Peres’ Pipeline Stance Linked to Jordan Ties

The Israeli government under then-Prime Minister Shimon Peres agreed in 1985 not to oppose a proposed, $1-billion Iraqi oil pipeline project primarily out of deference to Jordan, which is a close ally of Baghdad and the key to most Israeli visions of some future Middle East peace agreement, senior officials said here Sunday.

Also, the officials said, the agreement reflected concern in at least part of the ruling coalition over the danger of an Iranian victory in the Iran-Iraq War and the possible impetus such a development might provide to what are perceived as dangerous currents of Islamic fundamentalism in the region.

The sources, who represent both major partners in the coalition, said Peres had written to “a competent member of the U.S. government” in November, 1985, outlining Israel’s stand on the pipeline, which was to have been built on Jordanian territory close to Israel and Israeli-occupied areas on the West Bank of the Jordan River.

Didn’t Write to Meese

Contrary to some published reports, informed sources here close to Peres said the Israeli leader did not write to U.S. Atty. Gen. Edwin Meese III, even though Meese was one of several “top officials in the American Administration” who had contacted their Israeli counterparts about the pipeline project in discussions dating back at least into late 1984.

Meese did write to Peres concerning the deal, the sources said. The date of that communication could not be immediately learned, but the sources said the communication had nothing to do with money.

Peres’ motives in supporting the pipeline project are important in light of the latest developments in a continuing investigation of Meese by U.S. independent counsel James C. McKay.

Government sources familiar with the inquiry told The Times in Washington last week that the probe now focuses on a memo to the attorney general by his close friend and lawyer, E. Robert Wallach. The memo reportedly suggests payments to Peres to secure his support for the pipeline, which Wallach promoted on behalf of another client.

Peres Denies Report

Peres, who is now deputy prime minister and foreign minister, categorically denied late Saturday that money or anything else of value was ever offered in connection with the pipeline project either to him or the Labor Alignment political bloc that he heads.

The Hebrew-language newspaper Maariv quoted Peres on Sunday as saying: “If someone would come and offer me money for political decisions I would throw him out the window.”

Interviewed Sunday by Israel Radio, Bruce Rappaport, a wealthy, Israeli-born Swiss businessman who was a key intermediary in the pipeline negotiations, said that “never did we have a conversation on a payment of money either to a minister, or to a party, or to a government, or to anyone. I haven’t yet bribed anyone, and one would have to be a fool to think that a man like Peres, whom I have known for 45 years and who has such clean hands, would respond in any manner.”

Payments to foreign officials or political parties in order to gain or retain business are prohibited under the 1977 Foreign Corrupt Practices Act. And even if no payments were ever made or offered, the question has arisen whether Meese acted improperly by allegedly failing to report the suggestion contained in the Wallach memorandum.

No Israeli Opposition

In a statement released through the Foreign Ministry spokesman, Peres said Saturday that “all ministers (of the Israeli government) concerned” had considered the proposed pipeline following a request by the U.S. government and they had agreed not to oppose the project.

Baghdad, recalling that Israeli warplanes in 1981 had destroyed an Iraqi nuclear reactor then under construction, reportedly sought assurances that the same fate would not befall the pipeline. Iraq is said to have approached the United States to act as an intermediary to sound out the Israelis.

The Foreign Ministry spokesman also confirmed that U.S. officials sought a firm guarantee that Israel would not attack the pipeline and that the Israeli government agreed to consider such a pledge. However, it added, no guarantee was ever given since the pipeline proposal was later dropped.

The Israeli sources said the government’s position was agreed upon by Peres, by his primary coalition partner and then-foreign minister, Yitzhak Shamir (who is now prime minister), and by Defense Minister Yitzhak Rabin. The three men have acted as a virtual ruling troika on all matters related to state security ever since the so-called “national unity” coalition was formed in September, 1984.

Bribe Makes No Sense

Given the fact that under the current government arrangement, any meaningful Israeli agreement not to oppose the Iraqi pipeline would have had to involve at least those three officials, observers here said any idea of bribing Peres or Labor makes no sense.

To even suggest such an approach reveals “a colonialist form of thinking,” one informed source snapped. The source called it “such an unwise and ill-considered suggestion that I would fire from being my lawyer anyone who made such a proposal.”

In his Israel Radio interview, Rappaport said he and his associates were invited in November or December, 1986, to discuss the pipeline deal with Iraqi President Saddam Hussein.

“They didn’t want a letter--they wanted a sort of bank guarantee” covering the pipeline, Rappaport said. “In the event the Palestinians or the Kurds blew it up, the Iraqis would continue to pay. But if it was the Israelis, they wanted a special fund or a panel of arbitrators who would decide” on compensation.

An Apparent Gap

There was no immediate explanation for the apparent gap between Rappaport’s recollection of the timing of his meetings in Baghdad and earlier reports that the United States dropped its efforts to gain Israeli guarantees around the end of 1985, after a National Security Council review of the project.

The Israeli sources also stressed Sunday that all contacts with the United States over the pipeline proposal were open and above board.

One of the first topics raised was Israeli concern over the impact of the proposed pipeline on the ecology of the Gulf of Aqaba--the long, narrow waterway at the northeast tip of the Red Sea that is a crucial passage for both Jordan and Israel.

According to the Foreign Ministry statement, Wallach has met Peres only as part of a group and on social occasions. While Peres knows Rappaport well, it added, the two never discussed financial affairs.

The proposed pipeline was meant to protect Iraq’s vital oil exports from any Iranian threat by routing them through a 540-mile pipeline to the Jordanian port of Aqaba. The border between Israel and Jordan bisects the northern tip of the gulf, with Aqaba on the eastern side and the Israeli port and resort of Eilat on the western side.

Iran and Iraq have been at war in the Persian Gulf region since September, 1980. And one Israeli official said Sunday that the U.S. approach concerning the Iraqi pipeline was taken extremely seriously here because it was Iran’s strategy to bring down President Hussein’s regime by crippling Iraq financially--something it could do by attacking its oil exports.

The proposed pipeline was supported by Jordan, which is an Iraqi ally and which already facilitates shipment through its territory of much of the armament that Baghdad needs to continue the war with Tehran.

“We are not stupid enough to do something against Jordan’s interests,” an informed Israeli source said.

Semisecret Contacts

While technically in a state of war, Israel and Jordan actually have an extensive array of friendly, albeit semisecret contacts. And theirs has been the most peaceful of Israel’s borders since the 1967 Six-Day War.

Both halves of Israel’s frequently bickering coalition agree that a formal peace with Jordan is a critical ingredient to solving the Palestinian problem and the wider Arab-Israeli conflict. What they disagree about are the terms Israel is willing to offer and the appropriate forum for any peace talks.

At the same time Peres was telling Meese that Jerusalem would not oppose the Iraqi pipeline, Israel was sending the first secret arms shipments to Iran under a joint program with the United States.

“There was no connection between the two ideas,” one senior government official said. The Iranian arms deal, he explained, was primarily meant “to help the Americans” win freedom for U.S. hostages held by pro-Iranian elements in Lebanon. Secondarily, he said, it was meant to keep open “channels to Iran” that might prove useful after the passing of Tehran’s revolutionary leader, the Ayatollah Ruhollah Khomeini.

‘Neighborly Relations’

The Iraqi pipeline decision, he said, was taken “in the context of good neighborly relations with Jordan.” Neither Israeli effort was meant to favor either Iran or Iraq, he added. “The first was in favor of the United States; the second was in favor of Jordan.”

Almost from the beginning, Israeli policy-makers and intelligence analysts have differed over which side the government should favor in the Iran-Iraq War.

Some contend that Iraq, which has participated in every Arab war against Israel and which has a large army hardened by years of battle with Iran, is the greater threat. But others say a victory by Iran would only encourage the spread of a fiery, anti-Israeli brand of Islamic fundamentalism that could engulf the region.

Still others, as a result, argue that it is in Israel’s best interests that the war continue, since it keeps two potential enemies busy with one another and diverts the attention of much of the rest of the Arab world away from the Jewish state.

One informed Israeli source said Sunday that there is still “no strategic decision” here concerning the Persian Gulf war and that there are significant differences even among the “Big Three” of Shamir, Peres and Rabin.

What might appear conflicting actions on the part of the government are thus understandable “in human terms,” he said. “Politics is never the art of consistency, but the art of the survivable and the possible,” he said.

Moreover, this source added, in both cases Israel was acting on a U.S. request. “We are not the puppeteers in the Middle East,” the source said. “Our main interest is in Washington, and we will support the Administration in all requests that are reasonable. . . . We play ball with Washington.”