Arguing that a two-state solution has failed to achieve peace between Israel and the Palestinians, Prime Minister Scott Morrison announced that his government is contemplating moving the Australian embassy to the Holy City, to somehow rejuvenate the negotiation process. In December, he tweeted that U.S. President Donald Trump’s announcement (to move the US Embassy to Jerusalem), though risky, carried with it an “opportunity to advance peace.” In May, Sharma tweeted that even if Australia didn’t follow the United States’ lead and move the embassy to Jerusalem we should at least consider recognizing Jerusalem as Israel’s capital (w/o prejudice to its final boundaries or potential status as capital of future Palestinian state). Australia is due to a sign a trade deal this year with

Indonesia, the world's biggest Muslim-majority country, where the Palestinian question is a sensitive issue and tens of thousands protested against Trump’s decision. The former envoy, who is a candidate for Australia’s Liberal Party in a crucial by-election next week – activated when a previous prime minister Malcolm Turnbull resigned his seat – argued that backing the move was not inconsistent with Australia’s long-running position of support for a two-state solution. READ MORE: Prince Harry and Meghan Markle arrive in Sydney, Australia for 16-day tour

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 byelection Saturday in a Sydney electorate with a large Jewish population. Mr Sharma said the United States should "make clear that Trump's statement is not an endorsement of Israel's claim of sovereignty over the entire city of Jerusalem, and that it expects a Palestinian capital in the predominantly Arab neighbourhoods of east Jerusalem will emerge during final status negotiations." The opposition Labor Party’s foreign policy spokesperson Penny Wong said the prime minister was “now so desperate to hang on to his job, he is prepared to say anything if he thinks it will win him a few more votes - even at the cost of Australia's national interest.”

The move has also been criticised by Australia’s Asian neighbours – with Indonesian Foreign Minister Retno Marsudi urging Mr Morrison not to take “steps that would threaten that peace process and stability of world security.”

The Israeli Prime Minister said Mr Morrison had informed him of his plans, adding “I am very thankful to him for this. Media playback is unsupported on your device Media caption Why the ancient city of Jerusalem is so important

The prime minister said one future scenario could involve Australia recognising a Palestinian Authority capital in East Jerusalem and Israeli capital in West Jerusalem. ‘Completely contrary to reality’: Trump’s Israel embassy move irreversible, US ambassador says

There have been many diplomatic efforts to realize a two-state solution, but the last US-led Palestinian-Israeli peace talks came to a halt in April 2014, under the Obama administration. The U.S. Embassy became the only foreign embassy in Jerusalem in May, and Guatemala and Paraguay followed Washington's lead days later and also moved their embassies, although Paraguay returned its mission to Tel Aviv last month.
Australian Prime Minister Scott Morrison announces that his government is considering recognising Jerusalem as the Israeli capital and relocating its embassy accordingly, in line with the United States, drawing local criticism and sparking outrage from members of the opposition. The announcement comes days before a by-election in which the governing party's candidate is Dave Sharma, a former ambassador to Israel.