So, after all the hue and cry, America has officially recognized Jerusalem as Israel’s capital against international resolution.

The move had sparked protests across the Islamic world and clashes in Palestinian territories.

But Israeli Prime Minister Benjamin Netanyahu believes America made the right move and that recognising Jerusalem as his country's capital "makes peace possible".

The Israeli premier said what Trump had done was to "put facts squarely on the table" by acknowledging Jerusalem had been the capital of the Israeli state for 70 years and of the Jewish people for 3,000 years.

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"It doesn't obviate peace, it makes peace possible, because recognising reality is the substance of peace, it's the foundation of peace," he said in a statement alongside EU diplomatic chief Federica Mogherini.

Mogherini, who last week warned the Jerusalem decision could take the situation "backwards to even darker times", restated the EU's position that a two-state solution with Jerusalem as capital for both Israelis and Palestinians was the only sustainable way to resolve the conflict.

But Netanyahu pointed to a new US peace initiative as a possible way forward.

"There is now an effort under way to bring forward a new peace proposal by the American administration. I think we should give peace a chance. I think we should see what is presented and see if we can advance this peace," he said.

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