Originally posted by the Voice of America. Voice of America content is produced by the Voice of America, a United States federal government-sponsored entity, and is in the public domain. Australia Recognizes West Jerusalem as Israel's Capital by Associated Press SYDNEY -- Australian Prime Minister Scott Morrison said Saturday that his government had decided to formally recognize west Jerusalem as Israel's capital, but wouldn't move its embassy until there's a peace settlement. He said Australia would recognize East Jerusalem as Palestine's capital only after a settlement had been reached on a two-state solution. The Australian Embassy won't be moved from Tel Aviv until such a time. While the embassy move was delayed, Morrison said the government would establish a defense and trade office in Jerusalem and would also start looking for an appropriate site for the embassy. He said in a speech: "The Australian government has decided that Australia now recognizes west Jerusalem, as the seat of the Knesset and many of the institutions of government, is the capital of Israel.''