Israel and Turkey agreed to restore full diplomatic relations on Friday after Prime Minister Benjamin Netanyahu apologized in a phone call for a deadly naval raid against a Gaza-bound international flotilla in a dramatic turnaround partly brokered by President Barack Obama.

Joint interests between the two countries, including fears that the Syrian civil war could spill over their respective borders, and some cajoling by Obama made the time ripe to repair the frayed relations after nearly three years of acrimony over the deaths.

It was a surprising turnaround for Prime Minister Benjamin Netanyahu who had long rejected calls to apologize. He announced the breakthrough after a 20-minute phone conversation with his Turkish counterpart, Recep Tayyip Erdogan. Obama helped broker the fence-mending while visiting Israel, but the sides had been reaching out to each other before.

“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.

The statement stressed that the bloodshed was not intentional and suggested that relatives of those killed would get compensation. In light of an Israeli investigation into the shootings that pointed to a number of operational missteps, Netanyahu apologized to the Turkish people for “any mistakes that might have led to the loss of life or injury and agreed to conclude an agreement on compensation (and) non-liability,” the statement said.

It said Netanyahu appreciated Erdogan’s interview with a Danish paper in which he said he was misunderstood in remarks at a U.N. conference in Vienna. Erdogan said Islamophobia should be considered a crime against humanity “just like Zionism, like anti-Semitism and like fascism.” His comments drew wide condemnation. Erdogan later told Politiken that he was misunderstood and was criticizing Israeli policy.

Erdogan’s office said: “Our prime minister accepted the apology in the name of the Turkish people.”

Erdogan “expressed that it was saddening that relations, which are of vital strategic importance for peace and the stability of the region, have been soured in recent years,” the statement said.

Israel and Turkey were once close allies. Relations began to decline after Erdogan, whose party has roots in Turkey’s Islamist movement, became prime minister in 2003. Erdogan has embarked on a campaign to make Turkey a regional powerhouse in an attempt to become the leading voice in the Muslim world and distanced from Israel.

Tensions raged after Erdogan attacked Israel for the high Palestinian death toll in an Israeli campaign aimed at stopping daily rocket fire from Gaza on Israel in the winter of 2008, at one point storming off a stage he shared with the Israeli president at the high-profile World Economic Forum in Davos, Switzerland.

Relations gradually worsened.

A Turkish TV show that demonized Israeli soldiers prompted Israel’s then deputy foreign minister, Danny Ayalon, in early 2010 to reprimand the Turkish ambassador. He seated Ahmet Oguz Celikkol on a sofa lower than his own chair and wouldn’t shake his hand in televised images of the meeting.

Animosity peaked on May 31, 2010, when Israeli commandos stormed a ship named Mavi Marmara while stopping an international flotilla trying to breach an Israeli blockade of Gaza, which is ruled by Hamas, an Islamic militant group that has been branded a terrorist organization by Israel, the U.S. and the European Union. Gaza militants have fired thousands of rockets and mortar rounds at Israeli border communities and towns during the past decade. The latest rocket was fired at the Israeli town of Sderot on Thursday while Obama was visiting Jerusalem.

Eight Turks and a Turkish-American were killed, and dozens of activists were wounded. On the Israeli side, a total of seven soldiers were wounded.

Israel blockaded the coastal strip in 2007, in cooperation with Egypt, after Hamas violently overran the territory from the secular Palestinian Fatah party. Israel said the blockade was a move to weaken Hamas and keep militants from moving weapons into the enclave.

But pro-Palestinian activists say it amounts to collective punishment of Gaza’s residents and have launched numerous attempts to reach the territory by boat to draw attention to their cause.

Israel previously blamed the activists on the Mavi Marmara for the bloodshed that occurred during the raid, saying its naval commandos were attacked when they went aboard. Israel released videos showing armed activists brandishing iron rods and clubs attacking the soldiers as they slowly rappelled onto the deck from a helicopter. Soldiers were overpowered as they landed. They were surrounded by men with clubs. One soldier was tossed onto a lower deck.

The military later said the soldiers were not expecting trouble and had paintball guns as their primary weapons while handguns were only for an emergency. Two activists grabbed the handguns away from soldiers and shot two of them, the military said at the time. Both activists were then shot and killed.

Israel insisted that its soldiers acted in self-defense and later showcased knives, slingshots and clubs they said were found onboard the ship. Some activists had military-style gear, including bullet-proof vests and night-vision goggles. Israel said this indicated that the activists had planned for violence. The activists also said they acted in self-defense.

Following the flotilla incident, NATO-member Turkey withdrew its ambassador to Israel and greatly scaled back military and economic ties. But relations were never broken completely.

Erdogan phoned Ismail Haniyeh, the Hamas prime minister in Gaza, to update him Friday. In a statement, Hamas commended Turkey for holding firm on demanding an apology from Israel, which it refers to as the “Zionist entity.”

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.

Hasan Koni of Istanbul’s Bahcesehir University said the Arab Spring uprisings forced the two former allies to repair their strained ties.

“Developments in the Middle East aren’t progressing in a favorable way for the Western world,” Koni said. “For the West, it is now time to maintain some level of stabilization.”

The U.S. welcomed the development as a means to advance regional peace and security.

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.

(AP)