Turkey was the first Muslim state to recognize Israel in 1949 and since this time, military and economic bilateral relations have grown exponentially, particularly since the election of the Adalet ve Kalkinma Partisi in 2002. This evidence is indicative that, contrary to popular opinion, the AKP's purportedly Islamic identity did not stand in the way of creating ties with Israel based on geo-strategic, economic and security realities. Although this remains the case in Turkey, as a democracy, the government is not immune to changes in public opinion and thus has developed a populist discourse on this matter. Consequently, Operation Cast Lead, Davos and the Mavi Marmara incident have left Turkish-Israeli diplomatic and political relations frozen and caused a key divergence from Turkey's "zero-problems" policy in the region. Yet despite emphatic language, the divide between practice and discourse when it comes to Turkey's 'hard' stance towards Israel is stark. Although vocally critical of Israel's policies in Palestine, trade relations have remained immune to diplomatic difficulties and continue to increase under the AKP's jurisdiction. Consequently, this chapter will examine the disjuncture between the continuously strong trading and economic relations between Israel and Turkey in the light of the diplomatic ice age, examining the domestic and international factors which dictate said relations. In order to provide a comprehensive examination of both discursive and practical transformations in Turkish Foreign Policy behaviour and the political economy of the AKP, the function and effect of domestic ideational, historical and cultural variables must be examined. Such variables dictate the complex political opportunity structure in which the AKP operates, and consequently, define the future relations of these two important regional powers. Analysis of such contentious issues is increasingly important for understanding Turkey's decision-making processes. Turkey's future role as a regional power, as well as their EU accession bid is predicated on the normalization of Turkish-Israeli relations. Not only do Turkish-Israeli relations speak volumes about the nature and purpose of the AKP's power, but also implicitly define their limitations as a dominant actor in the international system. © Peter Lang GmbH Internationaler Verlag der Wissenschaften Frankfurt am Main 2015. All rights reserved.