JERUSALEM - Israel would be the big loser in case of a break in relations with former strategic ally Turkey because of its refusal to apologise to Ankara for a deadly naval raid, analysts warn.

"In this tug of war, Israel has more to lose than Turkey," said Ofra Bengio, an Israeli university professor and author of the book "The Turkish-Israeli Relationship: Changing Ties of Middle Eastern Outsiders."

"Turkey is a member of NATO and has close links with Muslim countries. It can give us up easily. We are a small, isolated country in this region," she said.

The two countries have been at loggerheads ever since Israeli commandos on May 31 raided a Turkish-owned ferry with hundreds of activists on board aiming to break the blockade of Gaza, killing nine Turks.

Turkey has repeatedly demanded a formal Israeli apology, compensation and an international investigation into the operation.

Turkish Foreign Minister Ahmet Davutoglu, in comments published on Monday by Hurriyet newspaper, warned that relations could be broken, but Israel said it would not apologise for defending its security.

Turkey has already closed its airspace to all Israeli military flights in reaction to the raid, Davutoglu said, adding that it could be extended to civilian flights.

A key feature of Turkish-Israeli relations has been the military cooperation agreement they signed in 1996, to the fury of Arab and Muslim countries.

Under the deal, Israeli military industries won numerous contracts to sell weapons to the Turkish armed forces such as M60 tanks and upgrade their current arsenal, including F-4 and F-5 fighter jets.

The two countries have carried out joint military exercises and Israeli troops have been allowed to train on Turkish territory.

"Turkey is the only Muslim country with which we had strategic military ties -- even if Ankara would never have allowed Israeli warplanes to use its air space to attack Iranian nuclear sites," said Bengio.

But Amir Rapapport, a military analyst at Israel`s Begin Sadat Centre for Strategic Studies, said the biggest loss would be the joint drills which "allowed the Israeli air force to practice for long-distance attacks."

"Israel using Turkish airspace had a deterrent effect on Iran, Iraq and Syria. Now that is lost," agreed Efraim Inbar, a political analyst from Bar Ilan University.

"The loss of Turkey is a serious strategic loss. Turkey is a very important country with huge influence in the Middle East," said Inbar.

Ankara recalled its ambassador immediately after the raid, scrapped plans for three joint military exercises and said economic and defence links would be reduced to a "minimum level."

Zvi Elpeleg, a former Israeli ambassador to Turkey, believes his country "is paying for Europe`s refusal to allow Turkey to join the EU."

"For a long time the Turks believed that Israel was a conduit to influence Brussels. But now they don`t believe this any more," he said.

A senior Israeli official, who declined to be named, agreed.

"Unfortunately Turkey is changing course and is trying to renew old dreams of a return to the Ottoman empire -- all at the expense of Israel," the official said.

BDST: 08.12 HRS, July 6, 2010