By Dan Williams
JERUSALEM (Reuters) - Papua New Guinea opened its embassy to Israel in Jerusalem on Tuesday, becoming only the fifth country with a full diplomatic mission in a city whose status is one of the most sensitive issues in the Middle East.
The Pacific nation's mission joins embassies from the United States, Kosovo, Guatemala and Honduras in Jerusalem, while most countries maintain their diplomatic representation in the coastal city of Tel Aviv, Israel's main economic hub.
While Israel considers Jerusalem its eternal and indivisible capital and wants all embassies based there, most of the world does not recognize Israeli sovereignty over the entire city, believing its status should be resolved in negotiations.
Palestinians want the capital of an independent state of theirs to be in the city's eastern sector, which Israel captured in the 1967 Middle East war and annexed in a move never recognized internationally.
Israel will pay for the embassy, located in a high-rise opposite Jerusalem's biggest mall, for the first two years, Papua New Guinea Prime Minister James Marape was quoted in the Papua New Guinea Post-Courier newspaper.
Marape also pledged support at the United Nations for Israel, whose leader, Prime Minister Benjamin Netanyahu, attended the embassy ceremony in a reprieve from stalled regional peacemaking and clouded ties with Washington.
"Many nations choose not to open their embassies in Jerusalem, but we have made a conscious choice," Marape said at the embassy's inauguration ceremony.
"For us to call ourselves Christian, paying respect to God will not be complete without recognizing that Jerusalem is the universal capital of the people and the nation of Israel," Marape said.
Wassel Abu Youssef, an official with the umbrella Palestine Liberation Organisation, said Israel was "looking for any country - even if that country can only be seen under a microscope - so it can claim there are countries opening embassies in Jerusalem".
Papua New Guinea, which occupies the eastern half of the West Pacific Island of New Guinea, has an economy based on agriculture and mining. Its bilateral trade with Israel is worth just $1 million a year, according to Israeli authorities.
Netanyahu said the new embassy would make it easier to develop agriculture, health, water and technology projects. "This will not only enable us to cherish the past but also seize the future," he said at the ceremony.
(Additional reporting by Kirsty Needham, Maayan Lubell and Ali Sawafta; Writing by Dan Williams; Editing by Bill Berkrot)