Turkish President Recep Tayyip Erdogan on October 25 tore up two years’ worth of efforts put into mending relations between Turkey and Israel by declaring that Palestinian militant group Hamas is not a terrorist organisation but a liberation group fighting to protect Palestinian lands.

Indicating the attempt at a rapprochement between Turkey and Israel had reached a dead end and that relations were once more heading for the deep freeze, Erdogan accused Israel of taking advantage of Turkey's "good intentions" and said that he had scrapped a planned visit to Israel.

"I shook the hand of this man named Netanyahu one time in my life," Erdogan said, referring to his New York meeting with Israeli Prime Minister Benjamin Netanyahu on the sidelines of the UN General Assembly in September.

"If he [Netanyahu] had continued with good intentions, our relations might have been different, but now, unfortunately, that will not happen either because they took advantage of our good intentions," he added.

Turkey has condemned the civilian deaths caused by Hamas's October 7 massacre committed in southern Israel, but is vocal in attempts to persuade the Israelis that their forces should act with restraint in their response to Hamas’s actions, and should not make Palestinian civilians in the Gaza Strip pay the price for the actions of the group.

"Hamas is not a terrorist organisation, it is a liberation group, 'mujahideen' waging a battle to protect its lands and people," Erdogan was reported by Reuters as telling lawmakers from his ruling AKP party, using an Arabic word denoting those who fight for their faith.

Unlike many of its Nato allies and the European Union, Turkey does not consider Hamas a terrorist organisation. In fact, it is known for hosting members of the group on its territory.

Israel was quick to strongly reject Erdogan's description of Hamas, with Foreign Ministry spokesperson Lior Haiat describing the group as "a despicable terrorist organisation".

“Israel wholeheartedly rejects the Turkish president’s harsh words about the terrorist organisation Hamas,” Haiat wrote on social media.

“Even the Turkish president’s attempt to defend the terrorist organisation and his inciting words will not change the horrors that the whole world has seen,” Haiat added.

In his comments, Erdogan castigated Western powers for backing Israel's bombardment of Gaza and called for an immediate ceasefire. There should also be, he said, unhindered entry of humanitarian aid into Gaza.

"The perpetrators of the massacre and the destruction taking place in Gaza are those providing unlimited support for Israel," Erdogan said. "Israel's attacks on Gaza, for both itself and those supporting them, amount to murder and mental illness."

Israel’s action in Gaza was one of the “bloodiest, most disgusting and most savage attacks in history”, said Erdogan—who himself is under fire for alleged war crimes committed by his forces against Syrian Kurds—urging the Israelis to heed calls for peace. 

Reuters reported that Erdogan's comments drew a swift rebuke from Italian Deputy Prime Minister Matteo Salvini. He said that they were "grave and disgusting and did not help with de-escalation". He urged Italy's foreign minister to lodge a formal protest with Ankara.

Amid the bitter clashes over the fate of Gaza, Turkish shares suffered the worst stock market performance in the world on October 25, with the pace of declines prompting regulators to introduce two market-wide suspensions. Investors were also nervous over a Turkish interest rate decision due on Thursday (October 26).

The benchmark Borsa Istanbul 100 Index fell 7.1%, hit by the largest loss since the devastating earthquake catastrophe that struck southern Turkey in February. It was on course for the worst monthly decline in more than three years. Flagship carrier Turkish Airlines was the biggest contributor to the decline, with a 6.2% share price slide.

“Geopolitical concerns seem to have unnerved investors and the pressure was intensified by heavy sellers from a number of brokers working with foreign institutional investors,” Can Oksun, a senior trader at Global Securities in Istanbul, was cited as saying by Bloomberg, adding: “The panic among domestic investors amid increased levels of margin calls and likely redemptions from local equity funds have snowballed the move.”