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Following World War II, the British withdrew from their mandate of Palestine, and the UN partitioned the area into Arab and Jewish states, an arrangement rejected by the Arabs. Subsequently, the Israelis defeated the Arabs in a series of wars without ending the deep tensions between the two sides.

The territories Israel occupied since the 1967 war are not included in the Israel country profile, unless otherwise noted. On 25 April 1982, Israel withdrew from the Sinai pursuant to the 1979 Israel-Egypt Peace Treaty. In keeping with the framework established at the Madrid Conference in October 1991, bilateral negotiations were conducted between Israel and Palestinian representatives and Syria to achieve a permanent settlement. Israel and Palestinian officials signed on 13 September 1993 a Declaration of Principles (also known as the "Oslo Accords") guiding an interim period of Palestinian self-rule. Outstanding territorial and other disputes with Jordan were resolved in the 26 October 1994 Israel-Jordan Treaty of Peace. In addition, on 25 May 2000, Israel withdrew unilaterally from southern Lebanon, which it had occupied since 1982.

In April 2003, US President Bush, working in conjunction with the EU, UN, and Russia - the "Quartet" - took the lead in laying out a roadmap to a final settlement of the conflict by 2005, based on reciprocal steps by the two parties leading to two states, Israel and a democratic Palestine. However, progress toward a permanent status agreement was undermined by Israeli-Palestinian violence between September 2003 and February 2005. An Israeli-Palestinian agreement reached at Sharm al-Sheikh in February 2005, along with an internally-brokered Palestinian ceasefire, significantly reduced the violence. In the summer of 2005, Israel unilaterally disengaged from the Gaza Strip, evacuating settlers and its military while retaining control over most points of entry into the Gaza Strip.

The election of Hamas in January 2006 to head the Palestinian Legislative Council froze relations between Israel and the Palestinian Authority (PA). Ehud Olmert became prime minister in March 2006; following an Israeli military operation in Gaza in June-July 2006 and a 34-day conflict with Hizballah in Lebanon in June-August 2006, he shelved plans to unilaterally evacuate from most of the West Bank. Olmert in June 2007 resumed talks with the PA after Hamas seized control of the Gaza Strip and PA President Mahmoud Abbas formed a new government without Hamas.

Olmert in September 2008 resigned in the wake of several corruption allegations, but remained prime minister until the new coalition government under former Prime Minister Binyamin Netanyahu was completed in late March 2009, following the February general election.

Since then, Netanyahu has positioned Israel in the historical position of  expressing desire for peace.  The Obama administration has criticized the settlement expansion in Israel leading to tension in the generally close U.S.-Israel relationship.

In Prime Minister Netanyahu's speech at the UN General Assembly in September '09 he tied peace in the Middle East closely to Iran. For the first time, he also stated that the Palestinians deserve a state of their own and confirmed - "all of Israel wants peace." In return he asked that the Palestinians say "yes to a Jewish state. Just as we are asked to recognize a nation-state for the Palestinian people, the Palestinians must be asked to recognize the nation state of the Jewish people. The Jewish people are not foreign conquerors in the Land of Israel. This is the land of our forefathers."

The peace process continues to be stalled. In a meeting on Sept 22, '09 with President Obama, Prime Minister Netanyahu and Palestinian Authority President Mahmoud Abbas it was clear that nothing had really moved forward. Israel maintains that even without a freeze on settlements, she has made major concessions to the Arab world without anything in return. The Obama Administration hopes that they can move past the discussion on settlement freezes to permanent status negotiations of the region as a whole.

President Abbas, leader of Fatah, has said he is stepping down in January. Abbas blames the lack of movement in Israel's part for his decision to leave office. In the meantime, Israel continues to negotiate with Hamas for the release of prisoners, a swap that would further weaken Fatah's position in the eyes of Gazans.