...Over the past few weeks, as Turkey has come under increasing criticism in Washington and Europe over its handling of the flotilla episode, there has been a marked moderation of its demands for resuming normal diplomatic ties with Israel.

The decision on Monday by Prime Minister Binyamin Netanyahu's inner cabinet, a forum known as the septet, to agree to participate in a panel established by UN Secretary General Ban Ki-moon, was largely viewed as an attempt to meet one of these demands and thereby significantly reduce the tension.

"Part of our agreeing to this process is that Israel, as the prime minister has said, is interested in reducing tensions with Turkey and bringing the ties with Turkey back to normal," a senior government official said.

Ban called the establishment of the panel an "unprecedented development."

"I thank the leaders of the two countries, with whom I have engaged in last-minute consultations over the weekend, for their spirit of compromise and forward-looking cooperation," Ban said in a statement on Monday.

He had met with Defense Minister Ehud Barak on Friday and spoke with him at least once over the weekend.

Netanyahu's office issued a statement saying that the decision to participate in the panel had been made "in the wake of diplomatic contacts that have been held in recent weeks in order to ensure that this was indeed a panel with a balanced and fair written mandate."...