two months during a meeting attended by Egyptian mediator Osama Al-Baz.

In spite of the July meeting in Brussels between Israeli Foreign Minister David Levy and President Arafat, the political situation continued to deteriorate when Israel responded to a 30 July double suicide bombing in Jerusalem’s Mahane Yehuda market in which 13 Israelis were killed with a total sealing of the Palestinian territories and a widespread arrest campaign, during which the army was authorized to operate "if necessary" inside Palestinian-controlled territory. On 31 July, the PLC voted (56:1) that the current cabinet be replaced in light of the report of the PLC Commission of Inquiry on Government Performance that recommended the dismissal of the entire PNA cabinet on suspicion of corruption. In Hebron, meanwhile, an anti-Islam campaign initiated by setters resulted in dozens of Palestinians being injured during protests.

On August 1, 16 of the 20 PNA cabinet members offered to resign following the call for their dismissal. US diplomatic efforts continued with US envoy Dennis Ross holding several meetings with President Arafat and Netanyahu in a bid to revive Israel-PLO security coordination. On August 19, some 50 Jerusalemite families threatened with losing their residency rights if they left the city took shelter in a tent encampment camp erected on Islamic Waqf land near Sawaneh following the demolition of their homes.

September witnessed a visit to the region by US Secretary of State, Madeleine Albright, during which her call for a freeze on Jewish settlement was bluntly rejected by Israel. In the wake of the 4 September triple suicide bombing on Jerusalem's Ben Yehuda pedestrian mall in which four Israelis were killed, the Israeli cabinet decided to reestablish its intelligence network in the Palestinian Territories and to extend its military activities directly into Area A. On 25 September, two Mossad agents were caught after attempting to assassinate Hamas political bureau chief Khaled Mashaal in Amman, whilst the PNA, bowing to US and Israeli pressure to crack down on Hamas activities, closed 16 Islamic welfare institutions in Gaza. On 29 September, Israelis and Palestinians finally agreed to resume formal talks.

On 1 October, King Hussein’s demand for Israeli concessions following the failed Mossad attack in Amman resulted in the release from prison of Hamas spiritual leader Sheikh Ahmad Yassin, and on 4 October, PNA Finance Minister Nashashibi cited Israel’s decision to withhold PNA tax revenues as the reason for the PNA budget deficit, estimated at US$116 million. Israeli President Ezer Weizman’s 7 October suggestion that Israeli and Palestinian leaders gather in the US for a Camp David style summit was vehemently rejected by the Palestinians who insisted that Israel first implement its commitments to the interim agreements, as they have continued to do so ever since.

November 5 witnessed the departure of Palestinian experts to the Palestinian-Israeli talks in Washington, where they insisted on a settlement freeze and the conclusion of due Israeli pullouts form the West Bank. Ten days later, a seven-year old Palestinian boy died after being shot in the head by an Israeli soldier four days previously, leading to further confrontations. Toward the end of November, prisoners at Jneid prison in Nablus began an open-ended hunger due to the fact that all had been detained since mid-October without charge or trial.

On 8 December, US Secretary of State Madeleine Albright attempted to pressure Israeli and Palestinian leaders to make key decisions on peace, but whilst saying that Washington would not dictate the terms for Israel's troop withdrawal from the West Bank. One week later, the EU Summit in Luxembourg called on the Israeli government to live up to its commitments at the same time as the UN General Assembly reiterated the Palestinian people’s right to self-determination and Amnesty International condemned a draft Israeli law to exempt Israel's security forces from civil liability, which meant that thousands of Palestinians would not be entitled to compensation for injuries suffered during the Intifada. The day after, 16 December, the Israeli cabinet delayed defining its West Bank demands for a final peace deal with the Palestinians. On 23 December, the PLC voted to suspend proceedings for a week and to allow Presidents Yasser Arafat’s administration to make a major decision: whether to meet its demand to dissolve the cabinet and to endorse laws passed by the PLC or face a motion of no-confidence. The year ended with a final meeting of the PLC, during which President Arafat pledged to consider the PLC’s demands in greater detail. However, as yet, no concrete action has been taken.