A senior Israeli minister who held covert talks with Turkey this week denied reports Friday that he had promised compensation for nine victims of the Israel Navy's raid on a Gaza-bound aid flotilla, according to Army Radio.

The Turkish daily Hurriyet reported that Industry, Trade and Labor Minister Benjamin Ben-Eliezer indicated to Turkish Foreign Minister Ahmed Davutoglu during their clandestine meeting in Brussels that Israel was rethinking its refusal to compensate and apologize to the families of those killed in the May 31 raid.

Open gallery view Thousands attended the funeral on Thursday June 3, 2010 in Istanbul for the activists killed in the IDF raid on a Gaza-bound aid flotilla. Credit: AFP

"We have no plans to do that, and the minister did not promise anything to that regard during his meeting with the Turkish foreign minister two days ago," Ben-Eliezer's bureau said in response to the report.

Davutoglu warned Ben-Eliezer during that meeting that Turkey may ban commercial flights between the two countries unless Israel agreed to its demands.

The covert talks - the first high-level contacts between the tense allies since the deadly raid - raised a storm in both in Israel and in Turkey.

The decision to hold the meeting was kept secret even from senior members of both administrations, a move which prompted a furious response from Foreign Minister Avigdor Lieberman and a warning that his relationship with Prime Minister Benjamin Netanyahu had been severely damaged.

Netanyahu and Lieberman, meanwhile, held their first meeting on Friday since the matter was exposed. Their bureaus termed the meeting "routine" and said it had been scheduled prior to news of Ben-Eliezer's talks with Davutgolu.

Turkish sources have reported that during the meeting, Ben-Eliezer and Davutgolu tried to hammer out an acceptable version of the apology Turkey is demanding from Israel, as well as agree on compensation for the families of those killed in Israel's raid on a Gaza-bound aid flotilla. "There has to be a clear Israeli statement that is not just an expression of regret at the deaths of the victims," one Turkish source stated.

Davutoglu reminded Ben-Eliezer of Turkeys demands from Israel, including an apology, payment of compensation to families of those killed and wounded, an international inquiry and an end to the blockade of Gaza, Turkish Foreign Ministry spokesman told reporters this week.

According to Hurriyet, moves toward such compensation would be made only after Israel completed its internal investigation into the raid.

The Turkish foreign minister had originally asked the Turkish aid organization IHH to postpone its flotilla and allow the government to reach an agreement with Israel.

Davutoglu was concerned that such aid organizations might force Turkey into a foreign policy that conflicts with its own strategic interests. However, these organizations enjoy broad public support and can impact elections.

Davutoglu also believes both that Israel's response was disproportionate and that it is not in Turkey's interests to create an irreparable rift between the countries. This contradicts the position of several senior members of the ruling party who - more than they want to penalize Israel - fear a boosted Davutoglu seeking party leadership if not the premiership, should Erdogan run for the presidency.

Meanwhile, a Turkish human rights organization announced that preliminary findings indicate that some of the victims were killed by gunfire from inside Israel Navy helicopters and not by soldiers who had boarded the ship.

They cite the angle of the wounds and the type of head wounds of some victims. However, because the bodies were washed before they were transferred to Turkey, it is difficult to determine if they were shot from close or long range.