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Israel Admits to Iran Oil Deals, Contradicting Earlier Denials

February 22, 1990
See Original Daily Bulletin From This Date

Israel affirmed for the first time Wednesday that it has had oil dealings with Iran, and that it has also earned profit from the transactions.

The admission, made by Energy Minister Moshe Shahal during a question period in the Knesset, was oblique.

But it clearly contradicted denials by government officials, including one made in December by Defense Minister Yitzhak Rabin, that Israel had any contact with the Teheran regime, which is considered a bitter foe.

According to army radio, Shahal, when questioned by Likud Knesset member Ariel Wein-stein, said that Israel had earned a $1.5 million profit on the oil, although he was unwilling to confirm the story, first reported Dec. 18 on NBC News.

Israeli government officials had denied the American news report, which said Israel had paid Iran $36 million for 2 million barrels of oil delivered to Eilat in November.

Shahal was unwilling to substantiate the story because Israel’s policy is not to disclose where it buys its oil.

Nevertheless, he was quoted as telling Weinstein, “If you refer to the oil shipment referred to in the American television report, Israel made that profit, and the sum will be transferred to the Treasury shortly.”

Although Iran has presented itself as the mortal enemy of Israel since the late Ayatollah Ruhollah Khomeini toppled the Shah in 1979 and established an Islamic fundamentalist regime, there have been persistent reports of clandestine contacts between the two countries.

NBC News reported that Israel had made the purchase as part of an oil-for-hostages deal. The U.S. State Department confirmed the purchase, but refused to comment on the hostage angle.

According to the NBC story, Israel also offered to free hundreds of Shi’ite prisoners, including Sheik Abdel Karim Obeid, a spiritual leader captured by Israeli forces in Lebanon the previous July.

In exchange, Israel would get back its soldiers held by pro-Iranian groups in Lebanon, and other Western hostages could be freed.

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