JERUSALEM (Reuters) – A long-awaited U.N. report on Israel’s lethal interception of a Gaza-bound Turkish activist ship appears to have both supported and rejected core arguments made by the former allies.

Following is an overview of the conclusions of the panel set up by U.N. Secretary-General Ban Ki-moon and headed by former New Zealand premier Geoffrey Palmer, and implications for the Israeli-Turkish feud.

JERUSALEM (Reuters) – Upgrading the Palestinians’ U.N. status would be a “strategic mistake by the world”, a senior Israeli official said on Wednesday, cautioning that Israel had prepared a slew of punitive and diplomatic responses.

Outlining government strategy ahead of next month’s showdown at the United Nations, the official said long-stalled peace talks would sag further should the Palestinians sidestep Israel in staking out statehood.

JERUSALEM (Reuters) – Israel will stick to its refusal to apologize to Turkey for killing nine of its citizens aboard a Gaza-bound ship, an Israeli official said on Wednesday, dampening any prospects for reconciliation between the former allies.

The decision, which the official said Prime Minister Benjamin Netanyahu conveyed to U.S. Secretary of State Hillary Clinton in a telephone call, was made days before the publication of the findings of a U.N. inquiry into the seizure of the Mavi Marmara last year.

JERUSALEM (Reuters) – Israel does not plan to expand military ground forces in response to instability in Egypt and Syria, but will improve their training and mobility for wartime deployment, Israeli officials said on Monday.

The fall in February of Egyptian President Hosni Mubarak, long a U.S. ally, has triggered concern in Israel for the 1978 peace accord between the countries and for the demilitarised status of Egypt’s Sinai peninsula on Israel’s border.

JERUSALEM (Reuters) – Israel’s defense minister played down on Sunday the prospect that fighting with the Palestinians will flare up when they apply for full U.N. membership next month in the absence of peace talks.

Israel has been reinforcing troops and riot police in the occupied West Bank as well as on its fronts with Gaza, Lebanon and Syria, worried pro-Palestinian protests could be inflamed by the late-September face off in New York.

JERUSALEM, July 31 (Reuters) – Israel’s government hit back
on Sunday at protests against the rising cost of living, saying
some reforms being demanded might lead to economic crises like
those besetting parts of Europe and the United States.

The warnings followed weekend marches by some 100,000
demonstrators, the resignation of a top treasury official and
questions from leading commentators over Prime Minister Benjamin
Netanyahu’s ability to ride out a revolt by the middle class.

JERUSALEM, July 31 (Reuters) – Israel’s government hit back
on Sunday at protests against the rising cost of living, saying
some reforms being demanded might lead to economic crises like
those besetting parts of Europe and the United States.

The warnings followed marches by some 100,000 demonstrators,
the resignation of a top treasury official and questions from
leading commentators over Prime Minister Benjamin Netanyahu’s
ability to ride out a revolt by the middle class.

JERUSALEM (Reuters) – Israel’s Foreign Minister Avigdor Lieberman said on Sunday he would not quit the coalition government if it decides to apologize to Turkey for killing 9 Turks aboard a pro-Palestinian activist ship last year.

Lieberman, Prime Minister Benjamin Netanyahu’s most powerful and hawkish political partner, has publicly scorned meeting Ankara’s demand that Israel atone for storming the Mavi Marmara as it led an aid flotilla toward the blockaded Gaza Strip.

JERUSALEM (Reuters) – Israel is debating whether to say sorry for storming a Gaza-bound Turkish activist ship last year, after its jurists recommended satisfying Ankara’s demand for an apology to help fend off war-crimes lawsuits.

Prime Minister Benjamin Netanyahu has so far voiced only “regret” for the navy’s killing of nine pro-Palestinian Turks aboard the Mavi Marmara, but Israeli officials say support for a stronger show of contrition is spreading in his government.

JERUSALEM (Reuters) – Turkey’s leader has “shut the door” on reconciliation with Israel by insisting it end the Gaza blockade and apologize for storming a Turkish ship sailing toward the Palestinian enclave, Israel’s top diplomat said on Sunday.

But in a possible reflection of disagreement within Israel’s coalition government, another official said rapprochement talks continued with Turkey ahead of the publication of a U.N. report which Israel has predicted will largely vindicate its actions.