Prime Minister Benjamin Netanyahu has ordered the closure of Israel's embassy in Paraguay, his office said, after the South American country announced Wednesday it was moving its mission back to Tel Aviv from Jerusalem.
"The prime minister has asked the foreign ministry to close the Israeli embassy in Paraguay," the statement said, adding that Paraguay's decision had cast a shadow on relations between the two countries.
Paraguay's announcement that it was moving the embassy back to Tel Aviv came little more than three months after it had transferred it to Jerusalem following a similar move by Washington.
US President Donald Trump's deeply controversial move to recognise the disputed city as capital of Israel sparked outrage among Palestinians who see Jerusalem's east as the capital of their future state.
In May, then-president of Paraguay Horacio Cartes met with Netanyahu in Jerusalem after his country and Guatamala opened their embassies there.
His successor President Mario Abdo Benitez, who took office in August, decided to move it back "to contribute to the intensification of regional and international diplomatic efforts that aim to achieve a broad, just and durable peace in the Middle East."