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By Dan Williams and Anthony Boadle

JERUSALEM/BRASILIA (Reuters) — Brazil’s reluctance to accept an Israeli ambassador who is a West Bank settler has set off a diplomatic crisis and led to concerns in the Israeli government that the clash could encourage pro-Palestinian activism against it.

The appointment four months ago of Dani Dayan, a former head of the Jewish settlement movement, did not go down well with Brazil’s left-leaning government, which has supported Palestinian statehood in recent years.

Most world powers deem the Jewish settlements illegal.

Israel’s previous ambassador, Reda Mansour, left Brasilia last week and the Israeli government said on Sunday Brazil risked degrading bilateral relations if Dayan were not allowed to succeed him.

“The State of Israel will leave the level of diplomatic relations with Brazil at the secondary level if the appointment of Dani Dayan is not confirmed,” Deputy Foreign Minister Tzipi Hotovely told Israel’s Channel 10 TV, saying Dayan would remain the sole nominee.

She said Israel would lobby Brasilia through the Brazilian Jewish community, confidants of President Dilma Rousseff and direct appeals from Prime Minister Benjamin Netanyahu.

Brazilian government officials declined to comment on whether Rousseff will accept the nomination of the Argentine-born Dayan. But one senior Foreign Ministry official told Reuters: “I do not see that happening.”

The official, who asked not to be named because he was not authorized to speak on the matter, said Israel would have to choose a different envoy because the choice of Dayan has further worsened relations that turned sour in 2010 when Brazil decided to recognize Palestinian statehood in the West Bank, East Jerusalem, and the Gaza Strip, which Israel captured in a 1967 war and settled.

Israel quit Gaza in 2005 but claims East Jerusalem as its indivisible capital and wants to keep swathes of West Bank settlements under any eventual peace deal with the Palestinians.

Rousseff’s predecessor, Luiz Inacio Lula da Silva, angered Israel by drawing Brazil closer to Iran.

Tensions rose last year when an Israeli foreign ministry spokesman called Brazil a “diplomatic dwarf” after Brasilia recalled its ambassador from Israel to protest a military offensive in Gaza.

Brazil’s government was also angered by the announcement of Dayan’s appointment by Netanyahu in a Twitter message on Aug. 5 before Brasilia had been informed, let alone agreed to the new envoy as is the diplomatic norm.

Over the weekend, Dayan went on the offensive to defend his nomination, telling Israeli media that Netanyahu’s government was not doing enough to press Brazil to accept him. Dayan said not doing so could create a precedent barring settlers from representing Israel abroad.

Emmanuel Nahshon, spokesman for Israel’s Foreign Ministry, said ties with Brazil were “good and important”, noting Israel’s recent opening of a new consulate in Brazil and the business opportunities for Israeli security firms during the Olympic Games to be held in Rio de Janeiro in August.

Israel has a considerable role in providing avionics technology for Brazil’s aerospace and defense industry.

Celso Amorim, a former Brazilian foreign and defense minister, said on Friday that the diplomatic dispute over Dayan’s appointment showed that “it is time the Brazilian armed forces reduced their dependence on Israel.”

(Reporting by Dan Williams and Anthony Boadle; editing by Adrian Croft)

Photo: A boy walks in Ramat Shlomo, a religious Jewish settlement in an area of the occupied West Bank that Israel annexed to Jerusalem November 17, 2015. REUTERS/Ronen Zvulun

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