U.S. President Donald Trump on Wednesday declared Jerusalem as Israel's capital, hailing it as "very fresh thinking" and a repudiation of "the same failed strategies of the past" employed by his predecessors.
"It is time to officially recognize Jerusalem as the capital of Israel," Trump said from the White House.
Trump also said he would direct the State Department to begin the process of moving the U.S. Embassy from Tel Aviv to Jerusalem.
While Trump is fulfilling campaign promises domestically on both decisions, the U.S. risks infuriating the Muslim world, potentially sparking protests that could fray American alliances in the volatile Middle East.
Reactions from leaders in both the Mideast and around the world had already ranged from concern to alarm in anticipation of Trump's announcement.
Mahmoud Abbas, president of the Palestinian Authority, said Trump has destroyed America's credibility as a Mideast peace broker, adding in a televised statement that the decision "is a declaration of withdrawal from the role it has played in the peace process."
Jerusalem is the "eternal capital of the state of Palestine," he said. In Gaza, protesters burned American and Israeli flags.
Trump says U.S. still 'committed' to peace
Hamas, the militant group that controls Gaza, called Trump's recognition of Jerusalem as Israel's capital "flagrant aggression against the Palestinian people." Hamas urged Arabs and Muslims to "undermine the U.S. interests in the region."
Jerusalem's status is one of the most emotionally charged matters separating the Israelis and Palestinians. Both sides stake claims. Israel captured east Jerusalem — claimed by Palestinians for the capital of a future independent state — from Jordan in 1967 and annexed it, in a move not internationally recognized.
The U.S. Congress passed the Jerusalem Embassy Act in 1995, but every president since then has signed waivers to hold off moving the embassy.
"After more than two decades of waivers, we are no closer to a lasting peace agreement," Trump said Wednesday.
The embassy move would take years to complete, experts believe.
U.S. Secretary of State Rex Tillerson, in Germany, called Trump's decision a "bold move," and said planning for a site for a Jerusalem embassy would begin immediately.
While acknowledging the policy shift could lead to disagreement and dissent, Trump said it should not be interpreted as being one-sided.
The U.S. was still "deeply committed" to facilitating a lasting peace agreement between the U.S. and the Palestinians, the president said. But that message comes after he has moved to restrict travel to the U.S. from several Muslim-majority countries and retweeted controversial memes concerning Islamist violence.
Netanyahu 'profoundly grateful'
In reaction to Trump's announcement Wednesday, Israeli Prime Minister Benjamin Netanyahu said in a pre-recorded speech that he was "profoundly grateful," calling it an essential step towards a peace process.
"There is no peace that doesn't include Jerusalem as the capital of Israel," he said.
Jerusalem's Old City is home to several Jewish, Christian and Muslim holy sites, and Netanyahu said "Israel will always ensure freedom of worship."
Danny Danon, Israel's ambassador to the United Nations, called it a "courageous decision" on Trump's part.
"In 1948, President Truman was the first world leader to recognize the State of Israel and today President Trump righted a historic wrong by recognizing Jerusalem as our capital," said Danon. "Now is the time for all UN member states to follow the lead of our American friends and recognize our ancient capital of Jerusalem as the capital."
Antonio Guterres, secretary general of the UN, decried Trump's move while recognizing the "deep attachment" Jerusalem holds to many.
"In this moment of great anxiety, I want to make it clear: There is no alternative to the two-state solution. There is no Plan B," Guterres told reporters. "I will do everything in my power to support the Israeli and Palestinian leaders to return to meaningful negotiations."
French President Emmanuel Macron, at a news conference in Algiers, called Trump's announcement a "regrettable decision" that "goes against international law and all the resolutions of the UN Security Council."
Former UN secretary general Kofi Annan also criticized the U.S. president's move.
"There will be no lasting peace between Israelis and Palestinians unless both parties' rights and claims are respected in the historic city of Jerusalem," said Annan. "I deeply regret today's decision by the U.S. president."
Annan also urged those opposed to the decision to act "with restraint."
Leaders and senior government officials from Turkey, Jordan and Egypt were also quick to react with disapproval to Trump's speech.
Shortly before Trump spoke, the U.S. State Department issued a cable to all its diplomatic posts worldwide, asking its officials to defer non-essential travel to Israel, Jerusalem and the West Bank until Dec. 20, according to a copy of the cable seen by Reuters.
"Embassy Tel Aviv and Consulate General Jerusalem request that all non-essential visitors defer their travel to Israel, Jerusalem and the West Bank from Dec. 4-Dec. 20, 2017," said the cable, which did not specify a reason for the request.