JERUSALEM — 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.