Israel reacted angrily on Wednesday to Paraguay’s decision to move back its embassy to Tel Aviv, announcing that it will shut its Asuncion mission. Prime Minister Benjamin Netanyahu, who is also the foreign minister, ordered the closure of Israel’s embassy in Paraguay hours after the Latin American nation said it had decided to return its embassy from Jerusalem to Tel Aviv. "Israel views with utmost gravity the extraordinary decision by Paraguay which will cloud bilateral relations,” a statement in English from the Prime Ministers office said. Explaining the new Paraguayan move, the countrys foreign minister, Luis Alberto Castiglioni, said: "Paraguay wants to contribute to an intensification of regional diplomatic efforts to achieve a broad, fair and lasting peace in the Middle East." Former Paraguayan President Horacio Cartes traveled to Israel to inaugurate the new embassy in May. He was replaced by Mario Abdo, also a member of the conservative Colorado party, last month. The Palestinians said their foreign minister, Riyad al-Maliki, met Abdo two weeks ago and hailed Paraguays 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. The status of Jerusalem is one of the thorniest obstacles to forging a peace deal between Israel and the Palestinians. Israel regards all of the city, including the eastern sector that it annexed after the 1967 war, as its capital. But the Palestinians, with broad international backing, want East Jerusalem for the capital of a future state they hope to establish in the occupied West Bank and Gaza Strip. Negotiations between the two sides broke down in 2014. In December, US President Donald Trump recognized Jerusalem as Israels capital, reversing decades of US policy and upsetting the Arab world and Western allies. The move sparked weeks of protests in the Palestinian territories and a wave of international condemnation.