The agreement, which was the result of 18 months of negotiations, was signed in Jerusalem by Israel’s Deputy Foreign Minister Yossi Beilin and Msgr. Vatican Under-Secretary for Foreign Affairs Claudio Maria Celli. The World Jewish Congress played a key role in bringing about the establishment of relations between the two institutions.
Under the terms of the agreement, the Holy See agreed that it would not become directly involved in the "disputed territories and unsettled borders" in Israel, while reserving the right to speak out on moral issues regarding the conflict. It also called on the Vatican and Israel to "declare their respective commitment to the promotion of the peaceful resolution of conflicts among states and nations, excluding violence and terror from international life," as well as to fight antisemitism, racism, and religious intolerance.
The agreement also discussed the property rights and tax exemptions of the Roman Catholic Church within Israeli territory. While they were not able to resolve every point of contention, the Israeli and Vatican representatives still meet formally to deal with complicated legal issues.
The establishment of full diplomatic relations between Israel and the Vatican was a belated political consequence of the revolutionary changes the Catholic Church accepted in the Nostra Aetate declaration and a result of a new political reality during the Oslo peace process. The Fundamental Agreement, which The Jerusalem Post dubbed the beginning of "a new era of understanding," was a watershed moment between the Catholic Church in Israel and the State of Israel, and for Catholic-Jewish reconciliation.
"After 2,000 years, this is a very important move forward in the dialogue between the Jewish and Christian faiths," Beilin said after the signing. "It was time for them; it was time for us." Msgr. Celli said that “dialogue and respectful collaboration between Catholics and Jews in Israel, and throughout the world, will be marked by renewed energy.”
Respective diplomatic missions in Tel Aviv and in the Vatican opened on 15 June 1994. Saint Pope John Paul II, Pope Benedict XVI and Pope Francis have visited Israel since the signing of the agreement.