JERUSALEM, May 27 (Reuters) - Israel's ambassador to

Dublin warned on Monday that a crisis in bilateral ties over

Ireland's plan to recognise a Palestinian state sends the wrong

message about Ireland as a tech hub and is worrying Israeli

investors in the Irish IT services sector.

Speaking in Jerusalem, where she has held Foreign Ministry

consultations after being recalled in protest, Ambassador Dana

Erlich voiced hope of returning to Ireland, though she saw its

government as siding with the Palestinians against Israel.

The statehood recognition is due to be formalised on Tuesday

by Ireland in conjunction with Spain and Norway. The United

States and some other European countries favour first reviving

negotiations on resolving the conflict.

The move by Ireland, Spain and Norway was denounced as a

"reward for terrorism" by Israel, which is waging a devastating

Gaza war and knock-on fighting on other fronts in response to

the Oct. 7 cross-border rampage by Hamas, the dominant

Palestinian Islamist faction.

Erlich said all aspects of Israeli-Irish ties were under

review but stopped short of predicting further action by her

government, which has continued sparring with Madrid.

"Ireland is not neutral or an honest broker in this case,

because they are very supportive of the Palestinians. But what

we are saying (is): This is not the time for such announcement

on recognition," Erlich told Reuters in an interview.

The Irish government says that recognition of Palestinian

statehood may benefit Israel by reviving stalled peacemaking.

Many Irish sympathise with Israel "behind the scenes",

Erlich said: "I think there is a lot of potential in our

bilateral relations, if it's cybersecurity or health care,

climate change. I hope to be given that opportunity to continue

that."

But she said a public mood of hostility, which some Jews

deem antisemitic, is making Israelis question their place in

Ireland - a threat to tech services that account for the lion's

share of some $5 billion in annual trade between the countries.

"We are getting more and more phone calls and conversations

of concerned people - if it's Israelis who invest in Ireland and

are concerned about their investment, if it's Israelis who have

relocated to Ireland into different tech companies and either

are requesting to be relocated somewhere else or asking to

return to Israel," Erlich said.

"I think it sends the wrong message about the location and

the centrality of Ireland as a tech hub when there are more and

more people who are concerned about moving to Ireland. I don't

think that this is the message that Ireland wants to send to the

world ... And this is not what we want to see."

The business connection has already been hit by the decision

announced on Feb 5 by Israel's national carrier, El Al, not to

renew direct flights to Dublin that were launched last year,

citing changes in customer demands since the Gaza war.

The Irish government has rejected calls by pro-Palestinian

activists to impose sanctions or an economic boycott on Israel.

But on April 5, Ireland said its 15-billion-euro sovereign

investment fund would divest from six Israeli companies,

including some of its largest banks, over their activities in

the occupied Palestinian territories.

The Gaza war broke out a month after Erlich arrived in

Dublin, plunging her into 24/7 crisis-management and outreach.

"There are many similarities between Ireland and Israel that

I'm curious to learn more about - if it's a reviving of an

ancient language, if it's the diaspora, if it's the different

scenic options," she said.

"And I hope to be given that opportunity to continue

exploring Ireland. But right now, we need to address our

concerns."

(Writing by Dan Williams, Editing by William Maclean)