WASHINGTON - It could be the biggest espionage scandal of the century, or the greatest journalistic non-starter in many a decade, but it's clear that the story of the Israeli art students in New York - dozens of alleged spies living in the United States - refuses to die down. Anyone who believes the story says that everything is accurately documented and confirmed, and that only a conspiracy on the part of the U.S. administration - which is desperate to keep the affair quiet, partly out of shame and partly because of its warm relations with Israel - is keeping the affair out of the spotlight of public discussion. Those who repudiate the affair say it is baseless, just another unfounded urban legend that has taken on a life of its own on various marginal Internet sites.

Either way, the story of the Israeli spies is alive and kicking. The most recent mention of the affair came last week in the highly respected Internet magazine, Salon.com, which recapped the main points of the scandal and even added some new details of its own. The official Israeli response was the same as ever: "Nonsense," they say. The outline of the scandal is the same wherever it is published, with the more respectable journals taking more care over the details and relying more on reports and documented evidence, while the more marginal publications pile on spurious details and compare the scandal to the great conspiracies of the past.

According to reports of the scandal, around 120 young Israeli citizens, posing as art students and selling paintings door-to-door, have been arrested and deported from the United States. The door-to-door sale of art works, it is claimed, was a front for a sophisticated spy ring: the students would turn up at homes and offices - especially at buildings housing federal authorities and military bases, and even went to the homes of those employed in these offices. The students attempted to form friendships with federal employees, photograph their offices, tap their phone lines and infiltrate their databases.

It is also claimed that the spy ring kept tabs on Arab targets inside the United States, including Arab Americans who were in contact with the Al-Qaida network. According to some speculations, the Israelis' intelligence work enabled the spy ring to know in advance of the planned terror attack on September 11, without lifting a finger to prevent it.

Beware students selling art

There is one source for all these stories and it is not an unreliable one. The source is the 60-page draft of an internal report by the intelligence division of the Drug Enforcement Agency (DEA). Thedraft was leaked to the media and its existence was confirmed by spokesmen from the DEA and the Justice Department, which is responsible for running the DEA. But confirming that the report exists is not the same as verifying its contents.

According to the report's author, whose identity has never been published, DEA officials identified an increase in the number of incidents in which young Israelis, claiming to be art students, tried to sell them works of art. "It is entirely possible," said the report, "that this is an organized intelligence-gathering activity."

A warning was sent out by the federal anti-espionage office to other federal agencies in March 2001,warning them to be wary of students trying to sell them art works and gain entry to federal facilities. The document records several encounters between DEA officials and Israelis all over the United States. In one incident, the report documents an attempt to gain entry to the Tinker Air Force Base in Oklahoma City, where the AWACS spy plane and the B-1 bombers are serviced.

What is really keeping this story alive is the claim of a link between the Israeli "students" and Israeli intelligence. The original report, as well as subsequent media reports, say that many of the young Israelis arrested served in the IDF's Intelligence Corps and were involved in operating electronic bugging equipment; one even said he was the son of a senior Israel Defense Forces officer. It took just one small leap to turn this into a conspiracy, whereby all the Israelis arrested were in the pay of the Mossad.

The report also documents how those arrested in the U.S. were connected to Israeli companies that had provided telephony services for American companies and U.S. federal authorities, while also claiming the Israeli companies should be investigated, in case they had installed "back door" services, which would allow some future operative to access the American companies' systems. The DEA, it is claimed, purchased communications equipment worth some $100 million from Israeli companies five years ago, and that is said to be the reason for the widespread Israeli activity around this agency.

One paranoid official

Even though the claims made by the DEA and the various journals that have delved into the affair sound convincing and well-based, so do the Israeli counter-claims. Firstly, say anonymous Israeli representatives in the United States, it is true that more than 100 young Israelis were arrested in the U.S. following the events of September 11 - all of them for immigration and visa infringements. Most of those arrested were deported after being charged by the U.S. immigration service. The sources also admit that many Israelis are currently working illegally in the U.S., occasionally as door-to-door art salespersons.

As far as Israel is concerned, this is the only explanation for the affair, and anything more is just a fabrication based on the original reports, which in itself is based on the paranoia of one government official. There is also an explanation for the military background of the arrested Israelis: every Israeli has a military background, often in the various intelligence units. But this is not easy to explain to the Americans, who see the Israelis as "former intelligence officers" or "retired officers." As for the supposed connection between the young Israelis and various high-tech companies, all the companies mentioned strongly deny any involvement.

Those who deny that there is a spy ring in action also ask why none of the Israelis arrested was ever charged with espionage-related crimes. Why were their cases handled by the Immigration and Naturalization Service (INS), rather than the FBI, which is responsible for investigating spies? And the main question - why did Israel chose the DEA as its espionage target? Those who back the spy theory say that because the DEA is not usually involved in security matters it is easier to infiltrate, and that the DEA's war on the international drug trade has provided it a wealth of information that could be useful to Israel in a wide range of areas.

But while each side of the argument is sticking to its guns, without either party presenting clear evidence that could clear up the affair once and for all, the media is carrying out its own merry dance around a fascinating spy story - whether it's true or not.

The first mention of a mass arrest of Israeli art students on suspicion of involvement in spying was on Fox News on December 12, 2001. The dramatic report stated that around 60 Israelis had been arrested for immigration offenses, but were suspected of spying against the United States, and added that some of those arrested were members of the Israeli military. The report also stated that some of those arrested had failed lie-detector tests.

Instead of raising a storm, however, Fox's story slowly died away and was only briefly reported in the international press. Three months later, however, the affair came back to life, this time on a French Internet site, Intelligence Online. The story was immediately picked up by Le Monde. This time, the reporters claimed to have the entire DEA report, and the number of people arrested climbed to 120.

At this stage, the American media also woke up to the story. News agencies based their reports of the story on a French Internet site and on the official U.S. reaction. The Justice Department confirmed that it had investigated the alleged connection between Israeli students and anti-American espionage; the DEA confirmed that it had prepared a draft report, but did not say what had become of it; the FBI said that it had not received any complaint relating to spying by Israeli students.

The New York Times, according to sources in Washington, looked into the affair but, having concluded that it lacked a suitable factual base, decided not to write about it. The Washington Post, on the other hand, did publish an article, but cast doubt on the veracity of the affair. Post reporters found that the report was written by a "disgruntled [DEA] employee," who was upset that his claims of Israeli espionage were not being treated seriously.

Even this report was not enough to finally kill off the affair. Two weeks later, the New York Jewish weekly, Forward, published a report connecting the spy affair with the arrest in New Jersey, on September 11, of five Israelis whose behavior was defined as suspicious. The five were employed by a moving company and did not have valid work permits. According to Forward, the FBI concluded that the five were on a spy mission on behalf of the Mossad, and that the moving company was nothing more than a front. This story also died out quietly.

The final round of publications started last week with the publication of the art student affair in Salon.com, which repeated all the known details of the affair. It even added a claim that the spy ring was active in more than 40 cities across the U.S., and included offices belonging to the secret service, the FBI and the U.S. military.

Now the story is coming to life once more, with news agencies and at least one national television station regurgitating all the details. The American public will continue to be divided over the truth behind the so-called spy ring, with some believing that the original DEA report was the work of a problematic employee and others convinced that shadowy government officials are involved in covering up the exposure of one of the largest spy rings ever to operate on American soil.