As expected, the Palmer Report, issued by the UN investigative committee, over last year's confrontation between Israeli naval commandos and activists onboard Turkish ship the Mavi Marmara, didn't satisfy either Israel or Turkey, although it did give each of them partial satisfaction. It granted international legal legitimacy to Israel's blockade of Gaza, but heavily criticized Israel for excessive use of force that resulted in the deaths of nine Turkish citizens.

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At the same time, the report leveled criticism at those who organized the Gaza flotilla and the conduct of the Turkish government as well. The balanced language of the report clearly reflects the involvement of the two experienced diplomats who were members of the investigative panel: the Israeli representative, Dr. Joseph Ciechanover, and Turkish representative, Suleyman Ozdem Sanberk, who expended great effort to find a way out of the imbroglio.

The report also provided Israel with a lead at an effort to end the affair, or at least to present Israel as being interested in doing so, through an expression of regret - not an apology - and the payment of compensation to the families.

Out of a sense of responsibility for the strategic aspects of relations with Turkey, the Israeli military establishment actually supported such a formula, and for a time it appeared that Prime Minister Benjamin Netanyahu, too, was inclined to that approach. He was swept up in considerations involving his coalition government, however, and the language of prestige and honor that inform Foreign Minister Avigdor Lieberman's positions. This played into the hands of extremists in Ankara.

Turkish Foreign Minister Ahmet Davutoglu would have found himself in an entirely different situation from the standpoint of Turkish domestic affairs and foreign policy if Israel had accepted the report. The damage caused by Israel's refusal will hound us politically, militarily and diplomatically for years. Instead of minimizing the damage that the raid of the flotilla caused Israel, the Netanyahu government managed only to exacerbate it and to cause Israel additional strategic damage.

There is, however, also the humanitarian dimension, which, with all of the difficulties involved, it is possible to try and separate from the political aspect of the case. Those who are familiar with the current mood in Turkey know that even those who oppose the government in power there and its policies toward Israel share the criticism of Israel's conduct in the flotilla affair. From their viewpoint, we killed nine Turkish citizens. It is therefore important that Israel announce now that it is establishing a compensation fund for the families of those killed - beyond the letter of the law and separate from the political aspects of the case.

The fund should be given independent legal status, to provide it with credibility, and should be headed by a public figure who is not identified with the government. The sums that are to be offered to each family must be generous. Because the names of the Turkish citizens killed are known, it would be possible for such a compensation panel to approach the families directly. If the government lacks the ability to come to such a decision of this nature, perhaps Defense Minister Ehud Barak should announce the creation of such a fund and finance it from the defense budget. The sums required are not large, and it is highly unlikely that the foreign minister will cause a coalition crisis or quit the government over this.

The advantage of establishing such a fund is twofold. First of all, it constitutes a humanitarian gesture. It's clear the Israel Defense Forces didn't intend to kill Turkish citizens and got involved in a situation that was not to its benefit. Secondly, such an announcement could, to some extent, quell the animosity that currently exists among the Turkish public toward Israel. Some of the families may refuse to accept the Israeli compensation offer, and they may even find themselves subject to public - or government - pressure not to entertain it. One way or another, however, the offer could open the door to discourse of a somewhat different tone within Turkish public opinion.

Israel has long-term interests when it comes to relations with Turkey. It's not a matter of prestige or maneuvering over questions of honor, but rather one of tough realpolitik. Not everything is within our control, and there are those in Ankara who would like to undermine any effort to improve relations. We don't need to play into their hands. Although in light of the latest steps by Turkey it won't be easy, we need to grit our teeth and do the right thing, and do it intelligently and not through hotheadedness.