MANAMA — Israel and Bahrain signed an agreement on establishing diplomatic relations in Manama on Sunday, one month after a historic ceremony at the White House.

Why it matters: The "joint communique on establishing peaceful and diplomatic relations" is an interim agreement on the path to a comprehensive peace treaty, paving the way for the two countries to open embassies and sign more cooperation agreements.

The state of play: Treasury Secretary Steven Mnuchin and White House envoy Avi Berkowitz were in attendance at the signing alongside Bahrain's foreign minister and Israel's national security adviser.

• Mnuchin and Berkowitz arrived in Manama together with an Israeli delegation on the first direct flight of an Israeli airliner to Bahrain — El Al Flight 973, a reference to Bahrain's telephone code.
• Israeli and Bahraini officials held talks for several hours and inked eight memorandums of understanding (MOU) on visas, trade, agriculture, investments, direct flights, finance and investments.
• Mnuchin stood by as officials signed the MOUs alongside the agreement on diplomatic relations.

What they're saying: Today is just a first step for Israel, Bahrain and the U.S. and an important step for strengthening stability in the region. We have a big opportunity in security, in trade, in travel and in many other fields," Mnuchin said.

What's next: Minutes after the signing ceremony, a senior Israeli foreign ministry official handed the Bahraini foreign minister a diplomatic note with a formal request for opening an Israeli embassy in Manama. Israeli officials told me they want to open the new embassy before the end of the year.

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