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Indonesia may suspend Australia trade deal over Jerusalem stance

[JAKARTA] Australian Prime Minister Scott Morrison's indication of his support for moving Australia's embassy in Israel to Jerusalem has met with a frosty reception in Indonesia, with Jakarta reportedly mulling over whether to put an imminent trade deal with Canberra on hold.

The landmark free trade agreement was supposed to be signed before the end of the year, but a senior Indonesian government source told ABC News that the pact was now in doubt over Mr Morrison's position. The agreement was cemented during Mr Morrison's first international trip as Prime Minister.

Australia's ambassador in Jakarta has sought an urgent meeting with officials from the Indonesian Foreign Ministry to explain. However, given that one of Indonesia's foremost foreign policy positions is support for a Palestinian state, Mr Morrison's declaration in support of Jerusalem as Israel's capital has not gone down well in Jakarta.

It has the unintended effect of making it difficult for Indonesian President Joko Widodo to pursue a positive relationship with Canberra. Mr Joko has been pressing his government to conclude a free trade agreement with Australia, and has even proposed that Australia be allowed to join the Association of South-east Asian Nations (Asean).

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A senior Indonesian source told ABC News that Indonesian Foreign Minister Retno Marsudi had been "bombarding" her Australian counterpart, Ms Marise Payne, with concerned messages.

Both foreign ministers were due to meet in the Indonesian capital on Tuesday (Oct 16). The source said the recently sealed, but not yet finalised, trade deal could be suspended.

Prime Minister Morrison told Parliament during Question Hour he had been in touch with Mr Joko to discuss his position, as had the two foreign ministers.

"This is a regular part of our management of these foreign affairs relationships and I am pleased to be able to explain very clearly the nature of the announcements I have made today and I have been very pleased with the response that (we) have received from President Joko Widodo and we'll continue to work closely and cooperatively with our allies and with our partners all around the world on these issues," Mr Morrison said.