In June of this year, party members at the Liberal party’s annual federal council voted in favour of moving the Australian embassy from Tel Aviv to Jerusalem, endorsing Donald Trump’s controversial Middle East policy.

The push to follow Trump had bubbled up from the party’s conservative base and from the youth wing. The June vote was a totemic gesture in line with the resting (or perhaps restive) disposition of the faction that likes to control the play in the Liberal party of 2018.

The then foreign affairs minister, Julie Bishop, was quick to rule out changing Australia’s long-held policy. She understood “the sentiment behind this resolution” but she was clear the embassy relocation would not be happening. “Jerusalem is a final status issue and we have maintained that position for decades,” she told her colleagues at the council.

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Two days after Bishop’s comments, Scott Morrison, the treasurer, on Tasmanian radio, said exactly the same thing. Asked whether there was “any sense that the parliamentary party might actually support” moving the embassy, Morrison was curt. “No,” was the response.

He was pressed. Why not? “Because it’s not the government’s policy, it’s never been under review and we are not doing it.”

The government, or at least senior figures in the government led then by Malcolm Turnbull, had mulled mimicking Trump on the Middle East policy shift. There was a conversation, sources insist, in the national security committee of cabinet, and the consensus was the risks associated with the shift far outweighed any benefit.

One of the major hurdles was the negative reaction of Indonesia and, to a lesser degree, Malaysia. The relationship with Jakarta was in good shape. A free-trade deal was in prospect, and the Indonesians had been constructive in policing people-smuggling operations, which served an important domestic political imperative of the Coalition: stopping the boats.

The status quo would prevail, although some colleagues insist that Morrison has always privately favoured the Trump position, which is supported by a large number of evangelical Christians. Morrison, for the record, has said his view on the Jerusalem question is not influenced by his faith.

Roll forward now to mid-October, the week before the Wentworth byelection, and a growing sense of alarm that the government would not hold Turnbull’s vacated seat. The government’s lower-house majority was in play.

Morrison consulted his leadership group (but few others, as it turned out, although one of the people in the circle of trust was the Israeli prime minister, Benjamin Netanyahu) and then flagged the embassy shift publicly.

Some colleagues characterise Morrison’s behaviour pre-Wentworth as pure panic, others think the byelection gave him opportunity to flag a change he had wanted to pursue and the opening to do it with minimal resistance from colleagues.

Whatever the truth of that, the diplomatic blowback (apart from Bibi) was immediate, and the bold move did not save the Liberal party in Wentworth.

Morrison has been in political trouble ever since: Jakarta is playing hardball, taking the free-trade deal off the table, and government MPs are split between people who now worry about Morrison’s judgment, or want absolutely this policy shift to happen, or absolutely oppose it.

Confusingly too, the defence minister, Christopher Pyne, who was, sources say, in the circle of trust before Morrison’s first public statement, says the foreign policy shift the government is contemplating involves setting up two embassies, not just moving one – something Morrison has never said publicly.

If Morrison reverts to the status quo, the perception will be Australia has bowed to Jakarta.

Pyne shared this view the day after Morrison rolled the diplomatic dice pre-Wentworth, and he said it again this week. “In the event we did establish an embassy in West Jerusalem and move from Tel Aviv, and in the event there was a second state, I would envisage there would be an embassy in East Jerusalem for the Palestinian state,” Pyne told Sky News.

Conservative Eric Abetz has echoed Pyne’s view. Moving the embassy to West Jerusalem would trigger “an equaliser”, the Tasmanian conservative says – consideration of East Jerusalem as the capital of a Palestinian state.

If this is the Australian government’s position, it’s strange Morrison has never articulated it. Perhaps two embassies is implicit in what the prime minister has been saying: that he supports moving the embassy from Tel Aviv to Jerusalem, and he’s also committed to achieving a two-state solution – but you’d need an advanced degree in tea leaf reading to fathom it.

In any case, Morrison has now washed up in a position where harmonious relations with a key ally are at stake, and conservatives within his own ranks will eviscerate him if he doesn’t follow through with shifting the embassy.

To buy time, the prime minister has fallen back on a process where the government’s final decision will be determined by Christmas, possibly at 11.59pm on 24 December. Ho, ho, ho.

Everyone is now front-running that process. Pyne’s comments are an example (or possibly he’s just attempting to explain what Morrison, inexplicably, hasn’t). The current treasurer, Josh Frydenberg, a supporter of the Trump position, has decided attack is the best form of defence, and given the Malaysian prime minister a hard clip around the ears.

This week Mahathir Mohamad (who doesn’t mind giving Australia a serve) warned that Australia moving its embassy in Israel could encourage terrorism. Frydenberg responded by unfurling previous antisemitic contributions from Mahathir, and invoking Australian sovereignty over its own foreign policy.

Others duly chimed in with feelings. Morrison agreed with Frydenberg. Conservative Andrew Hastie wondered on Facebook “whose side” the former Labor foreign affairs minister Bob Carr was on. Carr had criticised Frydenberg’s comments.

Liberal James Paterson, who is passionately pro-Israel, and orbits with conservatives despite his libertarian tendencies, made a sprint for the barricades. If Australia was not permitted to move its diplomatic facilities “because it might enrage terrorists” this would effectively grant a veto over Australian foreign policy to “violent extremists”.

So what does a prime minister do, faced with a situation that is escalating into drawing room farce?

That is hard to predict, given the government is currently engaged in sprinting chaotically in all directions in an attempt to foil what the polls suggest will be electoral annihilation next year. That adrenaline-charged environment does not generally contribute to cool heads and calm contemplation.

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Objectively, shifting Australia’s embassy doesn’t advance our national interest. We are already close to America and to Israel. We don’t need to make this gesture to enhance those relationships. It won’t contribute to securing Middle East peace.

Adjusting the current position buys us trouble from Indonesia, and Jakarta is already an important relationship that’s in our interests to deepen.

Possibly a compromise is possible. Morrison could recognise West Jerusalem as the capital, flag an intention to move the embassy, but way off in the never-never, and hope that diffuses the problem while saving face.

It would be better, all other things being equal, for Morrison to drop the idea entirely and move on.

But the prime minister is in a serious bind. If he reverts to the status quo, the perception will be Australia has bowed to Jakarta, which hurts him with the voters he’s just spent two months courting with the fair-dinkum, oi-oi-oi tour.

Government conservatives, who have been plastering on fake smiles and trying to play nice, will also be given just cause to go to war with the prime minister.

And we all know how that story ends.