Israel will reopen its embassy in New Zealand this year, marking an improvement in strained relations between the two countries since a spy scandal, New Zealand's foreign minister said. Relations between New Zealand and Israel cooled in March 2004 when Israeli citizens Uriel Zoshe Kelman and Eli Cara, whom Wellington alleges were agents of the spy agency Mossad, were arrested in New Zealand's largest city, Auckland, on charges of passport fraud. New Zealand suspended diplomatic relations with Israel after their convictions and Prime Minister Helen Clark said they would not be restored until Israel apologized. In August last year, Israel issued a statement of regret and its new ambassador to New Zealand, based in the Australian capital Canberra, was accredited. New Zealand Foreign Minister Winston Peters said Friday that Israel's Foreign Minister Silvan Shalom told New Zealand's Turkey-based ambassador to Israel that its embassy in Wellington, which closed in 2002 for cost reasons, would reopen. "This provides a helpful basis for strengthening our bilateral relationship with Israel," Peters said.