Israel denies spying reports, 'intelligence activities' in U.S.

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TEL AVIV -- Israeli officials battled yesterday to contain damage from reports it had been caught spying on the United States, calling the charges illogical because of the extensive intelligence sharing between the two allies.

"Israel does not engage in intelligence activities in the U.S. We deny all these reports," staff in Prime Minister Ariel Sharon's office said late yesterday.

Larry Franklin,an official in the office of Douglas Feith, undersecretary of defense for policy, is believed to have fed Israel classified information on Iran and Iraq, U.S. officials said on Friday, but even as officials in Jerusalem issued the strongest possible denials yesterday, others worried a new spy scandal, in itself, would damage U.S.-Israeli ties.

The Pentagon issued a statement late Friday describing Mr. Franklin's role in Mr. Feith's office as "desk officer level, who was not in a position to have significant influence over U.S. policy."

Nearly two decades ago, Jonathan Pollard, a U.S. naval intelligence analyst, was caught passing secrets to Israel, and his case continues to cloud relations between the two allies.

"Israel decided many years ago that these relations with the U.S. are too sensitive to take the risk of another scandal," said Yuval Steinmetz, chairman of the Israeli parliament's foreign affairs and defense committee. "The Pollard affair damaged our relations and damaged our image. ..."

Pollard, an American Jew, is serving a life sentence in an American prison.

"Despite Israel's deep concern about Iran's nuclear program, it would not be tempted to break that ban," Mr. Steinmetz said. "Israel is very concerned ... that the ayatollahs will acquire nuclear weapons, but if you think this might change our previous decision to spy on the U.S., the answer is no."

In their denials yesterday, Israelis portrayed the current FBI investigation as a poor throwback to the Pollard affair. They argued that Israel had little need for information on U.S. policy toward Iraq and Iran because of the consensus among the allies' intelligence communities in assessing the threats posed by the two countries.

"Why should I spy on you if I know everything about you?" asked Yossi Melman, the author of a history of Israel's intelligence and espionage agencies. However, Mr. Melman said it might be too late to contain the damage for Israel, which now appears as an untrustworthy ally in light of the FBI inquiry.

"The bottom line is that Israel-American relations are stained by these reports, even if they turn out not to be true," he said.

The Ha'aretz newspaper said that security officials acknowledged that a desk officer in the Defense Department's Near East and South Asia bureau had been in contact with Israeli officials as a regular part of his work. However, the newspaper said the relationship hadn't deviated from the rules of accepted relations between the two governments.

In the past decade, Israel and the United States have expanded collaboration on defense and intelligence issues.

Israeli security sources told the Associated Press that the Mossad foreign espionage service, military intelligence and other intelligence branches all had been asked about possible involvement with the Pentagon analyst. All denied any connection to the affair, the sources said, speaking on the condition of anonymity.

After the arrest of Pollard, Israel issued an apology while trying to distance top politicians from knowledge of the activity.