White House Expresses Confidence in Habib Despite His Connection with the Bechtel Group

The White House has expressed full confidence in the ability of Philip Habib to continue his diplomatic mission in Lebanon despite disclosure that he has been employed by the Bechtel Group of San Francisco for the past year as a consultant.

Deputy Press Secretary Larry Speakes quoted President Reagan as saying this morning that Habib was performing his task “over and above the call of duty.” Speakes rejected a demand by Sen. Larry Pressler (R.SD) that Habib resign as U.S. special envoy on the grounds that his connection with the giant construction company compromised his ability to serve as an impartial mediator in the Lebanese crisis.

“The President has the utmost faith in his ability and his integrity …. He (Habib) is an honorable man. I cannot find words enough to describe the President’s feelings for Phil Habib,” Speakes said.

REJECTS CONFLICT OF INTEREST

Another White House press aide, Anson Franklin, declared yesterday that “Any implication of any conflict is absurd.” While confirming that the Administration was “checking” Habib’s Bechtel association, he stressed that “We’re confident that Ambassador Habib is working solely for the President and the United States Government in the Middle East.”

The disclosure that Habib, a retired career diplomat, was hired by Bechtel appeared yesterday in The Washington Post. It was confirmed by a Bechtel spokesman, Rick Laubscher, who said he was engaged last year by George Shultz, former president of Bechtel and now Secretary of State, primarily as a consultant on the Pacific basin region, the main area of Habib’s prior expertise.

SUSPICIOUS ABOUT IMPARTIALITY

According to Pressler and several other members of the Senate Foreign Relations Committee, anyone linked to Bechtel raises suspicions with respect to impartiality in the Middle East conflict because the firm has billions of dollars of contracts in the Arab world, chiefly Saudi Arabia.

This was the chief ejection raised to Shultz’s nomination and the subject of sharp questioning during his confirmation hearings. Nevertheless, he was confirmed unanimously by the Foreign Relations Committee and the full Senate two weeks ago.

Pressler said yesterday that Shultz’s failure to mention Habib’s employment by Bechtel during the hearings showed a lack of candor. He contended that Bechtel “actively lobbies for pro-Arab causes” and Habib therefore “cannot be effective now that it has been revealed that he is a paid consultant” to the conpany. According to Pressler, Habib’s connection with Bechtel was an embarrassment to President Reagan. It was Reagan who, in May, 1981, called Habib out of retirement to defuse a rapidly escalating crisis in Lebanon.

The controversy over his employment by Bechtel erupted as Habib was on a round of shuttle diplomacy, at Reagan’s behest, to find a solution to the west Beirut crisis. He visited Riyadh, Damascus and Cairo over the weekend and flew to London yesterday to see King Hussein of Jordan who is there on a private visit. He is expected in Israel shortly.

State Department spokesman Dean Fischer said yesterday that Habib’s retention by Bechtel did not compromise U.S. diplomatic efforts in the Middle East. “It doesn’t strike me as a problem any more for Habib than it would be for (Defense Secretary Caspar) Weinberger and Shultz,” he said. Weinberger is also a former Bechtel executive.

Habib served as Deputy Assistant and Assistant Secretary of State for East Asian and Pacific Affairs during the Johnson, Nixon and Ford Administrations. According to Bechtel spokesman Laubscher, he was hired for his extensive knowledge on those areas. Laubscher said that 15 percent of Bechtel’s projects were in the Pacific region and 12 percent in the Middle East.