Trump may recognise Jerusalem as Israel's capital next week

President Donald Trump may announce next week that the United States will recognise Jerusalem as Israel's capital, a senior administration official said on Friday, a move that would upend decades of American policy and possibly inflame tensions in the Middle East.

Trump may make the controversial declaration in a speech on Wednesday, though he is also expected to again delay his campaign promise to move the US embassy to Jerusalem from Tel Aviv. The senior official and two other government sources said final decisions had not yet been made.

The Palestinians want Jerusalem as the capital of their future state, and the international community does not recognise Israel's claim to the entire city, home to Jewish, Muslim and Christian holy sites.

Donald Trump's son-in-law and Middle East peace envoy Jared Kushner will make a rare public appearance on Sunday, as the president mulls whether to move the US embassy to Jerusalem.

The coincidence of a policy forum, the embassy decision and an imminent trip to the region by Vice President Mike Pence has also stirred speculation that a new peace plan is in the works.

Kushner will address the annual Saban Forum, hosted by the Brookings think-tank for Israeli-American investor Haim Saban, on Sunday.

The forum, which brings together leaders from Israel and the United States, has served as a launching pad for ideas to bring peace between Israel and the Palestinians in the past.

Kushner, the 36-year-old husband of Trump's daughter Ivanka, has been tasked with making good on the president's promise to find a deal that may be "not as difficult as people thought".

Word of Trump's planned announcement, which would deviate from previous US presidents who have insisted Jerusalem's status must be decided in negotiations, drew criticism from the Palestinian Authority and was sure to anger the broader Arab world.

Nabil Abu Rdainah, spokesman for Palestinian President Mahmoud Abbas, said US recognition of Jerusalem as Israel's capital would "destroy the peace process" and "destabilise the region".

Such a move, however, may help satisfy the pro-Israel, right-wing base that helped Trump win the presidency and also please the Israeli government, a close US ally.

The senior US official, speaking on condition of anonymity, said details were still being finalised and could still change.

Another US official said Trump appeared to be heading towards recognising Israel's claim to Jerusalem but that it was not a done deal.

"We've nothing to announce," said a spokesperson with the White House National Security Council.

Trump is likely to continue his predecessors' practice of signing a six-month waiver overriding a 1995 law requiring that the US embassy be moved from Tel Aviv to Jerusalem, two officials told Reuters on Thursday.

But seeking to temper his supporters' concerns, another option under consideration is for Trump to order his aides to develop a longer-term plan for the embassy's relocation to make clear his intent to do so eventually, the officials said.

Trump pledged on the presidential campaign trail last year that he would move the embassy from Tel Aviv to Jerusalem.

But in June Trump waived the requirement, saying he wanted to "maximise the chances" for a new US-led push for what he has called the "ultimate deal" of Israeli-Palestinian peace. Those efforts have made little, if any, progress so far and many experts are sceptical of the prospects for success.

The status of Jerusalem is one of the major stumbling blocks in achieving peace between Israel and the Palestinians.

Israel captured Arab East Jerusalem during the 1967 Middle East war and later annexed it, a move not recognised internationally.

Arab governments and Western allies have long urged Trump not to proceed with the embassy relocation, which would reverse long-standing US policy by granting de facto US recognition of Israel’s claim to all of Jerusalem as its capital.

Visiting Washington this week, Jordan's King Abdullah warned lawmakers that moving the US embassy could be "exploited by terrorists to stoke anger, frustration and desperation," according to the Jordanian state news agency Petra.