Serbia and Kosovo announced on Friday that they have normalised economic and diplomatic ties with Israel as part of US-brokered discussion, with Belgrade agreeing to move their embassy to Jerusalem and Pristina to recognise the Jewish state.
Serbia will become the first EU member state to relocate their embassy to Jerusalem, a move which only the United States and Guatemala have done as the disputed city remains at the centre of the Israel-Palestinian conflict.
The US moved its embassy from Tel Aviv to Jerusalem in 2017, going against decades of policy and threatening stability in the region.
Muslim-majority Kosovo will also set up its Israel mission in Jerusalem and in exchange earn Israel’s recognition, as it seeks to further legitimise its 2008 declaration of independence and statehood.
Netanyahu revealed Serbia‘s move during a speech on Friday, adding that the transfer will happen by July next year.
"I thank my friend the president of Serbia … for the decision to recognise Jerusalem as Israel‘s capital and to transfer his embassy there," Netanyahu said.
"I would like also to thank my friend President Trump for contributing to this achievement," he added.
It was the second piece of big news from Washington in a month for Israel on the diplomatic front. Last month, the US-brokered a deal for the United Arab Emirates to normalise relations with Israel, symbolically marked on Monday by the first commercial air flight between the two countries.
Senior Palestinian officials have condemned the move, with Saeb Erekat, the secretary-general of the Palestine Liberation Organisation (PLO), suggesting Palestine has again become election fodder for Trump months out from the upcoming US elections.
"Palestine has become a victim of the electoral ambitions of President Trump, whose team would take any action, no matter how destructive for peace … to achieve his re-election,” Erekat said in a tweet.
"This, just like the UAE-Israel agreement [to normalise diplomatic ties], isn‘t about Middle East Peace," he added.
The status of Jerusalem has remained a thorn in the side of peace in the Middle East since Israel captured the city during the 1967 ‘Six Day War’ and later annexed it in a move considered illegal by the international community.
Israel considers Jerusalem as their undivided capital, however, Palestine also seeks the occupied eastern side of the city as the capital of their future state.
The Old City, a UNESCO World Heritage Site, includes Islam‘s third holiest site – the golden Dome of the Rock and Al-Aqsa Mosque compound.
It is also home to the Western Wall, the holiest place where Jews are allowed to pray, and the Church of the Holy Sepulchre on the site where Christians believe Jesus was crucified and buried.
More than 200,000 Israeli settlers live in occupied East Jerusalem, which is home to about 300,000 Palestinians.