Turkey's Prime Minister, Recep Tayyip Erdogan, has threatened to widen sanctions against Israel – which he accused of behaving like a "spoiled boy" – and confirmed he was considering a politically highly sensitive visit to Gaza, possibly as early as next week.
The crisis in Israel-Turkish relations deepened as Mr Erdogan said his government was "totally suspending" defence industry links after Israel refused to apologise for the killing of nine Turks on a Gaza-bound flotilla 15 months ago.
Mr Erdogan said there would also be an enhanced Turkish naval presence to ensure "freedom of navigation" in the eastern Mediterranean and declared: "Trade ties, military ties, regarding defence industry ties, we are completely suspending them." He added without elaboration: "This process will be followed by different measures."
The moves follow Turkey's expulsion of Israel's ambassador last Friday in the wake of the publication of a UN report, which criticised Israel for using "excessive and unreasonable" force during the flotilla raid. The report also said Israel's naval blockade of Gaza was legal and justified – a conclusion that Turkey rejects.
A visit to Gaza by Mr Erdogan, which would be the first by a head of government since Hamas seized full control of it in 2007, would guarantee the Turkish Prime Minister a hero's welcome, and would further exacerbate the virtual breakdown of relations between Turkey and Israel.
Mr Erdogan, who is expected to visit Egypt next week to pursue a new strengthened alliance with Cairo, said: "We will make our final decision after consulting with our Egyptian friends. There may be a visit to Gaza or not. It is not certain." He has long been a leading critic of Israel's policy towards Gaza, and would need Egyptian co-operation to enter the Palestinian territory through its southern Rafah crossing.
Mr Erdogan did not spell out exactly what trade ties he envisaged suspending, but an aide to the Turkish Prime Minister told The Wall Street Journal the government was envisaging not a general trade embargo, but one affecting defence industries, "for now".
The Governor of the Bank of Israel, Stanley Fischer, warned earlier this week that the Turkish economy was thriving and that "the consequences of not having trading relations with Turkey will be expensive".
There was no formal comment on Mr Erdogan's remarks from Israel's foreign ministry yesterday. An Israeli official stressed that the government did want to escalate the dispute, which has seen its embassy downgraded such that it is now headed by a second secretary.
Meanwhile, Alon Liel, a former director general of Israel's foreign ministry and a strong advocate of maintaining good Israel-Turkish relations, said Israel and the US would do "everything possible" to prevent Mr Erdogan from visiting Gaza, where he would be treated "like a God".
Mr Liel pointed out that it took 11 years for the previous diplomatic downgrading in 1980 to end. He claimed that the Israeli Cabinet had overruled an earlier agreement between officials in which Israel would have said it was apologising "if there had been irregularities" during the lethal operation aboard the Mavi Marmara, the lead vessel in the flotilla. But he doubted that an apology would enough to defuse the crisis now. "This is not something that will be rescued soon," he said.
Mr Liel said he did not envisage that Mr Erdogan would be able to cancel trade agreements between private companies in Turkey and Israel. But he would be able to halt trade between Israel and public bodies in Turkey.