Israeli Diversion of Missile Data Alleged : Intelligence: Washington is looking into reports that Israel gave Patriot technology to China. Jerusalem denies doing so.

American officials are investigating intelligence reports that Israel diverted U.S. Patriot missile technology to China in direct violation of the terms under which the United States sent the weapons to the Israelis for protection from Iraqi Scuds during the Persian Gulf War.

Officials could not confirm that the missiles or components had been sent to Beijing. But reports of the transfers--denied by the Israelis--have been received with grave concern in Washington. The sale would not only jeopardize relations with Jerusalem but also would put in Chinese hands some of the Pentagon’s most advanced anti-ballistic-missile technology.

The United States supplied Israel with the Patriots at the beginning of the Gulf War to defend against Iraqi Scud missile attacks. The Administration agreed to sell Israel a total of 121 Patriot missiles with a value of $467 million under the condition that the weapons and their technology not be transferred to any third party.

The report follows evidence that Israel last year illegally diverted missile technology from the joint U.S.-Israeli Arrow antimissile program to Israel’s Jericho II offensive ballistic missile project, then shared the technology with South Africa.

Officials from the State Department, the Pentagon and the Commerce Department urged last year in a strongly worded memo that the Administration impose harsh sanctions on Israel for the South Africa diversion. But they were overruled by Secretary of State James A. Baker III, who argued that sanctions would jeopardize his efforts to achieve peace in the Middle East.

Israeli officials immediately denied the latest report. “Israel has not transferred any Patriot missiles or technologies of the missile to China. Those are totally false and baseless reports,” said Danny Naveh, spokesman for Israeli Defense Minister Moshe Arens, who is in Washington for talks with senior Administration officials.

The allegations surface at a particularly delicate time in U.S.-Israeli relations because of a dispute over terms for Israel’s request for $10 billion in loan guarantees for housing and jobs to resettle Jewish immigrants from the former Soviet Union.

Reports of the Patriot transfer have circulated only to the most senior Administration officials. Spokesmen for the White House, Pentagon, State Department and CIA all refused to discuss the matter.

The first account of the possible Patriot transfer appeared in Thursday’s Washington Times.

White House spokesman Marlin Fitzwater, asked if the Administration is looking into the situation, said, “We always consider these matters from an intelligence point of view, but I don’t think we would have any public comment on it.”

Middle East military experts were perplexed by the purported sale, asking why Israel would risk transferring weapons technology to China, which has sold various weapons to Syria and Iran.

“I greet this report with a great deal of skepticism. It doesn’t make any sense,” said Marvin Feuerwerger, military expert at the Washington Institute for Near East Policy. “Why would Israel transfer technology to the Chinese, who then might transfer it to the Arabs?”

He also asked why Israel would jeopardize its relationship with the United States at a time when it was seeking the loan guarantees.

Feuerwerger also suggested that the United States did not provide Israel with all details of the Patriot system’s operation, including critical software codes that operate the missile’s radar guidance system.

Jerusalem and Beijing have undertaken a number of cooperative military ventures over the last decade, including shared technology for tank armor, surface-to-air and air-to-air missiles and airborne radar systems.

A recent RAND Corp. report prepared for the Pentagon called Israel a “back door” by which China obtained Western military technology. The report said Israel became China’s preeminent foreign supplier of defense equipment when the United States suspended military sales after the 1989 crackdown on dissent in Beijing’s Tian An Men Square.

Israel and China established diplomatic ties earlier this year.

China has been particularly eager to acquire details of the Patriot system after the United States agreed to sell the missiles to Taiwan late last year. Beijing has complained to Washington about the sale to Taiwan but has not succeeded in slowing or stopping it.

Gary Milhollin, an independent proliferation expert, said the possibility of a Patriot diversion is particularly troubling, coming on the heels of Israel’s transfer of U.S. missile technology to South Africa last year.

“The fact that we determined last summer that Israel was diverting our missile technology to offensive purposes and did nothing about it, gave Israel the green light to divert the Patriot and gives Israel a continuing green light to divert who knows what in the future,” said Milhollin, director of the Wisconsin Project on Nuclear Arms Control.