On Monday, state department deputy spokesman Robert Palladino said the merger had taken effect and promised "complete continuity of U.S. diplomatic activity and consular services".
The US insists that folding the Consulate General in Jerusalem into the US Embassy is all about efficiency, part of the Trump administration's efforts to increase "effectiveness of our diplomatic engagements and operations".
It infuriated the Palestinians who see closing the office that served them and moving it to the embassy as another sign of the Trump administration's pro-Israel bias.
Dennis Ross, chief USA negotiator with both Republican and Democratic administrations, criticized the move as "unfortunate" noting that the Palestinian public would read it "as a sign of indifference to them".
Also, Consul General Karen Sasahara, who has been acting as what many describe as the "de facto ambassador to the Palestinians", will be leaving Jerusalem. Jewish Voice for Peace executive director Rebecca Vilkomerson, for example, said that his appointment was "a distressing signal that the [Trump] administration will give the Israeli government a free hand to deepen its fundamentally undemocratic and abusive control over Palestinian land, resources, and rights". He said that the United States "continues to take no position on final status issues, including boundaries or borders". Now, that outreach will be handled by a Palestinian affairs unit, under the command of the embassy.
The step evoked Palestinians' concerns over United States administration policy that ignores the Palestinian position on occupied Jerusalem.
The Trump Administration "is intent on leaving no room for doubt about its hostility towards the Palestinian people and their inalienable rights, as well as its abject disregard for global law and its obligations under the law". Israeli media said two of the Palestinians were killed.
Israeli politics have moved firmly to the right in recent years, with much of the population having grown tired of calls for a two-state solution and unwilling to make signficant compromises in favour of the Palestinians.
"Though the U.S. said the merger was meant for bureaucratic efficiency, Malaysia views that it is nothing more than a smokescreen trying to camouflage what is essentially opening of the American Embassy in Jerusalem", it said in the statement.
Anadolu Agency was unable to obtain immediate comment from either Palestinian or Israeli officials regarding Lavrov's assertions. Closing the Consulate is a setback for peace between Israelis and Palestinians and a major error by this Administration. It said that once in power it would confer with Arab states "and intensify the process of separation from the Palestinians, while ensuring an uncompromising commitment to Israel's national security". And we've seen ties between the USA and Palestinians deteriorate.