Announcing the deal in a joint statement, Trump, Netanyahu, and UAE's leader Sheikh Mohamed bin Zayed Al-Nahyan said that they had "agreed to the full normalization of relations between Israel and the United Arab Emirates".
They added that Israel would "suspend declaring sovereignty" over occupied Palestinian West Bank areas — an idea proposed in Trump's controversial earlier plan to resolve the conflict.
Sheikh Mohamed quickly stressed in a tweet that "during a call with President Trump and Prime Minister Netanyahu, an agreement was reached to stop further Israeli annexation of Palestinian territories".
But Netanyahu said shortly afterward in a television address that he had only agreed to delay, not cancel, the annexations, that the plans remained "on the table" and that he would "never give up our rights to our land".
Among other US allies in the Gulf, both Bahrain and Oman put out statements backing the normalization deal.
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But there was no immediate word from the region's heavyweight Saudi Arabia, which is likely to be cautious owing to the complex political calculations involved.
Annexation relief
The controversial Trump plan, unveiled in January, had offered a path for Israel to annex the Jordan Valley and Jewish settlements across the occupied West Bank, communities considered illegal under international law.
The Palestinians rejected the plan outright as biased and untenable, as did Israel's Arab neighbors, and it sparked fears of further escalation in a tense region.
UN chief Antonio Guterres said he hoped Israel's suspension of annexations under the plan could help realize a two-state solution with the Palestinians.
Annexation would "effectively close the door" on negotiations between Israeli and Palestinian leaders and "destroy the prospect" of a viable Palestinian state, he said.
President Abdel Fattah al-Sisi of Egypt, which signed a treaty with Israel in 1979 to opposition from across the Arab world, praised the deal on "the halt of Israel's annexation of Palestinian land", and said he hoped it would bring "peace".
His stance was echoed by US allies in Europe.
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