Washington Report on Middle East Affairs, November 2004, pages 26-27

Special Report

New Spy Investigation Suppressed at Crucial Juncture

By Richard H. Curtiss

The United States is investigating another case of Israeli espionage that apparently neither the Democrats nor the Republicans want to touch until after the Nov. 2 election. This latest case involves two long-time staff members of the American Israel Public Affairs Committee (AIPAC).

U.S. investigators were surveilling a lunch meeting between an AIPAC employee and an Israeli Embassy official when an unknown person joined them. The investigators had no idea who he was.

The man turned out to be Lawrence A. Franklin, a mid-level civil service employee who worked for many years at the Defense Intelligence Agency. The FBI obtained warrants from a special federal court for surveillance under the Foreign Intelligence Surveillance Act, and for months kept tabs on Franklin.

About three years ago Franklin transferred to the staff of Douglas Feith, under secretary of defense for policy, who has spent most of his career looking out for the interests of Israel.

Interestingly, Feith’s father, Dalck, was an Israeli extremist and a long-time protégé of Zev Jabotinsky. Dalck Feith, who now lives in the United States, is just as extreme today as he was all those years ago in Israel. His son Douglas, as the person in charge of the Pentagon’s Office of Special Plans (OSP), for some time has worked on compiling any material, no matter how vague or extreme, to make the case for military action in Iraq.

Having successfully made that case, Feith and his colleagues proceeded to the next step: making the case for war on Iran. He and his staff—which now totals roughly 1,500 people—are unstinting in their efforts to start another war as soon as possible against either Iran or Syria—or both. The point is to keep the spotlight and pressure off Israel. Even though it’s clear to everyone—even to Vice President Richard Cheney—that there should be no new war immediately, that doesn’t keep Feith from putting a sinister spin on everything.

After working for the Defense Intelligence Agency for most of his career, Franklin transferred to Feith’s Office of Special Plans in the summer of 2001 to deal with Iranian issues. He currently is one of two Iran desk officers who work in the OSP’s Northern Gulf directorate.

Franklin works under William J. Luti, deputy undersecretary for defense for Near Eastern and South Asian affairs, whose office is part of the operation under Feith.

Franklin is also a colonel in the Air Force Reserve, and spent at least one of his annual tours on active duty working in the Defense Attaché’s office in the U.S. Embassy in Tel Aviv in the 1990s.

According to a U.S. government official familiar with the investigation, Franklin, a Christian, is outwardly very supportive of Israel. In February 2000, he wrote an op-ed piece for the Wall Street Journal’s European edition that was sharply critical of Iranian President Mohammad Khatami, arguing that the leader was launching a “charm offensive” that was simply a “ruse” to make the Iranian government look better to Westerners while it continued to abuse human rights.

Lawrence Franklin “was very close to the anti-Iranian dissidents.”

Franklin also participated in secret meetings with Manucher Ghorbanifar, the Iranian arms dealer who acted as a middleman in the Iran-Contra affair during the Reagan administration. The secret meetings, first held in Rome in December 2001, were brokered by Michael Ledeen, a leading neocon and long-time supporter of Israel. Ledeen said he arranged the meetings to put the Bush administration in closer contact with Iranian dissidents who could provide information on the war on terrorism. But he said that Franklin was always skeptical about the usefulness of the back-channel meetings.

At one point in early 2003, during the run-up to the Iraq war, Franklin was brought in to help arrange meetings between Deputy Secretary of Defense Paul Wolfowitz and American Shi’i and Sunni clerics, a defense official said. A one-time Cold War specialist, after the Soviet Union collapsed Franklin studied Farsi, the language spoken in Iran. “He was very close to the anti-Iranian dissidents,” a former defense colleague said. “He was a good analyst of the Iranian political scene, but he was also someone who would go off on his own.”

Franklin is now talking to FBI investigators as they try to determine the extent of, if any, involvement by a senior member of the Israel lobby. The FBI’s investigation of AIPAC has been assigned to federal prosecutors in Alexandria, Virginia. Headed by Paul McNulty, the U.S. attorney for the Eastern District of Virginia, the office has long experience in prosecuting espionage issues.

A high-ranking Democrat on the House Judiciary Committee, however, demanded that a new prosecutor be assigned to investigate the alleged leaks, questioning McNulty’s “political leanings.”

In a letter to Attorney General John D. Ashcroft, Rep. John Conyers Jr. (D-MI) wrote, “The role of U.S. Attorney Paul J. McNulty in the case has obvious political implications” in an election year. Conyers cited anonymous allegations contained in a news report that McNulty “had put the brakes on” the probe.

“While I have no reason to question Mr. McNulty’s integrity,” Conyers wrote, he ”suggested that either a special counsel or U.S. Attorney Patrick Fitzgerald of Chicago, who is overseeing a separate probe into the disclosure of CIA operative Valerie Plame, should take over the Pentagon probe.”

Justice Department spokesman Mark Corallo declined to comment on the specifics of Conyer’s allegations. “We will review the congressman’s letter and give it the attention it is due.”

Deputy Defense Secretary Wolfowitz, as well as Feith, have been briefed on Franklin’s case. According to the AP, neither Wolfowitz nor Feith is regarded as having any involvement in the matter, other than as potential witnesses because of their familiarity with Franklin’s work.

The Israeli press provided the names of two possible suspects. They are Steven Rosen, AIPAC’s director of foreign policy issues, and Keith Weissman, an AIPAC expert on Iran. It is quite possible that the FBI was looking even higher in the organization. It appears, however, that someone blew the whistle on what might have been a major scandal. Why the investigation seems to have come to a standstill is not clear.

In his first comments on the case, Israeli Ambassador to the United States Daniel Ayalon protested on Aug. 31 that the intelligence investigation was a “non-issue,” adding, “I can tell you here, very authoritatively, very categorically, Israel does not spy on the United States.”

According to The New York Times’ Steven Erlanger, “After the hugely embarrassing spying scandal of 1985, when Jonathan Pollard, an American intelligence analyst, was arrested and convicted of spying for Israel, the Israeli government made a firm decision to stop all clandestine spying in the United States, Yuval Steinitz, the chairman of the foreign and defense committee in Parliament, said on Aug. 28.

“”˜This was a firm decision,’ Steinitz said. ”˜And I’m 100 percent confident—not 99 percent but 100 percent—that Israel is not spying in the United States. We have no agents there and we are not gathering intelligence there, unlike probably every other country in the world, including some of America’s best friends in Europe.’”

Israeli Prime Minister Ariel Sharon’s office emphasized the same point on Aug. 28, issuing a statement saying: “Israel has no connection to this matter. The U.S. is Israel’s greatest ally. Israel is not engaged in intelligence activities in the U.S. and denies reports to the contrary.”

While Israel does have representatives of the Mossad, its intelligence agency, and military intelligence in Washington, they are attached to the embassy and their presence is known to American authorities, officials said.

At an Aug. 29 event held in New York on the eve of the Republican National Convention, and sponsored by AIPAC, the Republican Jewish Coalition and the United Jewish Communities, AIPAC President Bernice Manocherian described the allegations against her group as “outrageous as well as baseless.” In her speech to Jewish Republicans, Manocherian vowed, “We will not allow innuendo or false allegations against AIPAC to distract us from our central mission.”

Timing Is Everything

Just about the time news organizations began reporting on the existence of the FBI counterintelligence investigation, the FBI was interviewing Rosen and Weissman. The interviews were halted when both men asked to be represented by a lawyer before answering more questions. Washington defense attorney Abbe Lowell said he had been hired to represent Rosen and Weissman, and would not discuss the case. AIPAC has said it is “cooperating fully” with investigators, but strongly denied any wrongdoing.

Investigators believe that the AIPAC officials turned over Franklin’s information to the Israelis, although the exact nature of their contacts with Israel remains unclear, and it is uncertain if Franklin knew of their discussions with Israel. “It is not illegal for employees of AIPAC to meet with Pentagon officials or representatives of the Israeli government, which has wide-ranging information-sharing with the United States,” wrote New York Timescorrespondent David Johnson. “But knowingly passing classified materials to a foreign power could be a crime under American espionage statutes.”

Franklin’s legal status is unclear. Authorities believe he gave a draft policy directive on Iran to AIPAC officials, who then provided the information to Israeli intelligence.

When FBI agents visitied AIPAC headquarters on Capitol Hill, they searched Rosen’s office and copied his computer hard drive. Agents also met with AIPAC executive director Howard Kohr, who was asked about AIPAC’s structure, acoording to people who have been officially briefed on the matter.

“The whole thing makes no sense to me,” said Dennis Ross, special envoy in the Arab-Israeli peace process in the first Bush and the Clinton administrations. “The Israelis have access to all sorts of people. They have access to Congress and the administration,” said Ross, now a senior fellow at the Washington Institute for Near East Policy—an AIPAC spinoff.

Israel sees Iran as the single biggest threat to its existence, and as a result closely monitors Washington’s Iranian policy—especially as the Bush administration presses Tehran to disclose more about the state of its nuclear program.

One former State Department officer recalled being told that U.S. government experts considered the countries whose spying most threatened the U.S. to be Russia, South Korea and Israel. “I also know from my time in Jerusalem that official U.S. visitors to Israel were warned about the counterintelligence threat from Israel,” she added.

Neither Rosen nor Weissman has been advised that he is a target of the investigation, and government officials said the men’s legal status remained uncertain. National Security adviser Condoleeza Rice and her deputy, Stephen J. Hadley, were told about the investigation early in the Bush administration.

Federal agents had been preparing to lead authorities to contacts inside the Israeli government when the case became public, government officials said on Aug. 29. The disclosure of the inquiry by CBS News revealed what had been for nearly a year a covert national security investigation conducted by the FBI, according to officials who said that news reports about the inquiry compromised important investigative steps—such as the effort to follow the trail back to the Israelis.

David Johnston and Eric Schmitt of The New York Times wrote that Franklin would have had top-secret security clearance, giving him access to much of the nation’s most sensitive intelligence about Iran, including that relating to its nuclear program, Pentagon officials said.

According to The New York Times, Franklin is thought to be negotiating a deal with the government that could result in leniency in the form of reduced charges in exchange for his information about other people in the case. It is not clear when or even whether he will be charged.

Eric Schmitt of The New York Times wrote, “”˜We don’t have a presidential directive on Iran,’ said a government official familiar with the internal debate. ”˜We have an ad hoc policy that we’re making up as we go along. And it is to squeeze Iran, using international pressure, to get them to rid themselves of their nuclear program.’”

For more than a year, a major debate over Iran policy has divided the administration. Hard-liners in the Pentagon, including some in the policy office, and, to some extent, in Cheney’s office, have advocated a policy of threatening confrontation with Tehran, and supporting opposition groups and student demonstrations, government officials said.

Last May, one proposal advocated by some lower-level Pentagon officials advocated covert support for Iranian resistance groups to destabilize Iran’s powerful clergy. Some officials even raised the prospect of air strikes against an Iranian nuclear site if Iran’s nuclear program proceeded.

Others expected to be interviewed will probably include Iraq and Iran specialist Harold Rhode, former Defense Policy Board chairman Richard Perle, and Iran specialist David Wurmser, Cheney’s principal deputy assistant for national security affairs, according to sources familiar with or involved in the case.

Wurmser, Feith and Perle were among the authors of a 1996 policy paper for then-Israeli Prime Minister Binyamin Netanyahu entitled: “A Clean Break: A new Strategy for Securing the Realm.” The realm in question was not the United States, of course, but Israel.

Richard H. Curtiss is executive editor of the Washington Report on Middle East Affairs.