Israeli Prime Minister Benjamin Netanyahu ordered the closure of Israel’s embassy in Paraguay on Wednesday, hours after the Latin American nation’s new government announced it would move its embassy back to Tel Aviv from Jerusalem.

Paraguay’s decision was a blow to Israel’s efforts to achieve external recognition of Jerusalem as its capital, which appeared to have gained some traction this year with the United States, Guatemala and Paraguay opening embassies there. Most countries do not recognize Israeli sovereignty over the entire city and say its final status should be set in peace talks.

Paraguay’s foreign minister called Israel’s reaction “disproportionate.” Paraguay President Mario Abdo defended his decision as part of an effort to support “broad, lasting and just peace” among Israelis and Palestinians.

The Palestinians said their foreign minister, Riyad al-Maliki, met Abdo two weeks ago and hailed Paraguay’s change of mind as “a new Palestinian diplomatic achievement.”

“Minister Maliki exerted a big effort during his meeting with the new president who instructed his foreign minister to arrange the issue,” the Palestinian foreign ministry said in a statement.

Israel acted swiftly after the news broke and a statement in English from the Prime Minister’s office said: “Israel views with utmost gravity the extraordinary decision by Paraguay which will cloud bilateral relations.

Netanyahu has attempted to persuade other countries to follow their lead.

On Wednesday while meeting Bulgarian Prime Minister Boyko Borissov, Netanyahu said: “I appreciate your decision to open an honorary consulate in Jerusalem, and I hope, I hope, I hope it’s the first step toward establishing the Bulgarian embassy in Jerusalem.”

(Reuters)