Treasurer Josh Frydenberg has toughened Australia's case for shifting the country's Israeli embassy to Jerusalem, as regional leaders took aim at the Morrison government over the plan.
The government is reviewing whether the embassy in Israel should be moved from Tel Aviv, which has sparked a war of words with Muslim nations in the region and delayed a trade deal with Indonesia.
Malaysian Prime Minister Mahathir Mohamad brought up the issue in a meeting with Scott Morrison in Singapore on Thursday.
"I pointed out that in dealing with terrorism, one has to know the causes," Dr Mahathir said after the meeting.
"Adding to the cause for terrorism is not going to be helpful."
Treasurer Josh Frydenberg said on Friday the Malaysian leader had "form".
"He has called Jews 'hooked-nosed people'. He has questioned the number of people that have been killed in the Holocaust. He banned Schindler's List as a movie being shown, though it showed the amazing story of a righteous gentile who saved many people from persecution," Mr Frydenberg told reporters in Melbourne.
He said shifting the embassy made sense.
"Australia already recognises Israel's sovereignty over West Jerusalem. It's where the Israeli Parliament is. It's where the Australian ambassador presents his or her credentials. It will be the capital of Israel under any two-state solution," he said.
Mr Morrison said a decision on the embassy would be made by Christmas, but rejected any suggestion the free trade deal with Indonesia was at risk.
"I do not conflate the issues," he told ABC radio in Darwin.
"What we need to understand is that Australia has to set its own foreign policy and all I have said is that we would consider this question if we believed that it would advance the issues of the two-state solution."
Mr Frydenberg earlier told ABC radio it was right to call out the "double standards" applied by some countries "against Israel and its history and its values".
Former Labor foreign minister Bob Carr said it was wrong for Mr Frydenberg to "assail leaders of friendly countries".
"What got into him?" Mr Carr tweeted.
Labor frontbencher Mark Dreyfus said the government had opened itself to criticism by making "foreign policy on the run" during the recent Wentworth by-election.
"Nobody has yet explained, not Mr Frydenberg, not Mr Morrison, how it could be in Australia's interests or in the interests of the peace process in the Middle East that Australia moves its embassy," Mr Dreyfus said.
Australian Associated Press
