ISRAEL: Israeli officials over the weekend strenuously denied charges that an analyst working in the Pentagon had passed on highly secret documents to the Jewish state.
Observers suggested that even if the allegations proved baseless, damage had nevertheless been done to Israel's image and to the powerful pro-Israel lobby group alleged to have served as the conduit.
US officials on Saturday confirmed a report first aired on the CBS network on Friday, that the FBI was conducting an investigation into whether Mr Larry Franklin, an Iran specialist in the Pentagon, had passed classified information on Iran to Israel via the Washington-based American Israel Public Affairs Committee (AIPAC) lobbying group.
Mr Franklin, who is not Jewish, works with Under Secretary for Defence Mr Douglas Feith.
Israeli military intelligence chief Maj Gen Aharon Ze'evi said yesterday that Israel was not "running any operatives or collecting intelligence in the US".
Israeli cabinet minister Mr Natan Sharansky said he hoped it was "a mistake or misunderstanding of some kind". But he also suggested that the affair might be the product of rivalry between "the Pentagon and CIA".
The office of the Prime Minister, Mr Ariel Sharon, released a statement on Saturday which said: "Israel does not engage in intelligence activities in the US." AIPAC also strongly denied the allegations.
The CBS report quoted FBI sources saying that agents had collected clear evidence from surveillance and wire taps.
It was claimed the information transferred by Mr Franklin may have helped Israel to influence US policy on Iran. Israel is anxious to prevent Iran from acquiring nuclear capability.
No arrests have yet been made in the case and it is still not clear whether the FBI has uncovered a case of espionage or a far less dramatic instance of improper handling of sensitive documents.
The espionage charges are particularly sensitive because of the Pollard affair in which a US naval analyst, Jonathan Pollard, was arrested in 1985 for spying for Israel.
Pollard, an American Jew, was arrested outside the Israeli embassy and later tried and sentenced to life in jail.
Mr Sharansky said that since the Pollard fiasco, there has been a ban on espionage on American soil. "There are absolutely no attempts to involve any member of the Jewish community and any general American citizen to spy for Israel against the United States," he said.
But he conceded that "even though [the publications\] are false, they are damaging."
Most Israeli commentators said that comparisons with the Pollard affair were exaggerated, but that the allegation would nevertheless harm Israel's image and its working relations with the Bush administration.
Others said the affair could revive old dual loyalty charges against American Jews and the claims that the pro-Israel lobby in Washington had excessive influence over the administration, especially over the decision to go to war in Iraq.
Some Israeli observers suggested that the timing of the leaks from the FBI investigation were not coincidental, and were meant to harm President Bush on the eve of the Republican convention in New York.