The Turkish government of Prime Minister Recep Tayyip Erdogan expelled the Israeli ambassador Sept. 2 and severed military ties with the Jewish state over its refusal to apologize for the May 31, 2010, assault on a Gaza-bound aid flotilla in which nine Turks were killed.
The incident, which occurred in international waters in the Eastern Mediterranean, climaxed strained relations dating from February 2009 when Erdogan publicly denounced Israel at an economic forum in Geneva for its December 2008 invasion of the Gaza Strip, ruled by the militant Hamas Palestinian faction.
Some 1,400 Palestinians, most of them civilians, were killed in the 22-day incursion by a large Israeli force.
Defense links between the countries effectively came to a halt in May 2010, a heavy blow to Israel's high-tech defense industry, which depends on exports.
At the time, Turkey froze around 16 defense deals with Israel reportedly worth billions of dollars. Among the contracts affected was a 2005 joint venture between Israel Aerospace Industries, flagship of Israel's defense sector, and Turkey's Aselsan.
Under the $183 million deal, state-run IAI provided Turkey with 10 Heron 1 UAVs. Deliveries were completed before the cutoff but Israeli defense contractors continued to travel to Turkey to provide maintenance support.
Aselsan had another deal with Israel Military Industries, a private company, to upgrade 170 of the Turkish army's U.S.-built M60A1 main battle tanks.
The $687 million upgrade was completed in 2010. But IMI and Aselsan were reported to be bidding together for a new contract in Colombia, where Israeli defense companies have been making inroads over the last few years.
"The Turkish companies will not be able to bid for contracts without the Israeli companies," an Israeli defense official observed.
Israel's liberal Haaretz daily said the projects reportedly suspended included a $5 billion deal for 1,000 Merkava Mk 3 tanks.
IMI is the lead components contractor, including the 105mm or 130mm main gun. Assembly is handled by the army's Ordnance Corps.
Turkey also dropped IAI's Arrow-2 anti-ballistic missile system from its list of options for a new missile defense system worth as much as $2 billion. Only U.S., European and Chinese companies can now bid.
Turkey had expressed interest in a number of Israeli systems, including Rafael Advanced Defense Systems' Spike guided anti-tank missile, IAI's Barak 8 air-defense missile, Namer infantry fighting vehicles and electronic warfare systems.
Negotiations on these appear to have been suspended, although it's not clear where Turkey will now turn.
As far as the UAVs are concerned, on Aug. 31 Haaretz quoted a "senior Turkish source" as saying it was possible the 27-year war against the Kurdistan Workers Party, or PKK, "may actually be the factor that rehabilitates relations between Turkey and Israel.
"Turkey needs the UAVs and Israel is likely to be a good source, especially when the fact that Turkey already has a service platform for Israeli UAVs is taken into account."
The Herons provided by Israel have reportedly been deployed to gather intelligence on PKK fighters operating from neighboring Iraq's Kurdish region.
Hundreds of PKK guerrillas have been reported killed in Turkish airstrikes in recent days.
Expectations that Erdogan's Islamist government, which has made major political gains with regional Muslim states like Iran by severing its ties with Israel's military, will relent on the UAVs and possibly other weapons systems must be considered remote.
Analysts say Erdogan has invested too much in this, boosting his efforts to transform Turkey into a regional superpower with influence of regional events, to back down.
The Turkish armed forces were a key supporter of the alliance with Israel, which brought together the two most powerful non-Arab states in the eastern Mediterranean.
But Erdogan, with vast popular support, has succeeded in harnessing Turkey's once-powerful generals, who considered themselves the guardians of the modern secular republic established by Kemal Ataturk in 1922.
They had repeatedly intervened in politics between 1960 and 2002 when Erdogan's Justice and Development Party won its first election.