The few world nations that DID establish embassies in Jerusalem have since moved them to Tel Aviv for the same reason the U.S. and others refuse to move theirs to Jerusalem. Israel is in no position to "demand" anything from the world when in fact it is in blatantly defiant of international consensus.
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Details of secret talks for Israeli unity government revealed (Haaretz)
from the article: U.S.: Israel pledged not to build in Ramat Shlomo for two years