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While Israel kept a low official profile Sunday on Turkey's cancellation of a joint military exercise, defense officials said advanced weapons sales to Turkey would now be reviewed, and a leading academic expert on Israeli-Turkish relations suggested ending support for Turkey on the Armenian genocide issue in Washington if the deterioration in ties continues.
According to defense officials, several Turkish requests are currently under consideration by the Defense Ministry's Foreign Defense Assistance and Defense Export Organization (SIBAT). These will now need to be reviewed due to the change in the diplomatic ties between Jerusalem and Ankara.
"This is a country that appears to be distancing itself from the West and there could be repercussions," one official said, adding that in the 1970s, Israel sold Iran military equipment up until the Islamic Revolution.
The officials would not reveal which new military platforms Turkey had requested.
Ephraim Inbar, head of the BESA Center for Strategic Studies at Bar-Ilan University in Ramat Gan, who has written widely on the Israeli-Turkish relationship, said that while someone high up in the Turkish decision-making hierarchy has decided to "teach the Israelis a lesson," Ankara still needed Israeli influence in Washington to prevent the passage in Congress of a resolution declaring the killing of Armenians during World War I a genocide.
Israel should "sit and wait" this year on this issue, Inbar said.
"If they behave, we should help; if not, then while we should not actively work against them, we should let them know that there is a price for their misbehavior," he said.
The Washington daily The Hill reported on Sunday that despite the signing of an historic agreement between Armenia and Turkey on Saturday, the perennial lobbying battle over the contentious Armenian Genocide resolution would continue.
According to the report, Rep. Adam Schiff (D-California) intends to move forward with the resolution, one Turkey works hard every year to deflect. The non-binding congressional measure would recognize the killing of 1.5 million Armenians by the Ottoman Turks as genocide, and has proven over the years to be a red flag for Ankara.
The Hill reported that despite Armenia and Turkey's gradual reconciliation, US lawmakers are still signing onto Schiff's resolution, and it now has 134 co-sponsors.
Schiff, according to the report, said he was not sure when the measure would come before the House Foreign Affairs Committee for approval and then move onto the floor for a vote.
One senior Israeli diplomatic official, meanwhile, counseled against taking this type of drastic action, and said that while Israeli-Turkish relations were "getting complicated," Israel should not do anything "abruptly."
"There is room for quiet diplomacy, and not to take actions that would move things beyond repair. The situation can still be mended, nobody wants to push Turkey into the hands of Iran," he said.
This advice was heeded by the Foreign Ministry over the weekend, which instructed diplomats to make no comment on the matter, but rather to refer all queries to the defense establishment.
Turkey informed Israel on Thursday that it would not allow the IAF to participate in the annual Anatolian Eagle exercise that was scheduled for this week. As a result, the United States and Italy also dropped out of the exercise.
Turkey said that it was concerned the aircraft Israel planned to send had participated in bombing runs against Hamas targets in the Gaza Strip during Operation Cast Lead in December 2008 and January 2009. Turkish Prime Minister Recep Tayyip Erdogan was fiercely critical of Israel's actions during the Gaza offensive, causing a sharp nosedive in relations.
The only official to discuss the matter on Sunday was Deputy Foreign Minister Danny Ayalon, who - reflecting the policy of trying to play down the tensions, told The Jerusalem Post : "Turkey is very important, and our relationship is very strategic. Turkey is very important for the stability and promotion of peace in the Middle East."
Despite the recent hiccups in the relationship, Ayalon described Turkey as "the antithesis to Iran. Here is a Muslim country that is both a democracy and tolerant, living in good relations with Israel because it is in the interest of both countries to do so."
But Inbar said that a change was taking place in Turkey, and the incident over the military exercise should be seen within the context of the country slowly distancing itself from the West, and becoming more Muslim in tone and character.
He said Ankara's hosting Iranian President Mahmoud Ahmadinejad and Sudan's President Omer Hassan al-Bashir last year was an indication of this trend, as was Erdogan's recent comments against anti-Iranian sanctions.
"This is all part of the crisis of identity the country is undergoing," Inbar said, adding that the agreement signed on Saturday night with Armenia was not a sign of Turkey's moving closer to the West, but rather an indication that Ankara wanted its borders quiet.
According to Inbar, the decision on the military exercise was a reflection of Ankara's anger that Israel refused over the summer to let Turkey's Foreign Minister Ahmet Davutoglu visit Gaza, and hold meetings with Hamas officials. Davutoglu subsequently called off a planned trip to Israel.
Despite the growing tensions, Israel and Turkey have continued to do business over the past year.
Last December, subsidiaries of Israel Aerospace Industries and Elbit Systems signed a $140 million contract to supply the Turkish Air Force with targeting pods. Israeli Military Industries recently completed a $700m. deal signed several years ago with Turkey to upgrade the country's fleet of aging Patton-series M60 tanks.
IAI also recently supplied Turkey with its advanced long-range Heron unmanned aerial vehicle.
Israel, nevertheless, was not invited in September to present a proposal for a missile defense system Turkey is interested in buying, though it asked Chinese, American and Russian companies to bid.