Israel has recalled its ambassador to Bern a day after a meeting between Swiss President Hans-Rudolf Merz and his Iranian counterpart Mahmoud Ahmadinejad in Geneva.
The two heads of state met on Sunday night to discuss bilateral ties, ahead of the United Nations racism conference in the western Swiss city where the Iranian president gave an address on Monday.
Ambassador Ilan Elgar was ordered to return home for "consultations" on Monday.
The decision was made by Prime Minister Benjamin Netanyahu and Foreign Affairs Minister Avigdor Lieberman, according to a statement by the Israeli foreign ministry issued on Monday.
Israel also intended to express its unhappiness at the racism conference which includes attendance by Ahmadinejad, a "Holocaust-denier", the ministry statement added.
"It is not about a rupture [in relations], rather an expression of Israel's unhappiness at the Swiss' lax attitude towards Iran," a foreign ministry source commented.
The diplomat in charge of the Swiss embassy in Tel Aviv, Monika Schmutz-Kirgoz, has also been summoned to discuss the issue.
Merz responded on Monday saying he understood why there was criticism of the meeting but that it was "unjustified".
"Festival of hate"
Ahmadinejad has suggested the Holocaust never happened and has called repeatedly for Israel's destruction. On Sunday he was quoted accusing Israel of being "standard bearers of racism".
His address at the UN's second major race conference, dubbed Durban II, coincided with the start of Israel's annual Holocaust Remembrance Day commemorations.
Earlier Monday, Netanyahu told his cabinet that while Israel commemorated the six million Jews slaughtered by the Nazis, "in Switzerland, the guest of honour is a racist and a Holocaust-denier who doesn't conceal his intention to wipe Israel off the face of this earth".
"I congratulate the countries that have decided to boycott this festival of hate," he added.
The United States, along with Canada, Israel, Italy, Australia, New Zealand, the Netherlands and Germany pulled out of Durban II before it began, voicing fears it would be a platform to criticise the West and a forum for Holocaust denial or anti-Semitism.
Criticism by the Israeli Ambassador to the UN in Geneva, Ahardon Leshno-Yaar, of Merz's meeting with Ahmadinejad was published widely in the Israeli press.
The Jerusalem Post's 20 April editorial said it showed how "Swiss leaders shamelessly fete Ahmadinejad". The editorial further questioned Switzerland's neutrality in meeting the Iranian president, commenting: "the Swiss have their interests".
In an interview with Israeli radio, senior Lieberman aide Aviv Shir-On said Monday's measure fell short of permanently withdrawing the Israeli envoy. He voiced some understanding for Switzerland's position as a neutral country playing host to an international conference.
"These are the reasons the Swiss gave for the meeting" with Ahmadinejad, said Shir-On, himself a former ambassador to Bern.
"They also claimed that they would make clear to Ahmadinejad everything that needs to be made clear to him as a Holocaust-denier and a harmer of human rights, but I think that for the state of Israel, for the international community, this is not enough - hence our measure."
Former Swiss diplomat François Nordmann told swissinfo that Israel's retaliatory measure "reveals that there are some tensions in the relations between the two states".
He said it was correct and probably useful for Switzerland to meet with Iran as part of its mandate, but asked why such a "highly visible and friendly dinner" had taken place.
"A meeting at the Palace of Nations would have done in the framework of an international conference. Why did the meeting not take place in Bern?"
Merz told Swiss radio on Monday that dialogue was necessary with Iran and Switzerland had a role to play within that dialogue.
A member of the Swiss Senate's foreign affairs commission, Felix Gutzwiller of the Radical Party, told Swiss television he could understand the Israeli criticism and characterised the talks as tricky.
But he noted that Switzerland had a protecting power mandate for the US in Iran and spoke of the hope of bringing the two countries together to the table again.
The president of the foreign affairs commission of the Swiss House of Representatives, Geri Müller of the Greens, said the meeting had been appropriate and an occasion to raise human rights issues. Switzerland had to apply the same standards for all countries, he added.
The establishment of the state of Israel is closely linked with Switzerland: the First Zionist Congress was held in Basel in 1897. In addition 15 other congresses out of a total of 22 were also held in Switzerland.
Before the establishment of Israel, Switzerland maintained a consulate in Jerusalem (accredited to the British mandate) and a consular agency in Tel Aviv.
Switzerland recognised the new state in 1949 and opened a consulate in Tel Aviv. This consulate was upgraded to an embassy in 1958.
Israel is one of Switzerland's most important export markets in the Middle East.
Ties between the two countries go back to the 17th century when Swiss clockmakers settled in the Persian Empire.
Switzerland opened a consulate in Tehran in 1919, which later became an embassy in 1936. Because of its neutrality, Switzerland has over the years represented the interests of a number of countries in Iran. Since 1980 it has represented US interests there and looks after Iranian interests in the US.
Iran is one of Switzerland's most important trading partners in the Middle East. A trade agreement was signed in 2005 but has not yet been ratified. In 2007 Switzerland exported goods worth SFr763.4 million and imported goods worth SFr38.6 million from Iran.
DURBAN REVIEW CONFERENCE
The United Nations Durban Review Conference takes place in Geneva from April 20-24. It will evaluate progress towards the goals set by the World Conference against Racism, Racial Discrimination, Xenophobia and Related Intolerance in Durban, South Africa, in 2001.
After a wide-ranging debate, the conference adopted by consensus an action plan to provide a new framework for guiding governments, non-governmental organisations and other institutions in their efforts to combat racism, racial discrimination, xenophobia and related intolerance.
Among its measures for combating racism are strengthening education, fighting poverty, improving resources available to victims of racism, and bolstering respect for the rule of law and for human rights. Critics say little of this has happened since 2001.