Speaking at a conference at the Foreign Ministry on EU members' funding of NGOs which support terror on Thursday, Ayalon said, "Negotiations and contacts between Israel's representative and his Turkish counterpart have not yet been discontinued, so further reference to this issue will not help."
Israel has proposed paying compensation to relatives of the Turks who were killed during the raid, in exchange for Ankara's help in indemnifying the Israeli navy against lawsuits, officials said on Thursday.
The offer, broached by envoys in Geneva over the weekend, included measures for patching up ties but appeared to have fallen short of Turkey's demand that Israel formally apologize for the deaths of the nine pro-Palestinian activists in May.
Ehud Olmert criticized Israel's willingness to compensate the Turks. Speaking at a Calcalist conference Thursday, the former prime minister said,
"Six months ago everyone said, justifiably, that no one would break the blockade on Gaza. We were very confident in our position, and now we are thinking of how to compensate and apologize.
Israeli Prime Minister Benjamin Netanyahu, whose delegate to a UN probe of the bloodshed attended the rapprochement talks, also faces opposition to such a deal from his hawkish foreign minister and government coalition partner, Avigdor Lieberman.
Turkish ship that was raided by IDF (Archive photo: Oren Rosenfeld)
"We made a compensation offer, and asked the Turks to do what needs to be done to address our legal concerns. We also want to see them return their ambassador and allow us to appoint a new ambassador in Ankara," an Israeli official said.
"For now, however, there are still big obstacles."
The draft offers Turkey some $100,000 each to families of the men shot dead by Israeli marines during brawls aboard the converted cruise ship Mavi Marmara, and an Israeli expression of "regret" over the incident, Israeli diplomatic sources said.
Turkey's Foreign Minister Ahmet Davutoglu described the reports of an Israeli offer as "speculative" and said on Thursday his government's demands had not changed.
"We don't think it is right to cite figures, or discussions of apology or regret," Davutoglu said during a joint news conference with the visiting Syrian foreign minister.
"The citing of figures or the matter of regret did not come onto the agenda."
'They must accept their guilt'
On Wednesday, Netanyahu adviser Ron Dermer said Israel and Turkey were discussing "the phrasing of a compromise that both sides can live with ... (and) that will get our relations with Turkey back on track and remove the whole affair from the international agenda".
"We must remember that there are those at the United Nations, there are forces which would like to see our personnel arrested," Dermer told Israel Radio.
"What is important to the prime minister is to protect the marines and commanders. We have said at every discussion, at every meeting, that the troops acted in self-defense -- there's no question about it -- and not out of malice."
Rattled over private war-crimes suits filed abroad against its military brass and politicians by pro-Palestinian groups, Israel has tried to stave off any similar Turkish actions in global forums by quickly setting up two internal investigations whose findings will become its submission to the UN inquest.
Turkey has dismissed the Israeli probes as insufficient.
The rapprochement talks followed Turkish Prime Minister Tayyip Erdogan's dispatch of planes to help Israel battle a forest fire that raged out of control last week. Netanyahu had pledged to "find ways to express our appreciation" to the Turks.
But Erdogan, leader of the Islamist-rooted AK Party and a frequent scolder of Israel's Palestinian policies, on Tuesday signaled no flexibility in Turkey's terms. He even added an older demand that Hamas-ruled Gaza's borders be opened.
"If there are those who want to start a new period, I repeat: They must accept their guilt, apologize and pay compensation. I say too that the embargoes, which have been eased but not enough, should be lifted," he told AK lawmakers.
The Mavi Marmara led an aid-ferrying flotilla that tried to breach Israel's Gaza blockade, imposed with the declared aim of keeping arms from Islamist Hamas cadres. A world outcry at the high seas seizure prompted Israel to allow more goods to reach Gaza's 1.5 million Palestinians by land, but not by sea.
Among the most vocal champions of the blockade is Lieberman, who leads the far-right Yisrael Beiteinu party in alliance with Netanyahu's rightist Likud. Political sources say Lieberman is often excluded from Israel's more sensitive diplomatic contacts.
Noting that several marines were injured in the Mavi Marmara raid, a Lieberman confidant told Reuters: "It's the Turks who should be paying us compensation, and not the other way around."
That foreshadowed a possible showdown in Netanyahu's cabinet should the proposed rapprochement deal be brought for approval.
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