As blood flows in Libya, Yemen, and Syria, and the region continues its meltdown, the only two Mideast democracies out there are Israel and Turkey. Ideally, these two would be working together, especially as Syria, which is sandwiched between them, shows signs of regime failure.

Of course, the times are far from ideal. Israeli-Turkish relations, once close, are in the deep freeze; they nearly snapped last year after nine Turkish civilians were killed in an Israeli raid on the Mavi Marmara, an aid ship that tried to run Israel's blockade of Gaza.

However, Turkish and Israeli officials have been holding reconciliation talks for months, with some recent signs of progress. There seemed to be a chance that positive results would emerge before the release, next Wednesday, of a U.N. report on the Mavi Marmara episode. But now things look very uncertain.

We'll soon see whether the leaders of Turkey and Israel can put strategic interests above domestic politics and mend their ties.

The nub of the dispute boils down to whether Israel will apologize for the deaths and pay compensation, and whether this would permanently settle the issue. On a trip to Turkey last fall I saw how incredibly heated the issue of an apology is for both sides.

"Turkey and Israel are two friendly countries and there was never bloodshed between us in history," says Özdem Sanberk, the Turkish representative to the Palmer Commission (which is writing the U.N. report). This, he says, is why the Turkish public is so outraged at the killings and demands an apology.

Turkish Prime Minister Recep Tayyip Erdogan, an emotional man, was already aggrieved at Israel's 2008 bloody invasion of Gaza (in response to Hamas rocket attacks on Israeli civilians).

The Gaza invasion ended Erdogan's personal efforts to restart peace talks between Israel and Syria; he told me, in a 2009 interview, that he was further upset by Israeli refusal to let Turkey deliver relief supplies to Gaza. Erdogan's outrage was further aroused by the Mavi Marmara deaths.

In Israel I heard an equal degree of outrage. The charge: that Erdogan failed to criticize Hamas rocket attacks and to stop the Mavi Marmara sailing, even though he knew that radical pro-Palestinian activists were on board. Then there are Israelis on the right, like Foreign Minister Avigdor Lieberman, who argue no apology should ever be uttered.

Yet Israeli Prime Minister Benjamin Netanyahu appears to be willing to consider an apology - not for conducting the raid on the Mavi Marmara but for operational mistakes that resulted in the nine Turkish deaths. Indeed, Israel's successful deflection of another Gaza flotilla this month, with some help from Turkey, indicates how much better things could have been handled last year.

Israeli diplomatic sources tell me: "The question of an apology ... for Prime Minister Netanyahu ... could be considered under certain conditions. Not for the whole thing but for operational flaws or mistakes that were unintentional ... and [if it] would close the whole circle of legal liability against Israel or individual Israelis." In other words, any apology would have to be linked to a guarantee against future lawsuits by Turks against Israeli citizens or soldiers over the nine deaths.

Moreover, Israeli Defense Minister Ehud Barak has come out openly in favor of a compromise. He told Israel's Channel 1 last week: "From a strategic point of view, we have an interest in smoothing things over with Turkey. National pride is important, [but] in the end, we have to understand that we have other interests here. ... Turkey can have an important role in issues relating to Syria, Iran, Lebanon, and Hamas."

If Netanyahu had the backing of his defense ministry and military on a compromise, his balky foreign minister would probably accept it. But is he really willing to try?

And will Prime Minister Erdogan agree to a partial compromise on the language of apology? Not at all clear.

The Palmer report would seem tailor-made to facilitate compromise language. It reportedly states that Israel has a legal right to conduct a naval blockade of Gaza, and stop suspect ships. But it also reportedly criticizes Israel sharply for the conduct of the raid and unnecessary use of force.

Yet Turkey has already rejected the Palmer panel's finding that the blockade is legal, which may mean a partial Israeli apology will be rejected. And senior Israeli officials are disputing the need for any apology at all.

The argument for repairing Turkish-Israeli ties was put eloquently by Sanberk. "If we can't revert to normalcy," he said, "the deterioration of Turkish-Israeli relations will be irreversible. This will create a new element of instability in a region which is already unstable. It is not in the interest of anyone. It would be a lose-lose situation."

Do Israeli and Turkish leaders have the courage to turn this situation into a win-win?