Israeli officials rejected a demand by the Turkish prime minister that an agreement on normalization of ties between the two countries would be dependent on Israel ending its blockade of the Gaza Strip.

The unnamed officials said the subject was not even under discussion, Army Radio reported on Wednesday.

On Tuesday evening Turkish Prime Minister Recep Tayyip Erdogan poured cold water on mounting expectations of a nearing détente between Ankara and Jerusalem, telling reporters that reconciliation between the once-friendly nations was contingent on Israel lifting its blockade on the Gaza Strip.

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“About the negotiations, we have not reached any agreement,” he emphasized, according to Channel 10. “As long as the siege on Gaza isn’t lifted, it won’t happen. The siege must be lifted, and that must be part of the protocol, signed and agreed upon.”

Erdogan also said that talks would continue over the amount of damages to be paid by Israel to families of the nine Turks killed in the ill-fated May 2010 naval commandeering operation on the Mavi Marmara ship.

The incident triggered an international outcry and exacerbated already strained relations between Turkey and Israel into a full-blown diplomatic crisis, with Ankara expelling the Israeli ambassador and demanding a formal apology and compensation.

Talks on compensation eventually began in March 2013 after Israel extended a formal apology to Turkey in a breakthrough brokered by US President Barack Obama during a landmark visit to Jerusalem.

On Monday, a Turkish official said that negotiators were close to striking the long-awaited deal.

Turkish foreign ministry undersecretary Feridun Sinirlioglu was in Israel earlier this month to discuss the terms of an agreement, which would help normalize relations between Jerusalem and its once closest Muslim ally.

Foreign Minister Ahmet Davutoglu said on Sunday there had been “momentum” in talks toward bridging the gaps.

“It would not be correct to provide a timeframe on such (delicate) issues but I can say that serious progress has been made in recent meetings,” Davutoglu told Turkish television.

“A historic step was taken with the apology… Now a second step will be taken with the compensation,” he said. “We are going through a period where the relations are the closest to normalization after Mavi Marmara.”

Israeli media reports have said the compensation talks were revived in December when Israeli negotiators traveled to Istanbul and Turkey lowered its demands, which was neither confirmed nor denied by the Turkish side.

The amount of compensation to be paid, as well as the legality of a final agreement, are believed to be sticking points but the two sides appear to be narrowing their differences.

Last week, Haaretz reported that Israel has offered $20 million in compensation to the families of those killed and wounded in the flotilla raid.

Western diplomats quoted by the paper said Ankara had demanded $30 million, but Israel was initially willing to give only $15 million.

Prime Minister Benjamin Netanyahu later decided to up Israel’s offer to $20 million, with an extra $3 million available “if necessary to secure an agreement,” the paper said.

Davutoglu refused to disclose the amount of compensation being sought but hinted at “some positive developments.” He said he was in constant touch with Erdogan to discuss future steps to be taken after a deal including the appointment of an ambassador to Israel.

Turkey’s interest in reconciliation is also thought to be connected to its desire to purchase Israeli natural gas.

AFP contributed to this report.