Were Israeli Arms Dealers Linked to Contras?

While Israeli officials have said they knew nothing about the diversion to Nicaraguan rebels of proceeds from sales of U.S. arms to Iran, it is still unclear whether Israeli arms dealers, acting privately, had anything to do with what is coming to be called the contras connection, senior government sources said here Sunday.

One of the principal arms merchants involved in the sales, meanwhile, issued his own statement insisting that he “withdrew from the picture completely” a year ago, presumably before the contras connection was established, and that he had acted earlier without remuneration, at the request of his government.

The latest developments here came on the eve of what Israeli leaders see as a critical new phase of the U.S. arms-to-Iran crisis, with several American investigations into the affair picking up momentum after the Thanksgiving holiday.

Officials here are clearly concerned that the investigations might generate more embarrassing surprises, such as Atty. Gen. Edwin Meese III’s press conference last week. Meese linked Israel to unauthorized arms shipments to Iran and told of the diversion of money from the sales to the Nicaraguan rebels who seek to overthrow the Sandinista regime in Managua.

That announcement spurred Israel’s only official comment on the affair to date--a joint statement by the country’s prime minister, foreign minister and defense minister, admitting for the first time that Israel had helped the United States transfer arms to Iran and categorically denying any knowledge of the contras connection.

Israeli officials are particularly sensitive about the contras allegation, since it apparently involves a direct contravention of the U.S. Congress.

Knew of Money Flow

The English-language Jerusalem Post quoted unnamed U.S. investigators Sunday as being convinced that Israeli “representatives” knew that money from Iranian arms sales was going to the Nicaraguan rebels.

The Post quoted U.S. officials as saying that Israel had a “long record” of cooperating with the Reagan Administration in Central America, including the shipment of “hundreds of millions of dollars” worth of arms to the region. Some of those arms, including weapons captured during the war in Lebanon, were passed on to the contras.

Another Israeli concern is that the investigations will damage President Reagan and Secretary of State George P. Shultz, both considered close friends of Israel, by showing that they knew more about the program than they have so far admitted.

Israel’s involvement in the secret arms-to-Iran program has become increasingly controversial here, as the crisis over it has deepened in the United States.

‘Sordid Affair’

“There has been one consistent feature in this entire sordid affair,” the Jerusalem Post said Sunday in an editorial. “Jerusalem has always remained two or three steps behind Washington in admitting its involvement, if not guilt.”

The result, it said, are a series of “half-truths” that later prove embarrassing.

“Have our leaders not yet grasped that they are playing with fire?” the independent newspaper Yediot Ahronot asked in another Sunday editorial.

Prime Minister Yitzhak Shamir reportedly faced tough questioning when he reported details of the affair to the Israeli Cabinet for the first time Sunday, according to Israel radio. His report and the subsequent discussion was conducted under the auspices of the Ministerial Committee on Defense, whose deliberations are a state secret.

Question of Authorization

The question of authorization for those initial Israeli shipments has been a key one here because of Meese’s statements last week that the transfers were not approved in advance.

In the second stage of the operation, beginning late last year, “the Americans really took over,” a senior government source said. The focus shifted to the strategic possibilities of re-establishing contacts with Iran, he added, and Israel’s role became little more than one of logistical support.

It is presumably in this phase, after authorized covert arms shipments to Iran, that some proceeds from the sales were diverted to the contras, the source said.

“The only loose end I have here is whether one of the private citizens (arms dealers) was involved in Phase 2 without our knowledge,” the Israeli government source commented.