Washington (CNN) Donald Trump's designated ambassador to Israel signals a potential shift in long-standing US policy that has implications for Washington's relationships in the region, with Europe and even the American Jewish community.

The President-elect tapped New York-based attorney David Friedman Thursday to represent the United States. Friedman, who maintains a residence in Jerusalem, is known for hardline views that depart from decades of established American policy and in some cases are to the right of Israeli Prime Minister Benjamin Netanyahu.

Friedman argues that Israeli settlement construction in Palestinian areas shouldn't be illegal and has called the effort to find a two-state solution an "illusion." In Trump's announcement, the bankruptcy lawyer and Orthodox Jew welcomed moving the embassy from Tel Aviv to "Israel's eternal capital, Jerusalem" -- settling in one phrase a fraught issue that has been designated for final peace talks, as Palestinians claim Jerusalem as their capital as well.

The upshot, analysts and experts say, is that there's likely turbulence ahead. The Israeli-Palestinian conflict has ebbed as an issue of concern for the Middle East, roiled by five years of war that have changed regional dynamics. But a US shift in the status quo of Jerusalem -- home to the third-holiest site in Islam as well as the holiest in Judaism -- and away from forging a state for the Palestinians, long seen as an important cause by other Arabs, could revive regional tensions.

"Immediate reaction will be muted, but over time, if the US does support a dramatic change in the status quo that undermines Palestinians or undermines chances for some sort of independent Palestinian state in the future, it's going to cause a problem for Arab governments," said Haim Malka, deputy director of the Middle East Program at the Center for Strategic and International Studies. "And then it could become a point of contention between those Arab governments and the US government."

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The Israeli Embassy in Washington declined to comment, saying it expected Netanyahu to address Friedman's nomination at a Sunday Cabinet meeting. But Deputy Foreign Minister Tzipi Hotovely welcomed the nomination and said Friedman's views reflected a "desire to strengthen the standing of Israel's capital Jerusalem at this time and to underscore that the settlements have never been the true problem in the area."

Palestinians, however, expressed dismay.

Mustafa Barghouti, a member of the Palestinian Liberation Organization, said it was "not encouraging" to have Friedman be nominated, adding that, "People who say there is no place for a Palestinian state in the new American administration are changing all of the promises that were made by all previous administrations."

Talk about transferring the US Embassy to Jerusalem "would be, in our opinion, a violation of international law," he said, describing the climate of this appointment as "very dangerous, because if the hope for a two-state solution is killed, then what's the alternative for Palestinians?"

There are also US relationships with other countries in the region to consider. While the US is less dependent on Middle Eastern oil, Washington still works closely with Arab partners on counterterrorism efforts, intelligence-sharing and the war in Syria. Egypt offers the US military priority passage through the Suez Canal and overflight rights, while Saudi Arabia reportedly provides bases for US drone flights.

But the Trump team is arguing that this choice will help shore up the US-Israel relationship, which has been strained by differences between Netanyahu and President Barack Obama. Israel has sought international recognition of Jerusalem as its capital for decades, and the issue is one of the most emotionally resonant with Israeli citizens and many Jews worldwide.

Jason Greenblatt, who, with Friedman, was a co-chair of Trump's Israel Advisory Committee, said Friedman "is a wonderful choice to serve as the United States ambassador to Israel." He added that Friedman "has tremendous passion for and devotion to Israel. David's appointment is proof positive that President-elect Trump will be a true friend to Israel."

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It's unknown what a Trump administration will actually do once it's in office. There's also the question of how prominent figures within the administration will influence policy.

Trump's pick to lead the Pentagon, retired Gen. James Mattis, has broader experience and relationships in the Arab world than Friedman, Malka noted, "and they may take those relationships into consideration when they're making decisions about Israel and the Palestinians."

And in the wake of the Arab Spring, which has seen governments change and violence sweep the Arab world, the cause of the Palestinians has decreased in primacy.

Right now, "Palestinians are a pretty low priority for the Arabs," said one Middle East expert who asked to speak anonymously because of ties to the incoming administration. "But if you change the status quo, that could change the calculations of the leadership of these countries and set back some of the progress" that Israel has made in developing better ties to the region.

Eric Trager, an Egypt expert with the Washington Institute on Near East Policy, said repression under the country's current leader could mean people are more afraid to publicly protest the US and Israel than they have been in the past.

But he notes that an embassy move would "likely create complications for Jordan," whose King is the official custodian of the Muslim holy site in Jerusalem and whose population is 60% Palestinian.

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Official US recognition of Jerusalem as the capital of Israel would also cause trouble for Saudi Arabia, said Bruce Riedel, director of the Intelligence Project at the Brookings Institution and a former CIA analyst.

"If the US does move the embassy to Jerusalem and does it in a way that the ambassador-designate says -- which is a recognition that it is the eternal, undivided capital of Israel -- I think the Saudis will find that very, very hard to ignore and the Israeli-Palestinian conflict will come back onto the agenda," Riedel said.

The Jerusalem Embassy Act of 1995 requires the US government to move the embassy to Jerusalem, but the law includes a waiver if presidents deem there's a threat to national security. Presidents Bill Clinton, George W. Bush and Barack Obama all used the waiver to decline to relocate the embassy after being elected.

Shiite Iran, the Saudi's great religious and geopolitical rival, has publicly heaped scorn on Sunni Saudi Arabia for its closer ties to Israel, using it as a propaganda tool in an attempt to turn other Arabs against the region's wealthiest country.

Riedel called moving the embassy to Jerusalem a "self-inflicted wound" for Washington: "This would undermine whatever small degree to which the United States has been seen as an honest broker" Riedel said. The suggestion "really undermines and signals that the two-state solution, if not dead, is comatose and would require extraordinary action to revive."

Arab reaction has been muted, but privately diplomats expressed confusion and concern about the pick, which one diplomat said flies in the face of Trump's stated goal of being "neutral" when it came to Middle East peace.

Just this week, Walid Phares, a foreign policy adviser to Trump during the campaign, told Arab diplomats the President-elect hoped to negotiate what he has called the "ultimate deal" between Israelis and Palestinians.

"And then he goes and appoints someone like David Friedman who holds these views," one diplomat said. "It's insulting."

That may also complicate US relationships with European allies who have been strongly supportive of the search for a two-state solution.

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In reaction, a burgeoning movement to boycott, divest from and sanction Israel could grow stronger, and "you could see stronger European moves in international organizations and more European Parliaments recognizing a Palestinian state," Malka said.

At the same time, some supporters of Israel think that having the strong backing of the United States could help neutralize the issue on the international agenda, with Washington's veto power at the UN Security Council tacitly keeping European and other countries less inclined to act against Israel.

Friedman's appointment and a rightward shift in policy could also deepen rifts within the American Jewish community, Malka said, because he "is associated so closely with pro-settlement and rightwing causes in Israel, which is are ideals which are at odds with the majority of the American Jewish community."

Friedman has been openly contemptuous of the liberal Jewish organization J Street, which openly favors a two-state solution, calling them "worse than kapos," a reference to Jews who worked with the Nazis during World War II to guard prison camps.

J Street said it "vehemently" opposed Friedman and said he "should be beyond the pale for senators considering who should represent the United States in Israel" when they consider whether to confirm him.

But there are also many American Jews -- increasing Orthodox and right-leaning politically even as the vast majority remain Democrats -- who welcome the appointment of someone they see as an unabashed supporter of the Jewish state.

"The selection of Mr. David Friedman to serve as United States Ambassador to Israel sends a powerful signal to the Jewish community and the State of Israel that President-elect Trump's administration will strengthen the bond between our two countries and advance the cause of peace within the region," the Republican Jewish Coalition said in a statement.