JERUSALEM (BLOOMBERG) - Israel's foreign minister criticised the United States' plans to reopen its consulate in Jerusalem that had handled contacts with the Palestinians, warning it could threaten the fragile Israeli coalition government.

       "We think it's a bad idea, and we've told the Americans we think it's a bad idea," Mr Yair Lapid said in a speech on Wednesday (Sept 1). "We think this might destabilise this government, and I don't think the American administration wants this to happen."

       The Trump administration merged the consulate with the US embassy, which was moved from Tel Aviv to Jerusalem as Washington recognised the disputed city as Israel's capital. The Palestinians, who want territory in East Jerusalem for the capital of a future state, broke off relations with the US over the steps.

       US President Joe Biden has pledged to rebuild contacts with the Palestinians. The US Embassy reaffirmed on Wednesday that the US "will be moving forward with the process to reopen our consulate in Jerusalem".

       "The US is not reversing its decision to move the US Embassy to Jerusalem, nor revisiting US recognition of Jerusalem as Israel's capital," it said in a statement.

       The Israeli coalition that this year ousted long-time Prime Minister Benjamin Netanyahu is an unlikely alliance of nationalists and leftists, Arabs and Jews, religious and secular, meaning consensus is almost impossible on issues such as a peace with the Palestinians.

       Mr Lapid's comments come as the new government looks to repair its relations with the White House, which took a hit due to Mr Netanyahu's close relationship with former president Donald Trump, a Republican.

       The Foreign Minister, though, portrayed Israel's problem with the Democrats as one of messaging, not policy.

       "We are very much aware of the fact that the Israeli story has not been told in the way that it should have been told in recent years, especially within the Democratic party," he said.

       "We don't even need to change policies, we just need to explain better what it is that we are doing, and why it is that we are doing it, what motivates us and what kind of values we believe in."

       Mr Lapid insisted there were no "concrete" demands from the Americans regarding Israel's trade relationship with China, despite media reports that the US had asked Israel not to let Chinese companies bid for a lucrative metro project in the Tel Aviv area.

       "Nobody has asked us to change anything," he said.

       "We have very good bilateral relations with China, we're doing a lot of business with them," Mr Lapid said. "It's an interesting market for us and we are an interesting market for them because of the technological abilities of Israel."

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