The aim of both countries is to strengthen their influence in the Middle East region, especially towards countries such as Iran.
The agreement was made official following a telephone conversation between acting Israeli Prime Minister Yair Lapid and Turkish President Recep Tayyip Erdogan.
The problems date back to 2010, with the Mavi Marmara incident, when a Turkish humanitarian aid fleet attempting to reach Gaza by breaking the blockade was shot down by Israeli forces, killing ten people.
In addition to this, the United States' recognition of Jerusalem as Israel's capital in 2017 led to the withdrawal of ambassadors.
Despite the tension, both sides had kept some channels of communication open and acknowledged their need to restore diplomatic normality.
According to news website Enlace Judio (Jewish Liaison), Erdogan had told a group of Jewish leaders that the relationship with Israel is “vital for the stability of our region" and that “we all must work together to strengthen peace and stability in the Middle East”.
Acting Israeli Prime Minister Yair Lapid pointed out that “upgrading relations will contribute to deepening ties between the two peoples, expanding economic, trade, and cultural ties, and strengthening regional stability”.
Meanwhile, Israel's President Yitzhak Herzog stressed that the decision is “an important development that we have been leading for the past year, which will encourage greater economic relations, mutual tourism, and friendship between the Israeli and Turkish peoples”.
“Good neighbourly relations and the spirit of partnership in the Middle East are important for us all. Members of all faiths, Muslims, Jews, and Christians, can and must live together in peace”, added Herzog.
However, it remains to be seen whether the agreement will have any effect on the situation of some religious minorities in Turkey, such as Protestant Christians.
Ankara confirms that relations with Israel are “back on track” and that, among other things, they contribute to “defend the rights of our Palestinian brothers and sisters”.
Apart from the positive impact on the economy, the restoration of relations will allow Israel to ensure that the Turkish government stops alleged Hamas activities in the country and takes firm action against the terrorist organisation.
Turkey seeks to expand its influence and strengthen the coordination of its action in Syria, especially in the face of the Iranian presence, which both countries see as a threat.
“We know that there are a number of points that we currently do not agree on. We can move forward and solve them later on, but we are going into proper, positive bilateral relations that have a wide range of activities. We know we are not going into a perfect marriage”, Israel's top diplomat to Turkey in the negotiating process, Irit Lillian, told The Times of Israel.
With an acting government, parliament dissolved since July and elections scheduled for 1 November, Israel has announced the reinstatement of the ambassadors and general consuls in Turkey.