Australia’s treasurer has hit back at Mahathir Mohamad’s warning that Australia moving its embassy in Israel could add to terrorism by citing a history of anti-Semitic remarks by the Malaysian prime minister. Deputy Liberal leader Josh Frydenberg accused Mahathir of having form in making “derogatory comments” about Jews in the past, including calling them “hook-nosed”, questioning the number of people killed in the Holocaust and banning the classic Holocaust film Schindler’s List . Frydenberg made the comments at a press conference and an interview on Radio National on Friday, as he maintained the pressure on Prime Minister Scott Morrison to make a decision on the embassy independent of the rising backlash from Australia’s near neighbours. Morrison’s trip to the East Asia and Asean summits in Singapore has been dominated by the Israeli embassy issue, after a public warning from the Indonesian trade minister that Jakarta will not sign off on a free trade deal with Canberra if the move proceeds and Mahathir’s comments that “adding to the cause for terrorism is not going to be helpful”. Frydenberg told reporters in Melbourne that Australia “will make its own decisions in its own national interest”. Speaking of the Malaysian prime minister he told Radio National: “Dr Mahathir does have form, as you know, he’s made a number of derogatory comments in the past about Jews being hook nosed, he has questioned the number of people that have been killed in the Holocaust and he also saw the banning of Schindler’s List – the movie about the saviour of millions of people by righteous gentiles through that horrible period in world history.” Frydenberg went on to make the case for the embassy move. “Australia already recognises Israel’s sovereignty over West Jerusalem,” he said. “It’s where the Israeli Parliament is. It’s where the Australian ambassador presents his or her credentials. It will be the capital of Israel under any two-state solution.” Frydenberg said negotiations between the Israelis and the Palestinians had “frozen” because “Israel does not have a negotiating partner at the table”. “Israel is the only country in the world where Australia doesn’t put its embassy in that nation’s capital. It stands alone. “There seems to be a double standard within parts of the United Nations and the human rights council when it comes to Israel, when it comes to other countries.” Frydenberg brushed off the backlash, saying “of course” Australia would have a different view of the relationship with Israel than Indonesia and Malaysia, which are both majority Muslim nations. The Israel shift, flagged in the run-up to the Wentworth by-election, has become a major political headache for Morrison, and has prompted government colleagues to question his judgment. Some moderates want Morrison to dump the idea, but government conservatives favour the shift. The defence minister, Christopher Pyne, repeated a position on Thursday that he favoured two diplomatic presences – an Australian embassy in West Jerusalem and a separate facility in East Jerusalem in the event of a Palestinian state – and he suggested that was the policy Morrison was currently pursuing. Former trade minister, Steve Ciobo, reportedly told his Indonesian counterpart there was “less than a 5 per cent chance” of the move going ahead. Morrison has dismissed that report as a “complete furphy” “This is what I have advised the Indonesian government: Australia will make its own decision when it comes to our foreign policy,” he told ABC Radio in Darwin on Friday. Morrison said that he had “had a number of discussions on the topic” at the East Asia summit that were “helpful”. “We will look at our values and interests.” Australia will make its own decision when it comes to our foreign policy Former trade minister, Steve Ciobo, Morrison said the government would consider the embassy move “if we believed that it would advance the issue of the two-state solution”. “If it is possible to advance this agenda by going down that path, why couldn’t we consider it?” Morrison accused Labor leader Bill Shorten of “taking his cues from powers outside Australia” to decide the embassy issue. Earlier Labor’s foreign affairs spokeswoman Penny Wong told Radio National the Coalition’s proposal to consider the embassy move showed Morrison’s “poor judgment” because it “trashed bipartisan policy” and was announced against advice and without cabinet agreement. Wong said the cost of the proposal “is now being demonstrated” and urged Morrison to “accept he made the wrong judgment” and return to the bipartisan position supported by former prime minister Malcolm Turnbull and former foreign minister Julie Bishop. “No country should dictate our foreign policy,” she said. “It should be determined by looking at the national interest. That is not what occurred here – Mr Morrison made a rash, precipitous, judgment because he thought this would win votes in Wentworth.” Wong accused the government of being in a state of “chaos” over the decisions, citing Ciobo’s reported remarks and Liberal senator Eric Abetz’s threat to Australia’s foreign aid to Indonesia: Wong questioned why the government was waiting to determine its final position by Christmas.