How Iran Spent Millions to Kill the Israeli-Palestinian Peace Process -- And Won

The War Nobody Remembers

The most consequential war Iran ever fought wasn't against the United States or Saudi Arabia. It was an undeclared, decades-long campaign to destroy any possibility of Israeli-Palestinian peace. And Iran won.

Between 1993 and 1996, as the Oslo Accords promised a historic breakthrough between Israel and the Palestine Liberation Organization, Iran poured between $100 million and $200 million annually into Hamas, Palestinian Islamic Jihad, and Hezbollah -- militant groups committed to sabotaging normalization through violence. Adjusted for inflation, that's roughly $200 million to $400 million in today's dollars.

The money paid for suicide bombings on Israeli buses. It funded weapons training in Iran for Hamas commanders. It bankrolled a terror campaign designed to make Israelis so afraid that they would abandon peace and elect hardliners instead.

It worked.

Buses, Bombs, and Netanyahu's Rise

Hassan Salameh, a senior Hamas commander later convicted of planning attacks that killed dozens of Israelis, testified that he traveled to Iran for weapons training and bomb-making instruction. One of the attacks he orchestrated came just before Israel's 1996 elections -- helping tip the vote toward Benjamin Netanyahu, who had been trailing in polls.

Israeli military intelligence assessed at the time that Iran wanted Netanyahu to win because he would weaken the peace process. He won by 30,000 votes.

A U.S. federal court later found that Hamas received between $25 million and $50 million from Iran during 1995-96 alone -- a period the court described as a "golden age" for Iranian support. For an organization founded only eight years earlier, the influx was transformative.

Iran's supreme leader, Ali Khamenei, called Yasser Arafat -- who signed the Oslo Accords -- "both a traitor and a fool." Tehran made clear it would fund anyone willing to destroy the agreements through violence.

The Peace That Died Young

The Oslo Accords faced opposition from Israeli settlers and Palestinian hardliners even without Iranian interference. But the suicide bombing campaign -- which introduced a brutal new tactic to the conflict -- shattered public confidence in peace on both sides.

In November 1995, a right-wing Israeli extremist assassinated Prime Minister Yitzhak Rabin at a peace rally in Tel Aviv. Many assume that killing ended the peace process. It didn't. Rabin's successor, Shimon Peres, remained committed to the talks, and polls showed most Israelis still supported them.

What killed Oslo was the relentless wave of bombings that followed. Hamas and Palestinian Islamic Jihad -- funded and trained by Iran -- made sure Israelis associated peace agreements with exploding buses. Israel responded with checkpoints and closures that cut Palestinians off from jobs, eroding support for the accords among Palestinians too.

The dynamic was deliberate. Tehran didn't need to convince majorities in Israel or Palestine to oppose peace. It just needed to create enough violence and fear to empower the extremists on both sides who already did.

The Forgotten War's Legacy

Iran didn't invent Palestinian resistance to Israel's existence, and it didn't create the Israeli settlement movement. Those forces predate the Islamic Republic. But Tehran exploited and amplified them with hundreds of millions of dollars, turning fringe militant groups into power brokers and ensuring that every attempt at compromise would drown in blood.

Netanyahu has now won all but three Israeli elections since 1996. He has openly bragged about preventing the establishment of a Palestinian state, calling the Oslo Accords a "terrible mistake." Hamas, which Iran continues to fund, now governs Gaza and remains committed to Israel's destruction.

The current war in Gaza, the expansion of settlements, the collapse of any peace process -- all of it traces back to the war Iran fought and won in the 1990s. A war most people have already forgotten.

But the Middle East is still living with the consequences.