While Israel and Turkey's representatives are hard at work on normalizing ties, Defense Minister Moshe Ya'alon on Tuesday accused Ankara of encouraging terrorism by buying oil from the Islamic State group.

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"As you know, Daesh (Islamic State) enjoyed Turkish money for oil for a very, very long period of time. I hope that it will be ended," Ya'alon said during a meeting with his Greek counterpart Panos Kammenos in Athens.

The Israeli defense minister further accused Turkey of "permitting jihadists to move from Europe to Syria and Iraq and back, as part of Daesh's terrorist network, and I hope this will stop too."

Turkish President Erdogan; Defense Minister Ya'alon (Photos: AP, Emil Salman)

"It's up to Turkey, the Turkish government, the Turkish leadership, to decide whether they want to be part of any kind of cooperation to fight terrorism. This is not the case so far," he said.

Turkey has denied permitting oil smuggling by the Islamist militant group, which holds swathes of territory in Syria and Iraq. The United States last month rejected Russian allegations that the Turkish government and President Erdogan's family were in league with Islamic State to smuggle oil.

However, US State Department spokesman Mark Toner said last month that ISIS was selling oil to middlemen who in turn were involved in smuggling the oil across the frontier to Turkey.

Relations between former allies Turkey and Israel broke down in 2010 after an Israeli naval raid on a Gaza-bound flotilla killed ten Turkish citizens. Turkey has become the strongest critic of Israeli actions in Gaza, and reconciliation efforts between the two have repeatedly failed.

Both Prime Minister Benjamin Netanyahu and Turkish President Recep Tayyip Erdogan have expressed willingness to mend the strained ties between the two countries.

Last month, Erdogan told journalists that "normalization with Israel" was possible if the sides can reach a compensation deal for the raid's victims and if Israel lifts a blockade against Palestinians.

"There is so much the region could gain from such a normalization process," he noted.

Ya'alon in Greece (Photo: Ariel Hermoni, Defense Ministry)

Speaking to a Turkish news agency in Davos last week, Netanyahu said he was "hopeful" about normalization of ties between the two nations.

"We are talking to them (Turkish officials), and they are talking to us and if we succeed, that will be good for both countries," Netanyahu said.

Last month, it was reported that Mossad chief Yossi Cohen, at the time Israel's national security advisor, and Joseph Ciechanover, Netanyahu's envoy to talks with Turkey, met in secret with the Turkish Foreign Ministry's director general Feridun Hadi Sinirlioğlu in Switzerland. The representatives of the two countries were able to reach a number of understandings towards the normalization of relations.

Despite this, Ankara is still raising obstacles. A senior Turkish official stressed that Turkey demands complete, free access to the Gaza Strip.

The Turkish official, who spoke to Turkish newspaper Hurriyet, said Turkey wants access so that it can provide any aid necessary to the Palestinians living there. "Turkey is committed to reject any limitations on Turkish aid to Gaza," said the source.