In a statement carried by Reuters, Netanyahu said he “expressed apology” to the Turkish people for any error that could have led to loss of life in the flotilla incident. He also said Israel has agreed to pay compensation to the families of the victims and that Israel and Turkey agree to work together to improve the humanitarian situation in the Palestinian territories.
A Turkish official in Ankara confirmed the apology, telling Today's Zaman that Netanyahu called Erdoğan to offer an apology and that Erdoğan accepted it.
The breakthrough came as a result of what appears to be a US bid to normalize relations between the two former allies. News of the apology came just after President Barack Obama said that Erdoğan and Netanyahu spoke on the phone on Friday. The announcement came hours after Obama wrapped up a visit to Israel.
"I am hopeful that today's exchange between the two leaders will enable them to engage in deeper cooperation on this and a range of other challenges and opportunities," Obama said in the statement released by the White House.
"The United States deeply values our close partnerships with both Turkey and Israel, and we attach great importance to the restoration of positive relations between them in order to advance regional peace and security.”
The first conversation between the two leaders since 2011, when Netanyahu phoned to offer help after an earthquake struck Turkey, gave Obama a diplomatic triumph in a visit to Israel and the Palestinian Territories in which he offered no new plan to revive peace talks frozen for nearly three years.
The 30-minute call was made in a runway trailer at Tel Aviv airport, where Obama and Netanyahu huddled before the president boarded Air Force One for a flight to Jordan, US officials said.
Israel bowed to a long-standing demand by Ankara, once a close strategic partner, to apologise formally for the deaths aboard the Turkish vessel Mavi Marmara, which was boarded by Israeli marines who intercepted a flotilla challenging Israel's naval blockade of the Palestinian-run Gaza Strip.
"Prime Minister Netanyahu expressed an apology to the Turkish people for any error that may have led to the loss of life, and agreed to complete the agreement for compensation," an official Israeli statement said.
"They agreed to restore normalization between Israel and Turkey, including the dispatch of ambassadors and the cancellation of legal steps against Israeli soldiers," a statement from Netanyahu's office said.
Netanyahu "regretted the recent deterioration of relations between Israel and Turkey and expressed his commitment to overcoming their differences in order to advance peace and stability in the region," it said.
A US official said "Erdoğan accepted the apology on behalf of Turkey."
Netanyahu told his Turkish counterpart that Israel had "substantially" lifted restrictions on the entry of civilian goods into the Palestinian territories, Erdoğan's office said.
"Prime Minister Netanyahu ... noted that Israel had substantially lifted the restrictions on the entry of civilian goods into the Palestinian territories, including Gaza, and that this would continue as long as calm prevailed," the statement from Netanyahu's office said.
Turkey will support all international and regional efforts to find fair, enduring and comprehensive solution based on 'two-state' vision to the Israeli-Palestinian conflict, a statement from Erdoğan's office said.
"Erdoğan told (Israeli premier) Benjamin Netanyahu that he valued centuries-long strong friendship and cooperation between the Turkish and Jewish nations," the statement added.
Turkey has expelled the Israeli ambassador and severed military ties with Israel in protest of the Israeli refusal to apologize for the killing of the eight Turks and a Turkish American by Israeli commandos during a raid on the Mavi Marmara ship, part of a Gaza-bound aid flotilla, in 2010.
Israel had previously balked at apologising to the Turks, saying this would be tantamount to admitting moral culpability and would invite lawsuits against its troops.
Voicing until now only "regret" over the Mavi Marmara incident, Israel has offered to pay into what it called a "humanitarian fund" through which casualties and their relatives could be compensated.
An Israeli political source said the way to a formal apology was paved by the sidelining of Avigdor Lieberman, who opposed such a move when he served as foreign minister in Netanyahu's previous government.
Lieberman resigned from the post in December after he was indicted on fraud charges. The far-right politician's return to the position in the new Netanyahu-led administration that took office a week ago depends on the outcome of his trial.
A source in Netanyahu's bureau said opening a new chapter with Turkey "can be very, very important for the future, regarding what happens with Syria but not just what happens with Syria".
Tzipi Livni, a minister in charge of regional diplomacy, praised what she saw as "restoration of a first-rate strategic dialogue" that could help Israel forge a "camp of more moderate elements" to confront radicals in Syria and Iran.
Before the diplomatic breakdown, Israel and Turkey shared intelligence information and carried out joint military exercises. Israeli pilots trained in Turkish skies, improving their capability to carry out long-range missions such as possible strikes against Iran's nuclear facilities.
In Turkey, Erdoğan's success in obtaining an Israeli apology was viewed as a diplomatic coup.
"This is a diplomatic success," Turkish political scientist Ufuk Ulutaş said, noting that Turkey "did not take any step back regarding its demands."
In a statement, Hamas applauded Erdoğan for having won an apology from Israel, and said he had told the group's leader Khaled Meshaal by telephone that Netanyahu also promised to "lift the siege on the Palestinian people".
In address to Gazans on the ninth anniversary of assassination of Sheikh Ahmet Yasin, sprititual leader of the Hamas, Gaza's Prime Minister Ismail Haniyeh said Turkey won a diplomatic success.
Israel said, however, that it undertook to ease conditions in the Palestinian territories should the situation allow, and that Netanyahu and Erdoğan had pledged to work together to improve the humanitarian situation in Palestinian areas, including Gaza.
UN Secretary-General Ban Ki-moon welcomed the restoration of normal relations between the two countries and expressed appreciation for Obama's role.
"Assisting Israel and Turkey in restoring their good relations had been a core objective of the Secretary-General's efforts in the aftermath of the May 2010 flotilla incident," UN spokesman Martin Nesirky said. "Today's announcement is an important and hopeful signal for the stability of the region."
Alon Liel, a former Israeli diplomat to Turkey, said the time was right for reconciliation because of the new Israeli government and because of Obama's involvement. Liel said Turkey and Israel share the same concerns that violence from the Syrian civil war reaching their countries plus there are possible gas deals that would be impossible without reconciliation.
Speaking at a news conference with Jordan's King Abdullah II in Amman Friday, Obama said the timing on his trip to Israel was right for Turkey and Israel to start restoring normal diplomatic relations.
Obama said he has long argued that it's in the interests of both Turkey and Israel to restore normal relations, noting that they have historically had good ties and are both "extraordinarily strong partners and friends of ours."
"They don't have to agree on everything in order for them to come together around a whole range of common interests and common concerns," he said.
Media reports had said the Turkish-Israeli ties were on the agenda during Obama's talks with Israeli leaders. Obama ended his three-day trip to Israel by a visit to the grave of Theodor Herzl, the founder of modern Zionism who died in 1904.
Some said the visit to Herzl's grave was an indirect message to Turkey as well, given that it came in the wake of a speech in late February by Erdoğan in which the Turkish prime minister described Zionism as a “crime against humanity” along with fascism and anti-Semitism. The speech drew condemnation from Israel and the United States and UN Secretary-General Ban Ki-moon.
Erdoğan said this week that his remarks on Zionism, made during an Alliance of Civilizations meeting in Vienna, should not be misinterpreted by anyone, adding that his comments were directed at Israeli policies in Gaza.
In an interview with the Danish Politiken daily, Erdoğan said he stands behind his remarks against Zionism, claiming that his intent was to criticize Israel's policies of expansion in the occupied territories. “I know that my remarks created controversy, but no one should misunderstand my statements. Everyone knows that my criticism targeted certain critical issues, particularly Israeli policies in Gaza,” Erdoğan said. "On the other hand, we recognized and still recognize Israel as a state within the 1967 boundaries. It should not be forgotten that we have hosted in our country a number of Israeli presidents and prime ministers as part of our peace efforts," Erdoğan was quoted as telling the Danish daily by the Anatolia news agency.
"Turkey, like it did in the past, supports all international and regional efforts for a just, lasting and comprehensive solution to the Israeli-Palestinian conflict within the perspective of a two-state solution. My several speeches openly condemning anti-Semitism demonstrate my stance. In this regard, I stand behind my speech in Vienna."