Shaath disputed this. "Claiming that considering Jerusalem the capital of the state of Israel and moving the Australian embassy to Jerusalem will contribute towards a regional peace process between the Israelis and the Palestinians?"
He said: "When sensible suggestions are put forward that are consistent with your policy positioning and in this case pursuing a two-state solution, Australia should be open-minded to this and I am open-minded to this and our government is open-minded to this".
Morrison's openness to recognizing Jerusalem and moving Australia's embassy there comes four days before a by-election in Sydney at which his center-right coalition runs the risk of losing its tenuous hold on power.
Turnbull's government had explicitly distanced itself from the decision by Trump to move the U.S. embassy from Tel Aviv to the holy city, branding it "unhelpful" to the peace process.
"Jerusalem is a final status issue and we [the Australian Government] have maintained that position for decades".
Indonesia, the world's biggest Muslim-majority country and a major buyer of wheat and beef, bought more than A$3 billion of Australian agricultural commodities in 2017, according to government data.
Morrison added, recognizing the new capital could improve relations in the region as there has not been significant progress between Israel and Palestine in recent years.
"It also makes little sense to pretend the western part of Jerusalem is not sovereign Israeli territory".
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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.
Most foreign nations have avoided locating embassies to the occupied city for fear of prejudging peace talks on the city's final status - until Trump unilaterally moved the U.S. embassy there earlier this year.
The status of Jerusalem is one of the most contested issues between Israel and the Palestinians.
In the Palestinian city of Ramallah, Shaath, a former foreign minister, said Morrison's announcement was a hostile action that destroyed the chances of peace.
"I have made this decision without any reference to the United States", he said.
The statement, signed by Egyptian ambassador Mohamad Khairat as the head the Council of Arab Ambassadors in Canberra, said recognising Jerusalem as Israel's capital would strengthen the Israeli position, be detrimental to the Palestinian cause, and hurt the peace process.
In December 2017, United Nations member states voted decisively at the General Assembly in favour of a resolution effectively declaring U.S. recognition of Jerusalem as Israel's capital to be "null and void" and demanding it be cancelled.
The Liberal candidate for Wentworth insists it's a coincidence the federal government is considering moving the Australian embassy in Israel to Jerusalem as he campaigns in the crucial seat with thousands of Jewish voters.
Indonesian Foreign Minister Retno Marsudi said his government questions the merits of Morrison's announcement and conveyed its "strong concern".