Israeli Prime Minister Benjamin Netanyahu thanked Guatemala with a "God bless you" on Christmas Day for deciding to move its embassy to Jerusalem, while the Palestinians said the Central American country was "on the wrong side of history".
In an official Facebook post on Sunday, Guatemalan President Jimmy Morales said he had chosen to relocate the embassy from Tel Aviv – siding with the United States in a dispute over Jerusalem's status – after talking to Netanyahu.
US President Donald Trump recognised Jerusalem as the capital of Israel on December 6, reversing decades of US policy and upsetting the Arab world and Western allies.
On Thursday, 128 countries rebuked Trump by backing a non-binding UN General Assembly resolution calling on the United States to drop its recognition of Jerusalem.
Netanyahu said, switching to English, in remarks to a weekly meeting of his Likud party faction in parliament:
God bless you, my friend, President Jimmy Morales, God bless both our countries, Israel and Guatemala
Guatemala and neighbouring Honduras were two of only a handful of countries to join Israel and the United States, which has pledged to move its embassy to Jerusalem, in voting against the UN resolution.
The United States is an important source of assistance to Guatemala and Honduras, and Trump had threatened to cut off financial aid to countries that supported the UN resolution.
The status of Jerusalem is one of the thorniest obstacles to an Israeli-Palestinian peace deal. Palestinians want East Jerusalem as the capital of a state they want to establish in the occupied West Bank and in the Gaza Strip. The international community does not recognise Israeli sovereignty over the entire city, home to sites holy to the Muslim, Jewish and Christian religions.
The official Palestinian news agency WAFA quoted Foreign Minister Riyad Al-Maliki as saying that Morales was "dragging his country to the wrong side of history by committing a flagrant violation of international law".
Prior to 1980, Guatemala – along with Bolivia, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Haiti, The Netherlands, Panama, Venezuela and Uruguay – maintained an embassy in Jerusalem.
Israel's passage in June 1980 of a law proclaiming Jerusalem its "indivisible and eternal capital" led to a UN Security Council resolution calling upon those countries to move their embassies to Tel Aviv, prompting their transfer.
Israel's ambassador to Guatemala, Matty Cohen, said on Army Radio that no date had been set for the embassy move, "but it will happen after" the United States relocates its own embassy to Jerusalem. US officials have said that move could take at least two years.
Tension has risen across the Palestinian territories since US President Donald Trump's decision to officially recognise Jerusalem as Israel's capital.
Most countries consider East Jerusalem, which Israel annexed after capturing it in a 1967 war, to be occupied territory, and say the status of the city should be left to be decided at future Israeli-Palestinian talks.
While the international community has almost unanimously disagreed with Donald Trump's announcement, reports suggest that the announcement was done with the pre-agreement of Egypt and Saudi Arabia, with the Saudi Arabia going as far as, allegedly, stating to the Palestinian President to accept a village on the outskirts of Jerusalem as the alternative Palestinian capital.