The publication of the United Nations Palmer Report on the Israeli raid on last year's Gaza- bound flotilla has been delayed a third time, reportedly so that Israel and Turkey may continue reconciliation talks.

Headed by former New Zealand Prime Minister Geoffrey Palmer, the report was originally set to publish its findings on August 20, covering the events of May 31, 2010, when Israeli naval commandos boarded the Turkish ferry Mavi Marmara, the flagship of a six-ship convoy that planned to break Israel's maritime blockade on Gaza. Nine Turkish activists aboard the ship died in confrontation with the commandos.

The deaths lead to a sharp decline in Israeli-Turkish relations, and Turkish Prime Minister Recep Tayyip Erdogan has demanded that Israel apologize for the killings. According to a report by the Turkish paper Hurriyet Daily News this week, ties may be further downgraded should Israel refuse the demand.

Israeli Prime Minister Benjamin Netanyahu on Sunday convened his eight top ministers to discuss the possibility of Israel issuing a formal apology. However, several ministers publically opposed such a move, among them Foreign Minister Avigdor Lieberman, who heads Yisrael Beiteinu -- the second largest party in the coalition government.

The opponents to an apology argue that it would mean that Israel is taking responsibility for the deaths, and, instead, prefer saying that Israel "regrets the loss of life."

Meanwhile, Israeli Attorney-General Yehuda Weinstein believes the UN investigation might yet prompt lawsuits against Israeli soldiers who took part in the operation. He recommended that Netanyahu try to reach an understanding with Turkey, even if it meant issuing an apology, according to the Ynet news site.

Analysts speaking to Xinhua on Monday said that a return to past levels of relations would be good for both sides. However, normalization doesn't solely depend on the political leaders, but also on the will of the two peoples, they averred.

Hugh Pope, director of the Turkey/Cyprus Project with the International Crisis Group, believes that both Israel and Ankara would benefit greatly from reconciliation.

"For Turkey, restoration of relations will do much to bring back the sense of the country as a neutral regional power, able to talk to all sides, which did so much to improve its image until 2008," Pope said. He added that the primary reason for the deterioration of the relations prior to the flotilla incident was "Israel's aggressive actions against Gaza in 2008-2009."

"A secondary effect will be to clear away much of the problems Turkey currently faces with the U.S. Congress, which is very sensitive to the highly critical tone of some Turkish leaders towards Israel," Pope told Xinhua.

He argued that for Israel, restoration of relations would break some of its current regional isolation, which he said has increased as the Arab revolts have made governments more responsive to their peoples.

"However, it will not have fully smooth and normal relations with Turkey until Turkish public opinion is satisfied that Palestinians are getting a fair deal," Pope concluded.

Over the years, Israel and Turkey have established good economic relations, and, despite the fact that Israeli vacationers in Turkey have declined over the last couple of years, trade in 2010 grew by 30 percent, according to the Israeli-Turkish Business Council.

In 2010, Turkey climbed from eighth to third place as Israel's largest export market, Ynet recently reported.

Defense equipment has in the past been a significant part of the trade. Following the signing of a cooperation agreement in 1996, Israeli defense firms have won several multimillion dollar contracts for the Turkish military including the upgrading of fighter jets and tanks. The two countries closed a deal for 10 Israeli Heron drones worth 180 million U.S. dollars in 2010, despite Turkey's pullout from annual joint military exercises with Israel.

Dr. Gallia Lindenstrauss, of the Institute for National Security Studies in Tel Aviv, told Xinhua that there is a big debate over the issue in Israel, and that it's hard to say which way the wind is blowing.

"Those who oppose say that it's not going to change anything, whereas those in favor say that because of the Arab spring and the change in the political climate, Israel should consider apologizing because Israel can't have bad relations with all its neighbors," Lindenstrauss said.

Lindenstrauss said that she favors an apology -- not for the operation itself -- but for some of the "mistakes that were made" and that "it was more forceful than Israel wanted it to be."

In the eyes of Lindenstrauss, it was interesting that Lieberman has said even if Israel apologizes, he won't resign, which gives Netanyahu some maneuvering room to make a final decision without facing any threat to his government.

Lieberman has noted that his party would not bolt the coalition if Israel decided to apologize, according to Army Radio. "Israel does not need to apologize, but if there will be differences of opinion -- Yisraeli Beiteinu will not leave," Lieberman said at the beginning of Sunday's cabinet session.