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Jerusalem.
- Indonesia may be considering killing off a trade deal with Australia after it raised the idea of moving its Israeli embassy to Jerusalem.
- Morrison told reporters he was "open-minded" on moving Australia's embassy from Tel Aviv to Jerusalem, and recognizing Jerusalem as Israel's capital.
- The statement provoked Indonesia, has the largest Muslim population in the world, no formal diplomatic ties with Israel, and strongly supports the notion of Palestinian statehood, a senior Indonesian Government source told the Australian Broadcasting Corporation.
Indonesia may be considering killing off a trade deal with Australia after it raised the idea of moving its Israeli embassy to Jerusalem.
Morrison met with Indonesian President Joko Widodo met in September to discuss regional strategy, and announced they had concluded longstanding discussions towards a free trade deal between them. The deal, signed during Morrison's inaugural trip as Prime Minister, was set to be signed before the end of the year and would secure lower tariffs on certain goods.
Morrison's statements follow the USA controversially moving its embassy to Jerusalem in May, sparking mass rioting and international condemnation.
Both Israel and Palestine hold religious and historical claims to the capital city, and Palestine hopes East Jerusalem will be the capital of the future Palestinian state.
Morrison credited his changed stance on Jerusalem to Australia's former ambassador to Israel, Dave Sharma, who is a candidate in a by-election this weekend for the parliamentary seat previously held by ousted former Prime Minister Malcolm Turnbull.
Sharma, a member of Morrison's Liberal party, is running in the eastern Sydney electorate of Wentworth, which has a high proportion (12%) of Jewish residents. Morrison's policy flop led to speculation that he was attempting to appeal to the seat's Jewish community, who may support the embassy move and may influence Saturday's vote, which polls suggest is on a knife edge and threatening the government's one-seat majority in parliament.