A defiant President Donald Trump has abruptly broken with decades of US foreign policy and officially recognised Jerusalem as Israel's capital, in a move that sparked protests across the region and led to condemnation from around the globe.

Mr Trump also instructed his State Department to begin the years-long process of moving the American embassy from Tel Aviv to the holy city, calling the twin move "a step to advance the peace process" between Israel and the Palestinians.

While Israel's Benjamin Netanyahu praised Mr Trump's announcement as an "historic landmark", Palestinian President Mahmoud Abbas said that with the move, the US was making a "declaration of withdrawal" from its mediation role during the peace process.

Palestinian militant organisation Hamas called for "day of rage" protests over the announcement and said that President Trump had committed a "flagrant aggression against the Palestinian people".

“The issue of Jerusalem is the issue of the Palestinian people and the cause of the nation,” Ismail Haniya, the leader of Hamas, told Al Jazeera. “We think this is an unaccountable gamble and an adventure that will not have a ceiling. The decision will be the beginning of a time of horrific transformations across the region.”

Chief Palestinian negotiator Saeb Erakat said Trump "just destroyed any policy of a two-state solution", while leaders from the region and beyond fretted about what the move would mean for the chances of a deal.

Speaking in the Diplomatic Reception Room of the White House, Mr Trump said the recognition of Jerusalem as Israel's capital was was "nothing more, or less, than a recognition of reality". He noted that almost all of Israel’s government agencies and parliament were in Jerusalem, rather than Tel Aviv, where the US and other countries maintain embassies.

"Israel is a sovereign nation with the right like every other sovereign nation to determine its own capital," the president said.

Both Mr Netanyahu, who encouraged more nations to follow Mr Trump's lead and move their embassies from Tel Aviv, and Mr Abbas made clear that they both see Jerusalem as their capital. The Palestinians see East Jerusalem, captured by Israel in 1967, as part of any future state. The US has previously held that the status of Jerusalem should be decided by negotiations between the two sides.

In an apparent concession to the trouble the announcement would cause, Mr Trump reaffirmed his administration's commitment to a peace initiative in the region, saying that the US "would support a two-state solution if agreed to by both sides".

"This decision is not intended, in any way, to reflect a departure from our strong commitment to facilitate a lasting peace agreement," he said. "We want an agreement that is a great deal for the Israelis and a great deal for the Palestinians.

"I've judged this course of action to be in the best interests of the United States of America and the pursuit of peace between Israel and the Palestinians. This is a long-overdue step to advance the peace process and to work towards a lasting agreement."

He also sought to soften the blow by insisting that he was not taking a position on any "final status issues, including the specific boundaries of the Israeli sovereignty in Jerusalem, or the resolution of contested borders." However, the global response, with condemnation coming from Turkey, Jordan, Egypt, the UK, Germany, France and the EU, would suggest it was not enough.

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The president called for calm in the region, but that did not stop protests beginning in Palestinian refugee camps in the Jordanian capital of Amman, as well as in Gaza and outside the US embassy in Istanbul. The US State Department issued safety notices for its staff in a number of countries around the region.

“There will of course be disagreement and dissent regarding this announcement but we are confident that ultimately, as we work through these disagreements, we will arrive at a place of greater understanding and cooperation,” Mr Trump said.

While Congress in 1995 adopted the Jerusalem Embassy Act, urging the federal government to relocate the American embassy in Israel to the holy city, every president since then - including Mr Trump - has signed waivers delaying that move. Each waiver postpones the relocation for six months. Mr Trump signed a new waiver straight after his announcement, but made clear that the embassy move would happen.

"Presidents issued these waivers under the belief that delaying the recognition of Jerusalem would advance the cause of peace," Mr Trump said. "Some say they lacked courage, but they made their best judgments based on facts as they understood them at the time. Nevertheless, the record is in."

He continued: "After more than two decades of waivers, we are no closer to a lasting peace agreement between Israel and the Palestinians. It would be folly to assume that repeating the exact same formula would now produce a different or better result."

Other than fulfilling a campaign promise to move the US embassy, there appears little immediate political gain for Mr Trump, and world leaders were quick to come out against the provocative announcement. The status of Jerusalem is one of the most sensitive issues in the world, with the city being home to important holy sites for three major religions - Christianity, Judaism and Islam.

British prime minister Theresa May said Mr Trump’s announcement was “unhelpful in terms of prospects for peace in the region”, and said the UK did not intend to follow suit. The French president, Emmanuel Macron, and the German chancellor, Angela Merkel, also condemned the move. The EU and UN also issued statements saying they supported a two-state solution, with UN Secretary-General Antonio Guterres saying there was "no alternative" and the issue of Jerusalem needed to be settled by talks.

Around the region, reaction was even more stark. Jordan said Mr Trump's action was “legally null” because it consolidated Israel's occupation of East Jerusalem. Lebanese President Michel Aoun said Trump's Jerusalem decision was dangerous and threatened the credibility of the United States as a broker of Middle East peace. He said the move would put back the peace process by decades and threatened regional stability and perhaps global stability.

Qatar's foreign minister, Sheikh Mohammed bin Abdulrahman al-Thani, said Mr Trump's undertaking was a “death sentence for all who seek peace” and called it “a dangerous escalation", while Egypt, brushed off the decision and said it did not change Jerusalem's disputed legal status. Turkey called Mr Trump's move “irresponsible”.

Many experts have also questioned the timing of Mr Trump's announcement and his reasoning behind the decisions pertaining to the holy city, given that he is "walking into a minefield", said Dov Waxman, a professor of political science, Israel studies and international affairs at Northeastern University in Boston.

In an interview with The Independent, Mr Waxman said a declaration by Mr Trump that final borders or boundaries in Jerusalem would need to be determined in future negotiations could lessen the impact of his announcement - although there are still likely to be protests.

As a way to appeal to evangelical Christian voters, Mr Trump had promised during his campaign that he would relocate the US embassy to the holy city - but Mr Trump has already made several moves as President to please this group, the professor added.

“The real question I have is if this statement is part of an opening or prelude to the Trump administration’s peace initiative - the one [White House adviser Jared] Kushner has been working on for the past several months,” Mr Waxman said.

Mr Waxman said there are “very worrying signs” that the peace initiative will consist of an attempt to impose some kind of peace plan on the Palestinians - one in which they would be pressured to give up their claim to East Jerusalem.