The recent drama over the euro area’s bailout of Cyprus diverted attention from two important events, both of which feature the island’s old nemesis, Turkey.

The first was a cease-fire declaration on March 21, made by the imprisoned leader of the Kurdish Workers’ Party, or PKK, Abdullah Ocalan. His decision was the result of overtures made by Turkey’s government, after more than a year of escalated conflict in one of the world’s longest and bloodiest insurgencies.

The second signal event came a day later, March 22, when Israel apologized for its killing of nine Turks onboard a Gaza-bound ferry in 2010. Turkey’s acceptance of the apology, on lesser terms than it had demanded, was no less significant. It suggests Turkey wants to do more than simply humiliate Israel.

Each of these developments is a response to the deteriorating security situation in Turkey’s neighborhood, as the conflict in Syria is radicalized; the rift between mainly Sunni nations, including Turkey, and the Shiite governments in Iran and Iraq widens; and the differences over Syria dim prospects for deeper Turkish ties with Russia.

Any form of U.S.-backed intervention in Syria, which Turkey wants, would require cooperation between Turkish and Israeli security forces. Indeed, Israeli Prime Minister Benjamin Netanyahu publicly justified his apology on grounds of the threat in Syria. Intervention would also be less dangerous for Turkey if it were no longer at war with the PKK, which is closely allied to the main Kurdish organization in Syria.

Politics being local, domestic triggers for these moves were paramount, including, for Israel, a new government and a visit by President Barack Obama. Turkish Prime Minister Recep Tayyip Erdogan, meanwhile, needs to gain the support of ethnic Kurdish voters ahead of presidential elections in 2014. A peace deal with the PKK would help.

Still, it’s clear that Turkey is rebalancing its foreign policy, embracing old allies in the North Atlantic Treaty Organization while moving away from the Turkey-Iran-Russia triangle it nurtured in the 2000s. The confrontation with Israel has been a hindrance, especially to improved relations with Washington. The latest moves follow Turkey’s decision to host the radar for NATO’s missile defense system (angering Iran and Russia), and to place NATO Patriot missile batteries on its border with Syria.

Turkey deserves credit for these actions, but they are only beginnings. Erdogan has pronounced the Israeli apology a victory and says he will visit Gaza in April. He should understand that he can’t influence a settlement with Palestinians if he uses the occasion just to lob insults at Israel, as he did in a recent United Nations speech in which he described Zionism as a crime against humanity.

Turkey’s rebalancing offers opportunities to others, too. The European Union should pull its collective head out of the sand and end its blockade of Turkey’s membership negotiations.

Turkey’s shift also creates opportunity for Cyprus. The terms of the Cypriot bailout will destroy the country’s offshore finance business, dooming its economy to years of Greek-style contraction. The only readily available growth substitute lies in the unexploited natural-gas reserves that surround the island.

Israel and Cyprus have begun to explore these reserves, much to Turkey’s fury. The island has been divided ever since Turkish troops occupied the northern, ethnic Turkish part in 1974. That makes exploitation of the waters around Cyprus open to dispute; the uncertainty is one reason that Russia declined to bail out Cyprus in exchange for exploration rights.

It was Turkey’s conflict with Israel over the Mavi Marmara ferry incident that led Israel to boost ties with Cyprus as well as Greece, Turkey’s old rivals in the Mediterranean. All four have an interest in repairing relations now.

Bloomberg News (March 28)