On 20 October 1986, Mr. Shamir took over as prime minister, and Mr. Peres moved over to the foreign ministry for the duration of the term of office of the government of national unity. The next two years were marked by differences of opinions between the two leaders on the nature of the peace process. The prime minister wanted direct negotiations based on the 1978 Camp David Accords formula, leading to a transition period of autonomy and eventual negotiations for the final disposition of the conflict. Mr. Peres was prepared to accept an international opening leading to direct negotiations, also based on resolutions 242 and 338 and the Camp David formula.
The foreign minister was able to win increasing support for his views in Europe and the United States. On 11 April, he met secretly with King Hussein in London and initiated the so-called London Agreement which spelled out the modalities for the negotiations. But Mr. Peres was unable to win the support of the Inner Cabinet for his formula (documents 248 and 249). And once again the process was temporarily frozen. In addition to the issue of the international accompaniment for the negotiations, other issues had to be resolved Among them the nature of the Palestinian representation and their linkage to the PLO and to Jordan, the method of their selection and the role of Israel in this.
The peace process, the Pollard and the Iran-Contra affairs overshadowed Israel-U.S. relations in 1987. Washington did not wish to impose on the parties its views on how to proceed towards negotiations. It was deeply involved in the Israeli decision to halt the Production of the Lavi fighter jet.
From 9 December 1987, Israel found itself involved with the intifada (uprising) in the territories under its control which, during its first few weeks, created serious image problems for the country and its army.
Togo became the fifth Africa nation to restore ties with Israel. There was also a new policy aimed at reducing Israel-South Africa economic and security ties. There was further improvement in ties with China, when Mr. Peres met in new York with China's foreign minister. Contacts with the Soviet Union continued Israel made it clear that for the Soviet Union to play a key role in the peace process, it must allow unimpeded Jewish emigration and restore full diplomatic relations with Israel, Ties with various European nations also warmed up. The European Economic Community expressed desire to play a meaningful role in the peace process.