Israel and Turkey have reached agreement on normalising diplomatic ties that broke down in 2010 when 10 Turkish activists were killed after Israeli naval commandos raided the MV Mavi Marmara ship, part of an international flotilla trying to break Israel's maritime blockade of Gaza.
The diplomatic breakthrough followed secret talks in Geneva on Wednesday between senior Israeli and Turkish officials.
Under the terms of the emerging deal Israel will set up a fund to compensate the families of the Turks killed aboard the Mavi Marmara and Ankara will drop all legal claims related to the raid.
The two countries will again exchange ambassadors and, according to Israeli sources, senior Hamas operative Salah al-Arouri, who is based in Turkey and was blamed by Israel for masterminding militant attacks in the West Bank, will not be allowed to stay in Turkey.
In addition, talks will begin next week on the laying of a pipeline to transfer natural gas to Turkey and the possible purchase by Ankara of Israeli gas.
In the coming years Israel is set to extract large quantities of gas from newly discovered fields in the Mediterranean Sea. Turkey, faced with the possibility of economic sanctions from Russia – currently a key gas supplier – is eager to develop an alternative source of energy.
A Turkish official confirmed that progress was made in the talks in Switzerland, indicating that a final deal to restore ties will not take long.
Earlier this week, Turkey's president Recep Tayyip Erdogan made statements that hinted at a coming reconciliation. "Normalising relations with Israel will be good for the Middle East," he said, while clarifying that he was still waiting for Israeli compensation for the Mavi Marmara and the end of the Israeli blockade of Gaza.
Officials in both Jerusalem and Ankara cautioned that there is still no comprehensive agreement and talks on easing Israeli restrictions on Gaza will continue, although Israel is determined that the Gaza blockade, seen in Jerusalem as essential for Israel’s security, will not be lifted.
A final deal will need the approval of both Israeli prime minister Binyamin Netanyahu and Mr Erdogan.
In the aftermath of the Mavi Marmara raid, Turkey, once Israel's closest regional ally, became one of the fiercest critics of Israeli actions.
Israel apologised to Turkey for the deaths and agreed to compensate the victims’ families with an €18 million fund under a US-brokered arrangement in 2013, but efforts to restore ties faltered amid new Israeli action in Gaza.
Israel's former foreign minister Avigdor Lieberman expressed scepticism over the deal with Turkey, calling Mr Erdogan "the leader of a radical-Islamist regime". He warned that a deal with Turkey would impact negatively on Israel's relations with both Greece and Cyprus.
Israeli opposition leader Yitzhak Herzog criticised the delay in reaching the diplomatic breakthrough.
“If we had reached an agreement with Turkey two years ago, Israel would have benefited more,” he said, warning that any deal “must not give Erdogan a foothold in Gaza”.