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War of Attrition and regional diplomatic initiatives

Meanwhile, in January 1968, Nasser commenced the War of Attrition to reclaim territory captured by Israel, ordering attacks against Israeli positions east of the then-blockaded Suez Canal. In March, Nasser offered Yasser Arafat 's Fatah movement arms and funds after their performance against Israeli forces in the Battle of Karameh that month. He also advised Arafat to think of peace with Israel and the establishment of a Palestinian state comprising the West Bank and the Gaza Strip. Nasser effectively ceded his leadership of the "Palestine issue" to Arafat.

Israel retaliated against Egyptian shelling with commando raids, artillery shelling and air strikes. This resulted in an exodus of civilians from Egyptian cities along the Suez Canal's western bank. Nasser ceased all military activities and began a program to build a network of internal defenses, while receiving the financial backing of various Arab states. The war resumed in March 1969. In November, Nasser brokered an agreement between the PLO and the Lebanese military that granted Palestinian guerrillas the right to use Lebanese territory to attack Israel.

In June 1970, Nasser accepted the US-sponsored Rogers Plan, which called for an end to hostilities and an Israeli withdrawal from Egyptian territory, but it was rejected by Israel, the PLO, and most Arab states except Jordan. Nasser had initially rejected the plan, but conceded under pressure from the Soviet Union, which feared that escalating regional conflict could drag it into a war with the US. He also determined that a ceasefire could serve as a tactical step toward the strategic goal of recapturing the Suez Canal. Nasser forestalled any movement toward direct negotiations with Israel. In dozens of speeches and statements, Nasser posited the equation that any direct peace talks with Israel were tantamount to surrender. Following Nasser's acceptance, Israel agreed to a ceasefire and Nasser used the lull in fighting to move surface-to-air missiles towards the canal zone.

Meanwhile, tensions in Jordan between an increasingly autonomous PLO and King Hussein's government had been simmering; following the Dawson's Field hijackings, a military campaign was launched to rout out PLO forces. The offensive elevated risks of a regional war and prompted Nasser to hold an emergency Arab League summit on 27 September in Cairo, where he forged a ceasefire.