Australia is withdrawing its ambassador from Indonesia in protest at the execution of two of its citizens convicted of drug smuggling, marking a fresh low in diplomatic relations between the neighbouring countries.

Brazil has also condemned the executions of one of its nationals, who was among eight drug traffickers shot dead by firing squad on Wednesday as part of Indonesian President Joko Widodo’s “war on drugs”.

The leaders of Australia and Brazil had made personal appeals for clemency for their citizens, including Australians Myuran Sukumaran and Andrew Chan, raising the stakes for Mr Widodo.

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“We respect Indonesia’s sovereignty but we do deplore what’s been done and this cannot be simply business as usual,” said Tony Abbott, Australia’s prime minister, on Wednesday. “These executions are both cruel and unnecessary.”

Australia has deep commercial and political ties with Indonesia, and Mr Abbott had pledged upon taking office to deepen ties with the country. Brazil has a $5bn trade surplus with Southeast Asia’s biggest economy and is also at risk of losing a major military export deal to Indonesia over the executions dispute.

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Mr Abbott said all ministerial contacts with Indonesia would cease and the country’s ambassador recalled. But he cautioned against imposing a trade or tourism boycott on Jakarta, despite calls by campaigners on social media for an economic as well as diplomatic response.

The fresh blow to diplomatic relations between Canberra and Jakarta follows recent tensions over Australia’s policy of turning back asylum boats to Indonesia and allegations that intelligence officers bugged the mobile phone conversations of former Indonesian president Susilo Bambang Yudhoyono.

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Australia has long had a fractious relationship with its nearest neighbour, particularly in relation to Indonesia’s war in East Timor. However, the decision to withdraw the country’s ambassador over an execution is unprecedented, a mark of the extent of Canberra’s ire.

Mr Chan and Mr Sukamaran were two of eight foreign nationals shot by firing squad on Wednesday as part of a war on drugs that has been stepped up under Mr Widodo. Mary Jane Veloso, a Philippines national, was spared at the last minute.