Brazil opened a new trade mission to Israel in Jerusalem on Sunday, appearing to edge back from earlier signals it would follow the United States by moving its full embassy to the city.
The announcement came during a visit by Brazilian President Jair Bolsonaro - an outspoken admirer of President Donald Trump who broke global consensus by recognising Jerusalem as Israel's capital in late 2017 and moving the US embassy there last May.
Bolsonaro had suggested in January he would follow suit with the embassy. That could have been a boost for Israeli Prime Minister Benjamin Netanyahu, who hopes to win a fifth term in an election next week.
But Brazilian senior officials later backed away from the idea, for fear of damaging trade ties with Arab countries.
"Brazil decided to create an office in Jerusalem to promote trade, investment, technology and innovation as a part of its embassy in Israel," the Foreign Ministry in Brasilia said in a statement.
As with most other countries, the Brazilian embassy is in Tel Aviv.
"Obrigado (thanks) for opening a diplomatic office in Jerusalem!" acting Israeli Foreign Minister Israel Katz tweeted.
Netanyahu has sought to burnish his statecraft and security credentials during the election campaign in the face of a popular centrist challenger, former armed forces chief Benny Gantz.
Bolsonaro:"I Love Israel"
Greeting Bolsonaro at Tel Aviv's Ben Gurion airport, Netanyahu said he and the Brazilian leader would visit Judaism's holy Western Wall, "in Jerusalem, our eternal capital".
"I love Israel," Bolsonaro said in Hebrew at the ceremony.
Brazil has not officially recognised Jerusalem's as Israel's capital. Most world powers say the status of the city should only be decided as part of a peace process with the Palestinians.
Israel captured East Jerusalem along with the West Bank and Gaza in the 1967 Middle East war. Palestinians seek to establish a state in the two territories, with East Jerusalem as its capital.
Visiting Brazil for the Jan. 1 presidential inauguration, Netanyahu said Bolsonaro had told him that moving the Brazilian embassy in Israel to Jerusalem was a matter of "when, not if".
But Bolsonaro’s economic team and the country's powerful farm lobby have advised against relocating the embassy.
In an interview in February, Brazilian Vice President Hamilton Mourao, a retired army general, told Reuters that moving the embassy was a bad idea because it would hurt Brazil's exports to Arab countries, including an estimated $5 billion in sales of halal food that comply with Muslim dietary laws.
Separately on Sunday, Israeli Energy Minister Yuval Steinitz said Brazilian state-run oil firm Petrobras would take part in Israel's latest tender for offshore oil and gas exploration.