More than five years after the infamous Gaza flotilla incident severed the relations between them, and following a series of negotiations and diplomatic ups and downs, Turkey and Israel have finally taken a serious step towards reconciliation. Senior foreign policy bureaucrats from the two sides came together in Zurich earlier this week and agreed on the contours of an agreement that’s expected to bring an amicable end to the long running crisis.

Full normalization of bilateral ties is a possibility, but the two countries remain divided on the issue of Israel’s blockade of the Gaza Strip.

The Zurich agreement on Dec. 17 agreeing to restore diplomatic ties wasn’t a surprise as it came after days of intensive signaling towards that direction from both sides. On Dec. 9, the speaker of the Turkish President’s office, İbrahim Kalın, said that Turkish-Israeli relations were on a normalization path and Turkey was ready to take the necessary steps under the condition that Israel also does its part. On Dec. 14, the director general of the Israeli Foreign Ministry, Dore Gold, stated that he was “hopeful that in the not too distant future Israel and Turkey would find a way to reestablish their relationship.” On the same day, Turkey’s President Recep Tayyip Erdoğan said that “this normalization process would be good for us, Israel, Palestine and the entire region,” pointing to the need for “considering the interests of the people of the region and introducing peace.”

As these statements were being made, a historical event took place in Istanbul, where for the first time in the 92-year history of the Republic of Turkey, Hanukkah, the Jewish Festival of Lights, was celebrated by the country’s Jewish community with a public ceremony organized by the local municipality in one of the town’s historical squares. Whether this celebration will become a common practice in the future and whether it can help making up for the inflammatory anti-Jewish remarks that surface too frequently in Turkish public discourse remain to be seen. However, one thing is clear, this historical event has definitely served as a building block for reconciliation at the governmental level. Concrete proof of this fact was manifested only a couple days later with the deal in Zurich.

Both Turkey and Israel see benefits in reconciliation, and both now appear willing to make certain compromises in order to achieve it. Turkey increasingly sees itself isolated in the violent chessboard of Middle Eastern politics, and the recent standoff with Russia has only served to deepen disappointment. Israel on the other hand, is increasingly concerned about the spiraling instability beyond its borders, and the rapprochement between the US and Iran doesn’t provide any comfort either. Turkey and Israel need friends, and in this sense, they have nothing to lose from reconciliation and much to gain.

The more important dynamic behind the reconciliation process, however, lies elsewhere — in economics. Ankara and Tel Aviv know very well how to keep business separate from politics. Even during the period following the Gaza flotilla incident, when the two countries politically disconnected from each other, they got even more connected business-wise. The two-way trade between Turkey and Israel, which amounted to $3.44 billion in 2010, rose to $5.83 billion in 2014 and continues to increase.

However, such transactions encompass more than bilateral trade. Turkey and Israel have fragile economies, they are both suffering from the gradual decay in economic structures of the Middle East due to war and violence, and it is precisely for this reason that they increasingly need each other.

Gas is key

One of the most promising areas for economic interdependence is the gas sector. Due to recent offshore gas discoveries in the Eastern Mediterranean, Israel is not only becoming self-sufficient in energy, it is also becoming an exporter. Shipments to Asia using tankers are an option. However, the main prospective market is Europe, which is making efforts to diversify its sources of gas in the wake of political-economic fallout with Russia due to the Ukraine crisis. For Israel to deliver its gas to European customers, there’s no safer and economically more advantageous way than using the Turkish route.

On the other hand, import-dependent Turkey, which also has problems with Russia, feels the urgent need to source gas from different suppliers, and having Israeli gas in the basket can significantly contribute to the country’s quest for energy security. The fact that the Israeli government gave final approval for a long-delayed deal that will allow an American-Israeli consortium develop a major offshore gas field on the same day that the Zurich deal was struck with Turkey is perhaps only a coincidence. But it is also known, through information provided by Israeli press officers to media, that the Zurich deal includes a clause about “Turkey and Israel exploring cooperation in the natural gas field, with Turkey buying gas from Israel’s offshore oil fields and the laying of a gas pipeline that would run via Turkey and through which Israel would export gas to Europe.” In other words, both Turkey and Israel will benefit from the new gas deposits to be extracted from the Mediterranean, and this is a mighty motivation for reconciliation.

Facilitating Turkish exports

It’s not only about gas. From the Turkish view especially, the economic stakes are even higher. Turkey’s exports to the Middle East and North Africa are seriously losing steam. This is because not many routes remain open due to the conflict in the region. Syria is inaccessible. In Iraq, Turkish trucks can reach only a certain point due to the ISIS threat. Iran not only means a huge detour for trucks destined for other markets — there are also problems related to customs practices as Turkish vehicles are being charged a special fee at the Iranian border. The Suez Canal is an option for Turkish export products going to Gulf markets, but it’s too costly, in terms of time and money.

A solution to this overall problem was found when a Ro-Ro line was established between Turkey and Egypt, with Turkish trucks being loaded on ferries in Mersin, a Turkish port, carried to Egypt’s Port Said, disembarking there to make their way to different destinations within Egypt, in the Gulf region and in northern African countries. However, when relations between Turkey and Egypt soured, after the al Sisi regime gained power, the transportation pact between the two countries was discontinued.

One obstacle remains

There is one more route, the Ro-Ro line between the Turkish port of İskenderun and Israel’s Haifa port. The line was opened back in 2012. However, it has remained underutilized. This is mostly due to the problematic nature of the political relations between Turkey and Israel. If full reconciliation can be achieved, this route can be used much more effectively by Turks, and this would certainly bring fresh impetus for Turkish exports. In turn, Israel will not only gain revenues in the form of transit fees, it will also gain significant leverage by making Turkey more dependent on Tel Aviv.

In sum, both Turkey and Israel are profoundly motivated by economic considerations to achieve reconciliation. There is, however, one obstacle remaining.

Since the flotilla incident, Ankara has been bringing forward three conditions for full normalization of relations with Israel: an official apology, monetary compensation to the families of Turkish citizens killed in the flotilla raid, and the lifting of Israel’s blockade on the Gaza Strip. The apology was made in 2013, and the Zurich deal is said to include a $20 million compensation package funded by Israel.

But deep differences remain on the third condition. The Turkish government, and especially President Erdoğan himself, are not likely to step back on the Gaza blockade issue, as it would resonate terribly with their political constituency. For the Israelis, on the other hand, the blockade is necessary for national security. It is a matter of survival. The current blockade consists of joint Egyptian-Israeli controls on imports to Gaza.

At this juncture, both sides have good reasons for reconciliation, and its clear they will have to reach a compromise on the blockade issue. However, despite the positive atmosphere created by the Zurich deal, this may not be easy.

Dr. Altay Atlı is a lecturer at the Asian Studies program of Boğaziçi University in Istanbul, and a senior research associate at Turkey’s International Strategic Research Organization (USAK).

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