Although, the new Palestinian self-rule implement had reduced violence in the Strip, peace only lasted for a few months. In November of 1994, police and Islamic fundamentalist groups Hamas and Islamic Jihad clashed together. Jihad opposed the Palestinian Liberation Organization and their sponsored peace process. In 1995, the two factions were held responsible for a number of suicide bombings and terrorist attacks against Jews in Israel and the Gaza Strip. The increased violence and tension pushed the peace process to its limits, and withered away at the Gazan economy. Israel closed its borders to thousands of workers employed in Israel.

In September 1995, Israel and the Palestinian Authority signed a second treaty, agreeing to extend the limited self-rule of Palestinians to almost all of the Palestinian towns and refugee camps located within the West Bank. The Palestinian elections were held in their controlled land of Gaza, Yasir Arafat was voted president of the Palestinian Authority. The Hamas and other Islamic fundamentalist groups boycotted the elections, adding to the increased tension within the Strip.