Israel and Morocco have agreed to establish relations, US President Donald Trump announced on Thursday.
Morocco joins the UAE, Bahrain and Sudan in taking steps toward founding diplomatic relations with Israel in 2020, all agreements facilitated by the Trump administration.
"Another historic breakthrough today," Mr Trump tweeted.
"Our two great friends, Israel and the kingdom of Morocco, have agreed to full diplomatic relations – a massive breakthrough for peace in the Middle East."
Under the agreement, Morocco will establish full diplomatic relations and resume official contacts with Israel, grant access to its air space and open direct flights for all Israelis.
"They are going reopen their liaison offices in Rabat and Tel Aviv immediately with the intention to open embassies," White House senior adviser Jared Kushner told Reuters.
"And they are going to promote economic co-operation between Israeli and Moroccan companies."
Israeli Prime Minister Benjamin Netanyahu said: "I've always believed that this historic day would come. I've always worked for it."
Standing beside US and Israeli flags and a Hanukkah candlestick, wearing a yarmulke to celebrate the Jewish holiday, he thanked Mr Trump for his "extraordinary efforts to expand peace, to bring peace, to Israel and the peoples of the Middle East".
Mr Netanyahu also expressed gratitude to King Mohammed VI of Morocco for his "historic decision" to bring peace between the two countries.
"The people of Morocco and the Jewish people have had a warm relationship in the modern period.
"Everybody knows the tremendous friendship shown by the kings of Morocco and the people of Morocco to the Jewish community there.
"I think that this is the foundation on which we can now build. This peace will resume liaison offices quickly, between Israel and Morocco, and work as rapidly as possible to establish full diplomatic relations.
"We will also institute direct flights between Morocco and Israel, and Israel and Morocco, giving this bridge of peace and even more solid foundation."
The UAE's Sheikh Mohamed bin Zayed also praised the diplomatic breakthrough.
We welcome the United States recognition of Rabat’s sovereignty over the Moroccan Sahara, as well as the resumption of contacts and diplomatic relations between Morocco and Israel. A positive step towards our common quest for stability, prosperity, and peace in the region.
— محمد بن زايد (@MohamedBinZayed) December 10, 2020
David Friedman, the US ambassador to Israel who spoke alongside Mr Netanyahu at the Western Wall in Jerusalem's Old City, said: "What a perfect night to celebrate the normalisation and the peace, the light of peace between Israel and Morocco, on this festival of lights, at a time when the world has been in a dark place this past year and we are all searching for light.
"And now on this first night of this festival of lights, we usher in a new era of peace, with another Arab-speaking nation."
The news came moments after the US State Department announced that America would recognise Morocco's sovereignty over the Sahara.
"The United States recognises Moroccan sovereignty over the entire territory and reaffirms its support for Morocco’s serious, credible and realistic autonomy proposal as the only basis for a just and lasting solution to the dispute," the department said.
"The United States believes that an independent Sahrawi State is not a realistic option for resolving the conflict and that genuine autonomy under Moroccan sovereignty is the only feasible solution.
"We urge the parties to engage in discussions without delay, using Morocco’s autonomy plan as the only framework to negotiate a mutually acceptable solution."
Mr Kushner called Morocco “a great trade partner” and “a great intelligence partner” before defending the Trump administration’s decision to support Rabat’s sovereignty plan for the Sahara, which was a move strongly opposed by the Polisario Front and neighbouring Algeria.
“This is an issue that’s been out there for a long time, and quite frankly there’s just been no progress on a resolution,” Mr Kushner said.
“And the hope is that this step is – number one – recognising the inevitability of what is going to occur.
“We want the Polisario people to have a better opportunity, live a better life. And the president felt like this conflict was holding them back as opposed to bringing them forward.”
UN spokesman Stephane Dujarric said announcements from the US, Israel and Morocco would not halt efforts to support civilians in Palestine and Sahara, two spots that have been on the UN agenda for decades.
"Our efforts to find a solution to both of these issues remains unchanged and will remain unabated," Mr Dujarric said.
UN resolutions call for the creation of an independent Palestinian state and for the people of Sahara to vote by referendum to determine the territory’s sovereignty.
Both processes have been stalled for years.
"I applaud the anticipated establishment of official ties with Morocco, which presents an opportunity to anchor the long-standing relationship between our peoples, and formalise a rich and deep shared history that goes back centuries," Israeli Defence Minister Benny Gantz said.
"This is a significant step, which will further the defence and economic interests of both countries."
Israel's envoy to the UN, Gilad Erdan, spoke with his Moroccan equal Omar Hilale on Thursday, and the two agreed to mark the Jewish festival of Hanukkah together at an event in New York next week.
Mr Erdan described the deep ties" between the two countries, including the "large community of Jews of Moroccan heritage in Israel" who "have always remained proud of their roots".
