Vice premier confronts the Turkish prime minister:

"How can you trust a government that consorts with Iran and Hamas?" wondered Minister Moshe Ya'alon during a conference in Tel Aviv on Wednesday.

The vice premier, who addressed a Calcalist gathering, continued his assault on Recep Tayip Erdogan, saying that "since his government rose to power, Turkey has decided to turn east instead of west. Turkey turned into an Islamic republic from a secular republic."

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Relations between Turkey and Israel reached a new low on Tuesday after the Turkish prime minister said Anakra would cut all defense-related trade with Israel. Erdogan said that further sanctions are on the agenda, calling Israel a "spoiled child of the UN".

Ya'alon also referred to the question of whether Israel should apologize for the incident on board the Mavi Marmara, in which nine Turkish activists were killed. "We are talking about a phenomenon that goes beyond this specific incident. The goal is to defeat the State of Israel. If anyone thinks that one word can settle the matter, they fails to understand."

Ya'alon, who was involved in efforts to bring about reconciliation between Turkey and Israel, added that "what happened during the flotilla was without a doubt a Turkish provocation."

According to Ya'alon, "We had no intention of ending the incident with fatalities but the soldiers had no other choice but to defend themselves. The result was not good and we tried to resolve the crisis later on."

Ya'alon also reacted to criticism voiced by Opposition Chairwoman Tzipi Livni against the conduct of Netanyahu 's government during the crisis.

"Israel is not at fault for the situation with Turkey. I regret hearing the Opposition chairwoman say that the absence of Israeli-Palestinian peace talks led to the situation with Turkey. Whoever says that in an interview is asking for outside pressure. Perhaps he fails to understand or perhaps he is driven by political interests."

'We're not on brink of all-out-war'

Ya'alon stressed that "there is no all-out-war on our threshold. We cannot talk of an Arab coalition. The Arab countries are currently occupied with issues within and have no time to deal with Israel.

"Tuesday started off with an all-out-war – according to the IDF commander of the Home Front Command, the day continued with the Turkish prime minister's remarks on severing trade ties with Israel, which was later clarified with a statement explaining that he was referring to defense industry trade which has no significant volume as it is; in the background September tsunami is looming. Naturally, the stock market is sliding – not only because of these events but also because of global declines.

"When we talk about the events unfolding around us, the changes pose no threat to Israel, neither in the short term nor the mid term. What is happening around us is that young people are being exposed to the real word whereas until now they were cut off form the word by totalitarian regimes. Hafez Assad banned cell phones and internet in Syria. He must have seen the world. This wave cannot be contained.

"The shockwaves present an opportunity for radical elements to try and step into the picture and wreak havoc. The West must do all in its power to help moderate elements rise and prevail over radical elements in the Arab world. Israel will not be affected in the short and mid term; however, we are exposed to the threats on part of terrorist elements which are trying to capitalize on the situation and of course, in the long run there are Iran's nuclear aspirations.

"Looking closely at the Arab Spring uprising, one cannot maintain that the uprisings will have only a negative affect on Israel. The situation in Syria which has reached a point of no return may perhaps smash the axis of evil. Insofar as the event in Egypt, is the radical elements in the country are not neutralized Egypt will have a hard time working out of the crisis – this will pose a challenge for any President who is elected.

"As regards the Palestinian issue, no doubt they opted for a unilateral proclamation in order to sidestep negotiations. We are willing to sit down at the table and address not only territorial matters but also the recognition of a Palestinian state. I suggest reading the Arab press which places the September issue front and center.

"The unilateral proclamation poses a serious threat to the Palestinians as the US may cut off its aid and Israel might back out of the Oslo Agreement. It is my opinion that the September threat is an attempt to twist Israel's arm and gain concessions. We must be prepared for any case scenario. A proclamation at the UN does not change the reality – we have to be prepared for any contingency as we did in 2000.

"As for the social protest, if it results in a change in the socio-political dialogue such as that we as a government can effect changes and improvements to the socio-economic agenda – than we will be able to overcome exogenous economical threats."

Tal Litman contributed to this report

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