Hungary established full diplomatic ties with Israel Monday, becoming the first East bloc nation to revive relations with Jerusalem in more than 20 years.
Hungary's official news agency MTI announced the move shortly after Israeli Foreign Minister Moshe Arens arrived in the capital on an official visit.MTI said an agreement on the re-establishment of diplomatic relations was signed by Arens and Hungarian Foreign Minister Gyula Horn.
In Jerusalem, an official in Prime Minister Yitzhak Shamir's office who spoke on condition of anonymity confirmed the signing. Israeli Foreign Ministry officials declined comment.
All Soviet bloc nations except for Romania cut diplomatic ties to Israel after the 1967 Middle East war, when Israel captured portions of Syria, Jordan and Egypt.
Hungary, looking for more trade ties with the West, has been seeking removal of trade barriers imposed by Israel. The Israelis have stressed they extend trade preferences only to countries with which they have full diplomatic ties.
In September 1987, Hungary and Israel agreed to establish interest sections in each other's country.
Relations remained uneasy, however, and a month after the agreement was signed in Switzerland concerning interest sections, Hungary canceled a planned visit by Industry Minister Ariel Sharon.
Israeli officials said at the time that Arab countries put pressure on Hungary not to resume ties, canceling more than $300 million in orders for goods and services.
Israeli officials had expected that Hungary would be the first East bloc country to resume ties. Israel also has an interest section in Poland and low-level diplomatic contacts with the Soviet Union.
Shortly before an April visit to Budapest, Shamir said he hoped there would be normal diplomatic relations between the two countries "in the very near future."
Earlier, Hungarian Premier Miklos Nemeth had said he expected diplomatic relations to be restored by June.