Scandal over Iraqi Pipeline Creates Little Impact in Israel

The scandal brewing in Washington over a 1985 Iraqi oil pipeline project, involving U.S. Attorney General Edwin Meese III and alleged bribes to Israeli officials, had little impact in Israel this weekend, where attention was riveted on the violence in the administered territories and evolving diplomatic initiatives to end it.

A Foreign Ministry spokesman said the proposed pipeline had been discussed during official U.S.-Israeli contacts and was brought to the attention of all the relevant ministers in the Israeli Cabinet.

The spokesman said that Israel had agreed not to interfere with the project. He said the ministers had discussed a U.S. request for guarantees, but no conclusions were reached on that point.

In Washington, special prosecutor James McKay, who has been investigating the attorney general, reportedly told the White House on Friday that Meese played an important role in the $1.1 billion pipeline in which a close friend of his, E. Robert Wallach, had a financial interest.

Wallach was indicted on racketeering charges by a federal grand jury in December in a case involving the Wedtech Corp.

The 800-mile pipeline, never built, was intended to carry Iraqi oil to the Jordanian port of Aqaba, on the Red Sea, for shipment overseas. The idea was to bypass the Persian Gulf, where Iraq and Iran are locked in war. Syria, an ally of Iran, shut down Iraq’s pipeline through its territory to the Mediterranean in 1982.

The Bechtel Corp., a San Francisco-based engineering services company that has undertaken many construction projects in the Middle East over the years, discussed the pipeline with Iraqi and Jordanian officials in 1984. The two Arab countries wanted guarantees that Israel would not sabotage the oil conduit, which would have passed close to its territory.

CLOSE TIES TO PERES

Bechtel enlisted Bruce Rappaport, described as a Swiss businessman, as a partner. Ostensibly, Rappaport had close personal relations with Shimon Peres, leader of Israel’s Labor Party, who was prime minister in 1985 and is now foreign minister.

According to special prosecutor McKay, Meese was aware of plans, never consummated, to make payments to the Labor Party in exchange for Israel’s approval of the project. Such payments would violate U.S. law against bribing foreign officials.

Rappaport, in an Israel Radio interview Sunday night, dismissed the allegation of intended bribery as a ridiculous, unfounded canard. He said he has known Peres for 45 years and the Labor Party leader would have “thrown anyone out of his room” who proposed an impropriety.

Rappaport said there had been no discussion in the United States of any favors or benefits to the Israeli government, to a political party or to any individual minister.

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