Fearing Its Foes May Buy N. Korean Missiles, Israel Gets Down to Business : Jerusalem hopes economic incentives will dissuade Pyongyang from arms sales.

Two of the world’s most improbable diplomatic partners, Israel and North Korea, are deep into discussions not only on establishing formal relations but also on possible economic cooperation in what for Pyongyang would be an important chance to break out of its international isolation.

A top official of North Korea’s ruling Communist Party is expected to meet with senior Israeli diplomats in Beijing shortly to continue the talks.

Israeli Foreign Minister Shimon Peres has an invitation on his desk to visit Pyongyang, and ministry staffers are already joking about who is ambitious enough to go to the austere North Korean capital as ambassador.

“I can’t think of any important issue on which we and the North Koreans have seen things the same way,” a senior Israeli diplomat commented this week. “On the contrary, their best friends have been our worst enemies. Just talking to these guys with their (President) Kim Il Sung badges is very, very strange for us.”

At a time when the United States and its allies are pressing North Korea hard to conform to treaties against the spread of nuclear weapons, Israel is taking another, softer approach, trying to persuade it that business with the West will pay much better than selling arms to Iran, Syria, Libya and others hostile to the Jewish state.

“Washington has a global concern about non-proliferation, and it is worried about the long-term security of Japan and South Korea,” the diplomat said. “Our fears are more immediate--Scud missiles made in North Korea, fired from western Iran and targeted on Tel Aviv.”

Israel plainly hopes to persuade North Korea to halt deliveries of its Scud-C missiles, which have a range of about 360 miles, and not to sell its new Rodong-1 missiles, also known as the Scud-D, which will have a range of more than 600 miles, despite a reported order from Iran for 150 of them.

“The purpose of establishing diplomatic relations with North Korea is to prevent its sale of surface-to-surface missiles to Iran,” Micha Harish, Israel’s industry and trade minister, told worried Japanese in Tokyo this month. “For us, the matter is extremely important and very urgent.”

Iran, on account of its Islamic fundamentalism, unremitting hostility to Israel, oil wealth, size and location, has emerged for strategists here as Israel’s greatest threat.

“Better than putting our faith in new antimissile weapons and better than preemptive military action is preventing delivery of these Scud-D missiles to Iran and other states if we can,” said Prof. Ben-Ami Shiloni, an East Asian specialist at Hebrew University’s Truman Institute. “If Iran makes it worth North Korea’s while to develop these weapons, let us try to make it more profitable not to.”

Since the 1991 Persian Gulf War, Israel has been haunted by the possibility that its enemies--more likely Iran, Iraq or Libya than nearby Syria, Jordan or Lebanon--would put chemical, biological or even nuclear warheads on intermediate-range missiles and hit Israel from 1,000 miles away.

“The Scuds were duds, by and large,” a senior Israeli army officer declared, referring to the 39 Scud missiles that Iraq fired on Israel during the Gulf War, killing two people and causing limited damage. “Next time, we may not be so lucky.”

Seeing North Korea, rather than Russia or China, as the main source in the future for such missiles, Israel responded with interest to an overture from Pyongyang last October to discuss trade relations, including the amazing offer of a gold mine for sale for $300 million; the mine does need new equipment.

But North Korea’s aid and investment needs ran to more than $1 billion, according to Israeli sources, and Pyongyang was told this was more than Jerusalem probably could marshal from Jewish business leaders.

The United States, along with South Korea and Japan, intervened, protesting to Israel that it was breaking ranks with the West on North Korea’s isolation, and the talks were suspended until Peres explained Israel’s motives to Secretary of State Warren Christopher in Vienna last week.

But in Shiloni’s view, Israel’s close ties with the United States are precisely what interest North Korea the most and what give Jerusalem its real leverage in negotiating with Pyongyang. For North Korea, like some others, the path to Washington is thought to go through Jerusalem, Shiloni argued; Pyongyang sees the American Jewish community with vast influence on the White House.

The Clinton Administration, belatedly recognizing this, has acquiesced in Israel’s softer line, according to Shiloni. “Israel is the ‘carrot’ in the carrot-and-stick policy that the United States is employing against North Korea,” Shiloni said. “Dealing with Israel, in other words, is the ladder the U.S. is offering North Korea to climb down from the tree it has scaled with its nuclear weapons program.”