Australia considers recognising Jerusalem as Israel's capital

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Australia is considering recognizing Jerusalem as the capital of Israel and moving its embassy to Jerusalem, according to a statement from the office of Israeli Prime Minister Benjamin Netanyahu.

On Tuesday, hours after Australian media began reporting on the possibility, Morrison called a press conference to say he was "open-minded" to proposals to formally recognize Jerusalem as the capital of Israel and move his nation's embassy to the holy city, a sharp break with the policy of successive Australian governments for decades.

He said it may be possible for his nation to support a two-state solution and recognise Jerusalem as Israel's capital - something that Australia had "to date assumed" was unfeasible.

He added that, in the next few months, he would "confer with cabinet colleagues" and "with other leaders around the world to gauge the perception of this and to make the case".

During Question Time, Mr Morrison told Parliament he had been in contact with Indonesian President Joko Widodo in the last day to discuss his position, as had the two foreign ministers. "I'm very thankful to him for this", Netanyahu tweeted.

"I think we have to challenge that", Morrison said.

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Morrison rejected suggestions that his decision to consider following Trump's lead was a result of United States pressure or related to the by-election in Sydney's Wentworth district on Saturday.

Mr Morrison said Australia remained committed to a two-state solution to the Israeli-Palestinian conflict.

Mr Morrison confirmed he had also ordered a review into Australia's involvement in the nuclear deal with Iran, again bringing Australian foreign policy closer to that of President Trump.

"I have made this decision without any reference to the United States", he said. "It has not come up in any discussion I have had with the president or with officials", Morrison said.

Prime Minister Scott Morrison said the idea was suggested to him by a former ambassador to Israel, Dave Sharma, who is a candidate for Morrison's conservative Liberal Party in a crucial by-election Saturday in a Sydney electorate with a large Jewish population.

Trump's move ruptured decades of worldwide consensus that Jerusalem's status should be settled as part of a two-state peace deal between Israel and the Palestinians.

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