U.S. Set Iran Arms Prices, Israeli Says

Prices for U.S. arms that Israel helped transfer to Iran under a secret Reagan Administration initiative this year were set by the Americans, not by Israelis, according to an Israeli source knowledgeable about the program.

The source, who spoke on condition that he not be further identified and not quoted directly, also said that Israel knew of only one Swiss account into which the Iranians, by direct bank transfer, paid for the arms.

This version of events, which the source conceded is self-serving from Israel’s point of view, contradicts that given by Atty. Gen. Edwin Meese III in a press conference last week and also contradicts statements by President Reagan in an interview published this week by Time magazine.

And it came amid apparently growing concern here over repeated Administration suggestions that Israel, despite its official denials, knowingly helped divert money acquired in the Iranian arms deal to the rebels, known as contras, who are fighting the government of Nicaragua.

The Jerusalem Post, quoting “authoritative U.S. officials,” reported in today’s editions that Lt. Col. Oliver L. North, the dismissed National Security Council officer, told U.S. Justice Department investigators 10 days ago that he had fully briefed a top Israeli official on the secret funding of the contras.

North said he told Amiram Nir, an adviser to then-Prime Minister Shimon Peres and coordinator of the Israeli part of the program, that one secret Swiss bank account in which Israel deposited money from the Iran arms shipments was controlled by the contras, according to the Post’s Washington correspondent.

North’s reported comments directly contradict Israel’s stand that it was unaware of any contras connection, and they are the main reason for repeated U.S. allegations that Israel was involved in the diversion of Iranian arms money, the newspaper reported.

In a separate front page article, however, the Post quoted “the highest possible (Israeli) sources” as assuring it that Israel learned of the transfer of funds to the contras only hours before the news was made public by Meese last week. A senior Israeli official said today that the allegations were not accurate.

‘Another Country’

Reagan told Time magazine that “another country was facilitating those sales of weapons systems (to Iran). They then were overcharging and were apparently putting the money into bank accounts of the leaders of the contras. It wasn’t us funneling money to them. This was another country.”

While Reagan did not name the country, Meese last week said Israeli representatives had marked up $12 million worth of arms by as much as 250%, repaying the CIA the true value of the weapons and depositing the surplus into numbered Swiss bank accounts controlled by the Nicaraguan rebels.

The Israeli source said Israel was aware of the prices but did not set them and had no idea that money from the sales was being diverted to the contras.

In its only official statement on the affair to date, the Israeli government said last week that none of the funds passed through Israel. Payment was made by Iran directly “to a Swiss bank in accordance with instructions from the American representative,” the Israelis said.

$12 Million a Surprise

Given the variability of weapons prices, those charged to the Iranians did not raise any questions among those involved in the Israeli end of the program, the source said. In fact, he said, there was surprise here when it was learned from Meese’s remarks that the United States had collected only $12 million for the shipments.

The source would not say which Americans set the prices, but he did indicate that during this phase of the Iranian arms program, all Israeli contacts were with officials of the National Security Council. North was the American coordinator of the program.

Asked how Israel would have known the prices charged for the arms if it were not involved in handling the payments, the source said no secret had been made of the information.

While other versions have suggested that there were a number of Swiss accounts involved in the deal, this source said Israel knew of only one, which it assumed to be an American account. He said he did not know if it was the one that the CIA has said it set up to handle Iranian arms payments.

Misunderstanding Feared

Meanwhile, worried Israeli officials said Tuesday that they could not explain why the Reagan Administration had apparently not accepted their denials of involvement in the so-called contras connection.

“There must be some misunderstanding,” one commented.

Prime Minister Yitzhak Shamir repeated Tuesday that “Israel never helped and assisted the contras in Central America,” adding, “I hope that the United States authorities will . . . reach the same conclusion as we have reached” as a result of its investigations into the affair.

During a private meeting with an American Jewish leader Monday, Shamir said Israel had been approached “a number of times” over the years with requests to aid the contras, an aide who was present confirmed. However, he quoted the prime minister as saying, “We always turned down any such requests.”

The aide said Shamir never mentioned the identities of those making the requests or the countries they represented.

No Contras Connection

In addition to denying government involvement with the contras, Defense Minister Yitzhak Rabin told the Knesset, Israel’s Parliament, on Tuesday that “Israel did not grant permission to any Israeli to assist, supply know-how or sell weapons from Israel to the rebels in Nicaragua.”

Foreign Minister Shimon Peres, who was prime minister during most of the period of the secret Iranian arms initiative, told a closed meeting of his Labor Alignment party Monday night that after hearing the Meese statement, “I was in shock.” He said allegations of an Israeli connection to the contras are “a complete lie.”

Israeli sources also said Tuesday that the American side has unofficially raised the possibility of seeking Israeli help in the U.S. Justice Department probe of the Iranian arms deal. Investigators are said to want to interview Israeli officials and arms dealers who were involved in the operation.

Israeli sources said the government has complete records of its part in the program.

However, the sources stressed that no official request for cooperation has so far been made.