Israeli Prime Minister Benjamin Netanyahu backtracked on a U.S.-brokered reconciliation agreement that would had ended the crisis in Israeli-Turkish ties, the local Army Radio reported Thursday. Washington had secured Netanyahu's consent to the terms of the deal two weeks ago, following much pressure it placed on the latter to open a new leaf with Ankara. According to the report, Netanyahu agreed to issue an apology to Turkey for "tactical errors" made during the naval raid aboard a Gaza-bound ship in May 2010, in which nine activists were killed, and pay compensation to their families. Turkey, for its part, would not seek suits against Israel or the commandos who conducted the operation. Netanyahu had initially rejected the deal on grounds that Foreign Minister Avigdor Lieberman, who voiced his objection to any sort of Israeli apology to Turkey on numerous occasions, would dismantle his coalition. American officials then coaxed Lieberman to publicly announce he will not do so. The prime minister, however, ultimately decided to pull out of the deal, explaining that social protests in Israel have already dealt a blow to his approval ratings. A spokesman at the Prime Minister's Bureau dismissed the report as "speculation." In a meeting with a delegation of Democratic members of the U.S. Congress on Wednesday, Netanyahu said that Israel "neither wanted nor initiated" the deterioration in its relations with Turkey. "We would like bilateral relations to return to their previous state," Netanyahu said, according to a statement. Local pundits claim that Lieberman, who heads the hawkish Yisrael Beiteinu party, is the main stumbling block to sealing a reconciliation deal between Israel and Turkey. In an interview with the Army Radio on Monday, Lieberman opined that an apology to Turkey will not improve the ties between the two countries. "(Turkish Prime Minister Recep Tayyip) Erdogan will not make do with just an apology ... He also demands lifting the blockade on the Gaza Strip," he said. A Foreign Ministry official on Thursday reiterated Lieberman's claim that he would not derail issuing an apology if Netanyahu's cabinet were to approve one. "Lieberman's opinion is that Israel shouldn't apologize for defending itself, and that doing so would demoralize the army and harm its image. He will, however, honor a decision (to apologize to Turkey) and not break the coalition," the official told Xinhua. In a bid to entice Ankara to withdraw its demand for an apology, Israel has reportedly offered to double the restitution to the families of the nine activists who were killed aboard the "Mavi Marmara" ship, which attempted to breach Israel's maritime blockade on Gaza, the Ma'ariv daily reported Thursday. A senior government official told the paper that the offer, which was recently relayed via a third party, currently stands at 100,000 U.S. dollars per family. The Turks have still not responded. Israeli and Turkish officials are scheduled to meet in Washington next week for a last-ditch effort to reach an understanding prior to the publication of a UN-commissioned report on the Mavi Marmara affair. The Palmer Report, due to be published on Aug. 21, reportedly concludes that the maritime blockade that Israel imposed on Gaza in 2006 is in compliance with the international law, as well as the Israeli operation to stop the flotilla from breaching it. The report is also expected to include harsh criticism of Ankara for its failure to prevent the Mavi Marmara from setting sail, according to Israel officials who obtained a draft of the report. Regarding Israel, the report concludes that the navy soldiers who participated in the operation to overtake the ship resorted to disproportionate force.