Turkey has decided to downgrade its diplomatic ties with Israel to the lowest possible level, Turkish Foreign Minister Ahmet Davutoglu said on Friday, following Israel's continued refusal to apologize for a 2010 raid on a Gaza-bound aid flotilla.

The findings of a UN probe into Israel's deadly raid on a 2010 flotilla to Gaza known as the Palmer Commission Report, which were leaked to The New York Times Thursday, have further raised tensions between Israel and Turkey, and senior Foreign Ministry officials warned that Turkey could respond to the report's publication by expelling the Israeli ambassador and scaling back diplomatic relations.

Open gallery view Turkish FM Ahmet Davutoğlu, Turkish PM Recep Tayyip Erdogan, and PM Benjamin Netanyahu Credit: Avi Ohayun - GPO / Reuters

Speaking to reporters on Friday, Davutoglu announced the downscale of diplomatic relations with Jerusalem, saying the move was a direct response to Israel's refusal to apologize for the deaths of nine Turkish nationals in the May 2010 raid.

The implications of the downgrade are that the level of diplomatic representation in both countries will be scaled back from ambassador to first secretary. This means Israel's ambassador to Turkey, Gabby Levy, and his deputy, Ella Afek, will be expelled.

A statement by the Turkish Foreign Ministry, published minutes following Davutoglu's press conference, indicated that Turkish and Israeli diplomats due to leave their respective posts as a result of the downgrade will do so by September 7.

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"Israel squandered all of the opportunities to end the crisis, and now it must pay for it," Davutoglu said, adding that Turkey's official position was that Israel's blockade on the Gaza Strip was illegal, despite the fact that the UN report supported its legality.

Hinting at the possible consequences of Turkey's disagreement with the UN's interpretation of Israel's blockade, the Turkish FM said that Ankara would "do whatever it takes to implement its interpretation of the significance of international waters in the Mediterranean."

"We cannot accept the blockade on Gaza. We cannot say that the blockade aligns with international law," he said, adding that the stance taken by the Palmer Commission Report was the author's "personal opinion, one which does not correspond with Turkey's position."

Additionally, Davutoglu announced the cancellation of all defense contracts between Israel and Turkey, adding that Ankara would both initiaite legal action against the Gaza blockade in international courts, as well as aid families of those killed in the Gaza flotilla raid in seeking litigation against Israel.

Warning of the possible consequences of Israel's refusal to apologize for the flotilla raid, Davutoglu said on Thursday that Friday's official release of the Palmer Report constituted Israel's last chance to apologize for its raid on the Turkish-sponsored flotilla and warned of consequences, including sanctions, should Israel continue to refuse to apologize.

Unless there is an Israeli apology, "we will put Plan B into play," Davutoglu said. He said Turkey intended to impose sanctions, "which both Israel and other international parties are aware of."

Referring to Israel's request for another delay in the report's publication, he said that Ankara "cannot accept another six-month extension."

Senior Israeli officials said Thursday that Israel would not apologize for the raid and that Prime Minister Benjamin Netanyahu had reiterated this to the U.S. administration in the past few days.

Turkey is also planning a diplomatic and legal campaign against Israel in the United Nations, and will help the families of those killed and injured in the raid to file lawsuits against Israel in courts worldwide.

In addition, Ankara is threatening to halt trade between Turkey and Israel, which totals billions of dollars.