Israeli intelligence, our constant companion
By Tom Rick | Saturday, 03.27.2010, 04:10 PM

Another big week for Israeli spies - new and old.

In the latest chapter of the Dubai assassination drama, Britain gave the boot Tuesday to an Israeli diplomat, asserting that Israel was involved in the forgery of U.K. passports used in the January killing of a senior Hamas operative.

Meanwhile, declassified FBI documents from a 25-year-old Israeli spy scandal here surfaced on the Internet.

Lest one think the Israelis might lay low for awhile, a defiant Prime Minister Binyamin Netanyahu delivered a fiery speech in Washington Tuesday to the American Israel Public Affairs Committee, the same powerful group implicated in that long-ago spy scandal.

Odd, for a business that's supposed to stay out of the news. Then again, that's been the fate of spy services in recent years. A lot of what they do, from espionage and bribery to counterterrorism and hacking into computers, has ended up on the front page.

So it was in London Tuesday, when Her Majesty's Government concluded "there are compelling reasons to believe that Israel was responsible for the misuse of the British passports," in the words of Foreign Secretary David Miliband.

As a consequence, Britain ordered the expulsion of an unidentified Israeli diplomat after concluding that the high-quality fakes used in the Dubai hit were almost certainly "made by a state intelligence service."

"The actions in this case are completely unacceptable," Miliband said, "and they must stop."

Spy flaps are to foreign relations as insider trading is to Wall Street - mother's milk, sometimes spilled. And, like every other secret service, Israel's Mossad is not going to stop doing what it was designed for - to neutralize its enemies with whatever it takes, from car bombs and silencer-equipped pistols to - in the latest flap - muscle relaxants and a pillow, allegedly the weapons of choice against the Hamas military commander in Dubai. Mahmoud al-Mabhouh was wanted by Israel for his role in the slayings of two of its soldiers in the 1980s.

But another of Mossad's reason for being, as with all the world's spy services, is to make sure friends are really friends.

And judging by once sensitive FBI documents making the rounds in recent days, the Israelis have been at this task in Washington for a very long time.

The 21 documents, obtained by Grant F. Smith, a Washington, D.C. author who has made a career out of writing critical books on Israeli spying and lobbying, detail the FBI's investigation into the theft of a confidential U.S. document on the Reagan administration's position going into the 1984 U.S.-Israel Free Trade Area Negotiations.

Acting on a complaint that the document was circulating on Capitol Hill, the FBI discovered that an Israeli diplomat had acquired the paper and given it to officials at AIPAC, the lobbying group whose annual convention drew both Netanyahu and Secretary of State Hillary Rodham Clinton this week.

Although the document was classified only "confidential" (as opposed to Secret, Top Secret and higher), the FBI concluded that President Reagan's "negotiating position concerning a trade agreement between the United States and the State of Israel is compromised because this report divulges those products and industries that have been identified by the International Trade Commission as being the most sensitive to imports from Israel."

U.S. trade officials were furious at the discovery, "most angered by the fact that the American-Israel Public Affairs Committee (AIPAC) had apparently attempted to influence members of Congress with the use of a purloined copy of the ITC report and had usurped their authority," the FBI reported at the time.

Its investigation quickly hit a brick wall, however, when the Israeli embassy official who handled the stolen goods, identified as then-Minister of Economics Dan Halpern by Grant Smith in his 2009 book "Spy Trade," claimed diplomatic immunity.

"He indicated that he received this information in his official capacity as a diplomat, and that it would be against the principals of diplomatic work to divulge any information pertaining to the identity of the individual who provided him the report," the FBI reported.

Because the man claimed diplomatic immunity,"active investigation into this matter will be discontinued at WFO [Washington Field Office]," the FBI said. "Washington Field will be contacted by the USTR or the ITC if pertinent information is developed regarding this or similar incidents."

In his March 13, 1986 interview with the FBI, Halpern said "he received this information in his official capacity as a diplomat and that it would be against the principles of diplomatic work to divulge any information on the identity of the individual who gave him the report."

In any event, he told the agents, the report was all over town, and that "the Government of Israel did not ask to receive the report and stated that when the individual provided him with the report, the transaction was not conducted in a discreet or secretive manner."

Halpern is now on the executive committee of the America-Israel Chamber of Commerce in New York and the co-CEO of Iftic, a private business consultancy, according to his listing there.

But the trade-spy flap was small potatoes compared to the arrest 18 months later of Jonathan Pollard, the naval intelligence analyst who passed upwards of a million pages of classified documents to his Israeli handlers, according to court documents. Under a 1987 plea agreement, Pollard is serving a life sentence.

Since then, Israeli intelligence operations here have hardly slowed. In 2005, U.S. counterspies overheard Rep. Jane Harman, D-Calif., agreeing to help a suspected Israeli agent lobby the Justice Department to reduce espionage-related charges against two former AIPAC officials. Harman denied my account in Congressional Quarterly, which was subsequently corroborated by major news organizations.

Back in London, meanwhile, British Foreign Secretary Miliband asserted Tuesday that "trust between [Israel and the U.K.] had been badly dented" by the Dubai passport caper and "demanded formal assurances it never happen again."

Former Mossad agent Gad Shimron, interviewed in London by The Washington Post's Karla Adam, said Israel would never officially admit any involvement in the killing of Mahmoud al-Mabhouh in Dubai.

But Shimron added: "the British are hypocrites, because when they operate against al-Qaeda, they do not do it with genuine passports."

They don't call it the "spy game" for nothing.


By Tom Rick

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