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Indonesia warns Australia over possible embassy move in Israel

Australia should stick to policy of more than 40 years that its embassy be in Tel Aviv, not Jerusalem, says former PM.

Australia is to expect a "very negative reaction" from Indonesia if it follows the United States by moving its embassy in Israel from Tel Aviv to Jerusalem, a former prime minister warned on Tuesday.

Malcolm Turnbull spoke to reporters after meeting Indonesian President Joko "Jokowi" Widodo on the tourist island of Bali on Monday to discuss a bilateral free trade deal.

"The president expressed to me ... the very serious concern held in Indonesia about the prospect of the Australian Embassy in Israel being moved from Tel Aviv to Jerusalem," Turnbull told Australian Broadcasting Corp.

"There's no question that were that move to occur, it would be met with a very negative reaction in Indonesia."

Turnbull noted Indonesia is the largest majority-Muslim country in the world, "so we have to be very clear-eyed about that".

Prime Minister Scott Morrison said on Tuesday no decision had been made yet on the embassy's location.

Decades of policy

Turnbull said he was confident the free trade deal between Australia, a nation of 25 million people, and Indonesia, a near neighbour with a population of more than 260 million people, would be signed within weeks.

He also said Australia should stick with a policy of more than 40 years that kept its embassy in Tel Aviv.

Morrison, a long-time ally of Turnbull who had argued against replacing him in a leadership ballot of government legislators, floated the idea of moving the embassy days before a by-election in a Sydney electorate with a large Jewish population.

"Australia will always make our decisions on our foreign policy based on our interests and we'll do that as a sovereign nation," Morrison told reporters.

"We'll consult, we'll listen to others, but at the end of the day ... I will always put our interests first."

The Trump administration turned its back on decades of US policy last December by recognising Jerusalem as Israel's capital, and in May it moved the US embassy from Tel Aviv to Jerusalem.

The decision angered the Muslim world and was a major setback for Palestinian aspirations for statehood. 

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