President Donald Trump signed a waiver Thursday delaying the move of the us embassy in Israel from Tel Aviv to Jerusalem. Every US president has signed such a waiver twice a year after a law was passed in 1995 mandating the relocation of the embassy to Jerusalem.
Another dominant figure in the group pushing for the embassy move is new U.S. Ambassador to Israel David Friedman.
For nearly 70 years, the us embassy has been based in Tel Aviv - along with embassies of almost all other countries with relations to Israel - because the USA has wanted Israeli-Palestinian peace negotiations to determine the final status of Jerusalem.
The official added that even should Trump keep the embassy in Tel Aviv for now, he may act to move it to Jerusalem in the future.
"President Trump made this decision to maximize the chances of successfully negotiating a deal between Israel and the Palestinians, fulfilling his solemn obligation to defend America's national security interests", the White House statement said.
Presidents of both parties have consistently renewed the waivers for six-month stretches.
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Palestinian leaders cheered the move and said it improved the atmosphere for future negotiations by demonstrating Trump's seriousness about the process.
But Netanyahu's office said Israel appreciated Trump's statement of "friendship".
The Palestinians praised Mr Trump's decision, saying it strengthens the chances of peace. Trump avoided any public mention of a potential embassy move during his visit to Israel and the West Bank in May.
One senior administration official told CNN: "As you have seen the President say, in the region and here in Washington, he thinks this is a hopeful moment for peace and he has committed his administration to try to facilitate progress towards peace and for that reason, he signed the waiver".
"We are ready to start the consultation process with the USA administration", he said after Trump's announcement.
Jerusalem's status is one of the most emotionally charged matters separating the Israelis and Palestinians. "We are serious and genuine about achieving a just and lasting peace".
A senior administration official told CNN Thursday that the embassy will move when conditions are right. The Prime Minister's Office awaited the speech with a mix of anticipation and trepidation, but discovered that the opponents won out, and the embassy move was dropped from the speech. The long-standing US position is that Jerusalem's fate must be worked out through Israeli-Palestinian negotiations. But Jerusalem is also important to Palestinians, who want the predominantly Arab eastern part of the city, which Israel captured in the 1967 Arab-Israeli war, to be the capital of a Palestinian state.