Prime Minister Benjamin Netanyahu has postponed approval of a reconciliation agreement with Turkey over the 2010 Mavi Marmara raid, a Turkish daily reported Sunday.

Netanyahu’s foot-dragging is due to domestic political considerations as peace talks with the Palestinians have faltered, diplomatic sources told Hurriyet Daily News.

Reports surfaced in February that Israel was close to signing an agreement with Turkey to re-establish ties and pay compansation for the deaths of nine Turks aboard the Gaza blockade-busting Mavi Marmara ship during an Israeli raid.

According to the Turkish daily, the terms of the agreement were finalized and the text submitted for the approval of Netanyahu and Turkey’s Prime Minister Recep Tayyip Erdogan in February, but Netanyahu has yet to sign off on it, sources said.

The Prime Minister’s Office declined to comment on the report and the Foreign Ministry did not immediately return a request for comment.

Following months of negotiations between the two sides, the deal was intended to be signed after Turkey’s municipal elections on March 30, Deputy Prime Minister Bulent Arınç told HDN in March.

Once the terms were finalized, the Turkish parliament was to evaluate the document.

The agreement outlined the amount in damages to be paid by Israel to families of the nine Turks killed aboard the Marmara.

The incident triggered an international outcry and exacerbated already strained relations between Turkey and Israel into a full-blown diplomatic row, with Ankara expelling the Israeli ambassador and demanding a formal apology and compensation.

Navy vessels escort the Mavi Marmara to the Ashdod port on May 31, 2010. (photo credit: Kobi Gideon/Flash90)

Navy vessels escort the Mavi Marmara to the Ashdod port on May 31, 2010. (photo credit: Kobi Gideon/Flash90)

Talks on compensation eventually began in March 2013 after Israel extended an apology to Turkey in a breakthrough phone call brokered by US President Barack Obama during his visit to Israel.

Turkish Foreign Ministry undersecretary Feridun Sinirlioglu was in Israel in early February to discuss the terms of the agreement. 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.

While the final sum to be granted to the families of the victims is still under wraps, reports have indicated that Netanyahu rejected a $20 million compensation package in mid-February.

Marissa Newsman and AFP contributed to this report.