Bahrain joined the United Arab Emirates in agreeing to normalise relations with Israel on Friday, a move forged partly through shared fears of Iran, but one that threatens to leave the Palestinians further isolated.

US President Donald Trump tweeted the news after he spoke by phone to Bahrain's King Hamad bin Isa Al Khalifa and Israeli Prime Minister Benjamin Netanyahu, the White House said.

"This is truly a historic day," Trump told reporters in the Oval Office, saying that he believed other countries would follow suit.

"Opening direct dialogue and ties between these two dynamic societies and advanced economies will continue the positive transformation of the Middle East and increase stability, security, and prosperity in the region," the United States, Bahrain and Israel said in a joint statement.

The announcement comes one month after Bahrain's fellow Gulf Arab State, the United Arab Emirates, agreed to normalize ties with Israel under a US-brokered deal which is scheduled to be signed at a White House ceremony hosted by Trump on September 15.

The Israel-UAE ceremony will be attended by Israeli Prime Minister Benjamin Netanyahu and Emirati Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan. The joint statement said Bahrain's Foreign Minister Abdullatif Al Zayani would join that ceremony and sign a "historic Declaration of Peace" with Netanyahu.

On Friday, Netanyahu said Bahrain's decision marks a "new era of peace."

"For many long years, we invested in peace, and now peace will invest in us, will bring about truly major investments in Israel's economy -- and that is very important," Netanyahu said in a video statement.

Emirates Ministry of Foreign Affairs spokeswoman Hend al-Otaiba congratulated Bahrain and Israel, saying it marked "another significant and historic achievement which will contribute enormously to the stability and prosperity of the region."

But Palestinians were dismayed, fearing the moves by the UAE and now Bahrain will weaken a long-standing pan-Arab position that calls for Israeli withdrawal from occupied territory and acceptance of Palestinian statehood in return for normal relations with Arab countries.

"By normalising ties with the occupation, Bahrain is breaking all Arab resolutions. It is rejected, condemned and it represents a betrayal of the Palestinian cause," said Wassel Abu Youssef, a senior Palestine Liberation Organization official in Ramallah, in the Israeli-occupied West Bank.

In Gaza, Hamas spokesman Hazem Qassem said Bahrain's decision to normalise relations with Israel "represents a grave harm to the Palestinian cause, and it supports the occupation."

EYES ON SAUDI ARABIA

The easing of relations with Israel comes amid a backdrop of shared fears about the threat of Iran to the region. The biggest question now is whether Saudi Arabia, one of the most influential countries in the Middle East and a close ally of the United States, will follow suit.

The Trump administration has tried to coax other Sunni Arab countries, including Saudi Arabia, to engage with Israel. Riyadh has so far signalled it is not ready.

The agreements come against the backdrop of the US election campaign between Trump, who is seeking a second term on November 3, and Democrat Joe Biden. Foreign policy has not figured prominently in the campaign, but Trump is eager to present himself as a peacemaker even as he rattles sabres against Iran.

Trump's pro-Israel moves have been seen, in part, as an effort to bolster his appeal to evangelical Christian voters, an important segment of his political base.

Zaha Hassan, a visiting fellow at the Carnegie Endowment for International Peace, said Bahrain's move was "especially disturbing" to Palestinians.

"This move could not happen without a Saudi green light," she said. "[Saudi] is under pressure to normalise, but cannot because of its position as the custodian of Islam's holy places and the unpopularity of it on the street level.

"Bahrain was offered up as a consolation that will keep Saudi Arabia in Trump's good graces."

At the Arab League on Wednesday, the Palestinians sought but did not obtain a condemnation of the UAE-Israel accord from their fellow members. However they did secure renewed Saudi support for their right to statehood.

On Friday, the Saudi embassy in Washington did not respond to queries on whether its ambassador or another Saudi representative would attend Tuesday's signing ceremony.

Bahrain, a small island state, is home to the US Navy's regional headquarters. Riyadh in 2011 sent troops to Bahrain to help quell an uprising and, alongside Kuwait and the UAE, in 2018 offered Bahrain a $10 billion economic bailout.

Friday's deal makes Bahrain the fourth Arab country to reach such an agreement with Israel since exchanging embassies with Egypt and Jordan decades ago.

Last week, Bahrain said it would allow flights between Israel and the UAE to use its airspace. This followed a Saudi decision to allow an Israeli commercial airliner to fly over it on the way to the UAE.

The United States, Israel and the UAE have urged Palestinian leaders to re-engage with Israel. Negotiations last broke down between Israelis and Palestinians in 2014, and Palestinian President Mahmoud Abbas has refused to have political dealings with the Trump White House for more than two years, accusing it of pro-Israel bias.

On Friday Trump's son-in-law and senior adviser Jared Kushner told Reuters: "Everyone in the region is just down on the Palestinian leadership. The Palestinian leadership keeps making their case less and less relevant by acting the way are."