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International relations

Australia's Jerusalem proposal puts Indonesia trade pact at risk

Morrison floats moving embassy while Muslim countries object

The U.S. government has recognized Jerusalem as the capital of Israel and moved its embassy earlier this year.   © Reuters

SYDNEY/JAKARTA -- Australian Prime Minister Scott Morrison said on Tuesday that he is considering recognizing Jerusalem as the Israeli capital and moving Australia's embassy there from Tel Aviv.

The proposal triggered immediate opposition from Muslim countries, including Indonesia, which is preparing to sign a free-trade pact with Australia later this year.

"The government will carefully examine the arguments put forward by Australia's former Ambassador to Israel, Dave Sharma, that we should consider recognizing Jerusalem as the capital of Israel," Morrison wrote in a joint statement with Foreign Minister Marise Payne. "Specifically, the government will examine the merits of moving Australia's embassy to West Jerusalem, in the context of our support for a two-state solution."

Australia's opposition ranks strongly denounced the statement, calling it a ploy to win votes in Saturday's by-election to select a replacement for Malcolm Turnbull, Morrison's ousted predecessor. The election will determine if the government maintains the majority in the lower chamber, and Sharma is the candidate for the ruling Liberal Party.

Turnbull's former electoral district, occupying the eastern part of greater Sydney, is an upscale area where over 10% of the residents are of Jewish background. The right-of-center Liberal-National governing coalition now controls exactly 75 seats in the 150-person lower house of the Australian parliament.

Indonesia, the world's largest Muslim-majority country, warned on Tuesday that the move could undermine the Middle East peace process. "Indonesia has asked Australia and other countries to keep supporting the Palestine-Israel peace process in accordance with the principles that have been previously agreed upon, and not take action that could threaten the peace process itself and global security," said Indonesia's Foreign Minister Retno Marsudi at a joint press conference with Palestinian counterpart Riyad al-Maliki in Jakarta, according to local media.

The Australian Broadcasting Corp. broke the news Tuesday that Indonesia could put on hold a landmark free trade pact, the Comprehensive Economic Partnership Agreement, which is scheduled to be signed later this year.

The Indonesian minister revealed on Twitter that she had summoned the Australian ambassador in Jakarta the same day and "conveyed Indonesia's strong concern" as well as "question[ed] the merit of Australia's announcement on the issue of Palestine."

Indonesia, which publicly supports Palestine's independence through the two-state solution, criticized the U.S. when it moved its embassy to Jerusalem in May. Tens of thousands of Muslims also took to the streets in Jakarta to protest the move. Indonesia holds no formal diplomatic ties with Israel.

Egypt's Ambassador to Australia Mohamed Khairat told Reuters that if Morrison does move the Australian embassy to Jerusalem, the decision "will have very negative implications on the relations between Australia and not only Arab countries but many other [Islamic countries] as well."

Meanwhile, for Morrison, a loss on Saturday would spell the end of the coalition's majority status. This must-win election is also the first under the new Prime Minister, who assumed office in August.

Inside Australia, the prime minister faces backlash from immigrant communities and liberals. This comes on top of the sagging support the conservative coalition is suffering ahead of the general elections set to take place by next May. 

Australia is also focusing on its alliance with the U.S., said a person close to the matter. The embassy move would follow the U.S.'s move in May and is seen to be a nod to the Trump administration. 

George Browning, president of the Australia Palestine Advocacy Network, called Morrison's plans "irresponsible" in a statement released Tuesday. The policy "compromises the future of millions of people in the Middle East for a handful of votes," he said.

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