An Israeli soldier who stole a laptop and a video gaming console from the Turkish ship Mavi Marmara nearly four years ago will have to serve out a sentence of 7 months and be demoted to the rank of private, a military tribunal ruled on Friday in rejecting the man’s appeal.

The appellate court called the soldier’s actions “disgraceful” in its ruling, according to Israel Radio.

The accused had reportedly passed the stolen laptop to a friend for resale.

The Mavi Marmara incident, in which Israeli commandos raided the Gaza-bound ship in international waters, killing 9 Turkish citizens when they came under attack, triggered a global outcry and exacerbated already strained relations between Turkey and Israel into a full-blown diplomatic crisis. Ankara expelled the Israeli ambassador and demanded a formal apology and compensation.

Talks on compensation eventually began in March 2013 after Prime Minister Benjamin Netanyahu extended an apology to his Turkish counterpart Recep Tayyip Erdogan in a breakthrough telephone call brokered by US President Barack Obama during a landmark visit to Israel.

Netanyahu has now reportedly delayed approving the outline of a reconciliation agreement with Turkey for nearly two weeks over concerns that acceding to a $20 million compensation package for the ill-fated May 2010 raid will provoke the ire of right-wing political rivals.

According to reports in Hebrew media Thursday, 11 days ago a Turkish-Israeli negotiation team presented Netanyahu with a draft agreement aimed at resolving the diplomatic tensions between the countries. The agreement came with the positive recommendation of National Security Adviser Yossi Cohen, but the prime minister balked because of the sum that Turkey was demanding in compensation for the deaths of its citizens.

In particular, Netanyahu was concerned about criticism of the $20 million claim because he refused to pay out half that amount three years ago as part of an initial Turkish compensation plan, Army Radio reported.

Meanwhile, as Netanyahu mulled over the draft agreement, Erdogan upped the stakes on Tuesday by stipulating that Israel also lift the blockade on the Gaza Strip before he would agree to a détente.

Turkish Prime Minister Recep Tayyip Erdogan speaks during a press conference with his Spanish counterpart in Ankara on Tuesday, February 11, 2014 (photo credit: AFP/Adem Altan)

Turkish Prime Minister Recep Tayyip Erdogan speaks during a press conference with his Spanish counterpart in Ankara on Tuesday, February 11, 2014 (photo credit: AFP/Adem Altan)

On Wednesday Israeli officials rejected the new Turkish demand.

“I am in favor of an agreement with Turkey, but (the current impasse) is Erdogan’s fault,” Strategic Affairs Minister Yuval Steinitz told Israel Radio. “I don’t understand Erdogan’s behavior.”

A spokesman for Netanyahu refused to comment on the matter, but press reports said he rejected the idea out of hand.

“Erdogan mentions the Gaza issue every so often, but it was never a formal part of the talks,” an Israeli official close to the negotiations told AFP.

“It is being dealt with in a separate channel, not as part of the diplomatic negotiations (on compensation).”

Turkish foreign ministry undersecretary Feridun Sinirlioglu was in Israel earlier this month to discuss the terms of an agreement, which would help normalize relations between Jerusalem and its once closest Muslim ally. Under the deal, Turkey would reportedly legislate to prevent lawsuits against Israel over the Mavi Marmara affair, and drop its objections to an upgrading of Israel’s relationship with NATO.

Foreign Minister Ahmet Davutoglu said on Sunday there had been “momentum” in talks toward bridging the gaps.

“It would not be correct to provide a timeframe on such (delicate) issues but I can say that serious progress has been made in recent meetings,” Davutoglu told Turkish television.

“A historic step was taken with the apology… Now a second step will be taken with the compensation,” he said. “We are going through a period where the relations are the closest to normalization after Mavi Marmara.”

Passengers on the deck of the Mavi Marmara on May 31, 2010 (Photo credit: IDF Spokesperson's Office/ Flash 90)

Passengers on the deck of the Mavi Marmara on May 31, 2010 (Photo credit: IDF Spokesperson’s Office/ Flash 90)

AFP contributed to this report.