"A Secret Iran-Arafat Connection Is Seen Fueling the Mideast Fire,"  DOUGLAS FRANTZ and JAMES RISEN, New York Times, March 24, 2002.

TEL AVIV - American and Israeli intelligence officials have
concluded that Yasir Arafat has forged a new alliance with
Iran that involves Iranian shipments of heavy weapons and
millions of dollars to Palestinian groups that are waging
guerrilla war against Israel.

The partnership, officials said, was arranged in a
clandestine meeting in Moscow last May between two top
aides to Mr. Arafat and Iranian government officials. The
meeting took place while Mr. Arafat was visiting President
Vladimir V. Putin of Russia, according to senior Israeli
security officials who declined to describe the precise
nature of their information.

The new alignment is significant for several reasons,
American and Israeli officials said. In recent years,
Iran's support for terrorism around the world has been on
the wane, with the notable exception of its ties to
Hezbollah, the militant group that fought for 18 years to
expel Israel from southern Lebanon.

Israeli officials say they are alarmed by Mr. Arafat's
alliance with Iran because they say it gives the
Palestinians a powerful and well-armed patron in the
increasingly violent conflict with Israel. American
officials echoed that concern and said they were also
worried by intelligence reports that say Tehran is
harboring Al Qaeda members, including one leader who
recently tried to mount an attack against Israel from his
sanctuary in Iran.

Questions about Iran's relationship with the Palestinians
came into public view early this year when Israel seized a
ship carrying 50 tons of Iranian-supplied arms, including
antitank weapons that could neutralize one of Israel's main
military advantages over the Palestinians and rockets that
could reach most cities in Israel.

Both the Palestinians and Iranians deny they are working
together, but American and Israeli officials say they now
see the shipment as part of a broader relationship. They
say that began with several smaller attempts by
Iranian-backed groups in Lebanon to supply arms and was
cemented in the Moscow meeting. Officials of Israel and the
United States say they believe that Mr. Arafat personally
approved the dealings with Iran.

American officials said that Israeli intelligence reports
about the Moscow meeting were at the heart of secret
briefings that Israel provided to the Bush administration
after the arms shipment was intercepted.

"There's plenty of evidence to show that it wasn't a rogue
operation," a senior State Department official said of the
ship that Israel seized in early January.

Palestinian Authority officials dismissed the charges of
any Iranian involvement in their struggle against Israel
and denied that Mr. Arafat knew of the arms shipment. They
said the allegations were an attempt by Israel to discredit
the Palestinians and to justify Israel's military
operations in the West Bank and the Gaza Strip.

"This is a factory of lies," Yasir Abed Rabbo, the
Palestinian minister of information, said. "Israel is like
any colonial power. When they get in trouble, they try to
blame outsiders. There has not been a single Iranian here
since the 14th century."

Iran also has denied any involvement with the Palestinians
or the arms shipments. Ali Shamkhani, the Iranian minister
of defense, told the state news agency, "The Islamic
Republic of Iran has had no military relations with Arafat,
and no steps have been taken by any Iranian organization
for the shipment of arms to the mentioned lands."

For several years, American counterterrorism experts
believed Iran's terrorist apparatus had fallen dormant.
Hezbollah and other groups backed by Iran had not attacked
American targets since the Khobar Towers bombing in Saudi
Arabia killed 19 American servicemen in 1996. Iranian
leaders had apparently decided that state sponsorship of
anti-American terrorism was too risky at a time when the
country was trying to build closer economic ties with
Europe.

Post-Intifada Enthusiasm

Iran also seemed locked out of Palestinian issues while Mr.
Arafat pursued the Oslo peace process with Israel.
Relations soured so badly between Tehran and Mr. Arafat
after the Oslo accords in 1994 that the Palestinian leader
became convinced that religious leaders in Iran had issued
an order that he be killed for dealing with the Jewish
state, according to American and Israeli officials.

But American intelligence officials said that they believe
that the onset of the Palestinian uprising known as the
intifada in September 2000 renewed the enthusiasm among
Iran's hard-liners for terrorism.

"The main variable is that the intifada has stirred the
radical juices in Iran," said a senior American official.
"With the outbreak of the intifada, the Iranians decided
they wanted things to burn hotter. The Iranians are now
supporting a number of Palestinian groups - it's been a bad
news story on Iran over the last 18 months."

George J. Tenet, the director of central intelligence,
recently told Congress that Iran's political reformers were
losing momentum in the long-running battle for power with
the conservative clerics who control the Iranian
intelligence and security agencies that support extremist
groups. He warned that there had been little reduction in
Iran's backing for terrorism and he said that Tehran had
failed to seal its eastern border with Afghanistan to block
the escape of Al Qaeda members.

Israeli officials said there was new evidence that some
Iranian officials have allowed Al Qaeda to use the country
not just as a transit point after escaping Afghanistan, but
as a staging area.

Abu Musaab Zarqawi, a senior Al Qaeda leader who fled the
western Afghan city of Herat after the American military
campaign began, has turned up in Tehran under the
protection of Iranian security forces, according to senior
Israeli and American officials.

Last month, Mr. Zarqawi dispatched three Afghan-trained
operatives to attack Israel, Israeli officials said. The
three, two Palestinians and a Jordanian, were arrested when
they crossed from Iran into Turkey on Feb. 15.

Turkish authorities said the men had possessed fake
documents, had diagrams for bombs and claimed that they
intended to attack targets in Tel Aviv on orders from a
leader known as Abu Musaab. Israeli intelligence said his
full name was Abu Musaab Zarqawi, and American officials
said he was believed to be the highest ranking Al Qaeda
leader now in Iran.

The new information about his presence in Tehran raises
questions about his actions and the activities of other Al
Qaeda terrorists who entered Iran in recent months.

American officials say they are uncertain how much direct
support senior Iranian government officials are giving to
Al Qaeda members. Al Qaeda is a Sunni Muslim group, but
Iran is Shiite. Moreover, Iran strongly supported the
Afghan opposition groups that fought the Taliban.

But Mr. Tenet told a Senate committee that old religious
divisions among Muslims did not rule out cooperation on
terrorism against the United States and its allies.

There is evidence that Osama bin Laden sought to bridge the
religious divide when it came to terrorist operations by
exploring an alliance with the Iranian-backed guerrilla
group Hezbollah as early as the mid-1990's.

Ali A. Mohamed, an Al Qaeda member convicted of conspiracy
in the bombings of the American embassies in East Africa in
1998, testified that he had arranged security for a meeting
in Sudan between Mr. bin Laden and Imad Mugniyah, the
Hezbollah militant who masterminded the 1983 suicide attack
on the Marine barracks in Beirut that killed 241 Americans
and helped to define terrorism for Americans.

Among many Arabs, Hezbollah's status surged after its long
military and terrorist campaign in southern Lebanon helped
lead to the Israeli withdrawal from the country in May
2000. Its victory meant that Mr. Mugniyah and Hezbollah's
terrorist wing had less work. Soon after the start of the
Palestinian uprising, Iran sent Mr. Mugniyah to help the
Palestinians, American and Israeli intelligence officials
said.

"Mugniyah got orders from Tehran to work with Hamas," a
former Clinton administration official said.

In Grip of Hard-Liners

United States intelligence
officials say they are increasingly concerned by the
mounting evidence of Tehran's renewed interest in
terrorism, including covert surveillance by Iranian agents
of possible American targets abroad. American officials
said Iran appeared to view terrorism as deterrent against
possible attack by the United States. "If there was a
direct military operation by the United States against
Iran," one intelligence official said, "Mugniyah would
likely attack us."

Since the surprise election of reformer Mohammad Khatami as
president of Iran in 1997 and his wide public support,
Washington has been counting on a new moderate political
majority to emerge. But the hard-line faction has
maintained its grip on Iran's security apparatus,
frustrating American efforts to ease tensions with Tehran.

Now, Iranian actions to destabilize the new interim
government in Afghanistan, its willingness to assist Al
Qaeda members and its fueling of the Palestinian uprising
are prompting a reassessment in Washington, officials say.

At the same time, Israeli officials have become
increasingly vocal about Iran's new ties to the
Palestinians, partly to link their own fight to the
American-led war on terrorism. Earlier this year, President
Bush identified Iran, Iraq and North Korea as an "axis of
evil."

American intelligence officials said Iran's Revolutionary
Guards and intelligence service had considerable latitude
for supporting Iranian proxies. They also supported Israeli
assertions that Iran had become deeply involved in backing
Palestinian militants, both through Hezbollah and in the
training and financial support from Iranian intelligence
agents.

United States officials said, for instance, that the
Palestinian Islamic Jihad, one of the groups behind the
wave of suicide bombings in Israel, was financed and
directed by Iran. American and Israeli officials said that
since the beginning of the Palestinian uprising 18 months
ago, Tehran had paid millions of dollars in cash bonuses to
the group for each attack against Israel.

Hamas, a far larger Palestinian extremist group, is also
believed to receive Iranian support, though officials here
in Israel and in the United States said its ties to Iran
were less direct. Hamas has its own independent means of
raising money and recruiting members, so Iran is believed
to have less influence over the group.

Operatives of Islamic Jihad and Hamas have been trained in
Hezbollah camps in southern Lebanon and some have received
specialized training inside Iran, American and Israeli
intelligence officials said.

Israeli officials said they had recently arrested three
Hamas operatives who were returning from two years of
specialized training at a Revolutionary Guards officers'
course outside Tehran in Dara Kazwin.

Such training appears to have paid off. Recent attacks by
the groups have exhibited hallmarks of the tactics used by
Hezbollah against Israel in Lebanon, including the
destruction of two Israeli tanks in recent weeks by
roadside bombs.

In fact, Israeli and American officials believe that the
18-year struggle by Hezbollah in Lebanon, backed by tens of
millions of dollars worth of arms from Iran, provided a
model for what Tehran would like to recreate on the West
Bank and the Gaza Strip. "The strategy is to make the West
Bank another Lebanon," said one senior American
intelligence official.

Israeli officials say they have seen no evidence of Iranian
intelligence operatives working directly in the West Bank
or the Gaza Strip. Instead, they said, Iranian and
Hezbollah operatives meet with Palestinian militants and
their intermediaries in Syria, Jordan and Lebanon.

Growing Aid to Palestinians

Jordanian intelligence
officials said they had thwarted many attempts by Iran and
its proxies to mount attacks against Israel from Jordan.
Last weekend, Sayyed Hassan Nasrallah, the secretary
general of Hezbollah, criticized Jordan for blocking the
group's efforts to smuggle weapons to the Palestinians.
Meanwhile, Iranian-backed charitable organizations have
stepped up financial support for the Palestinians,
according to American officials. Israeli officials added
that some Palestinians wounded in the uprising were being
treated in hospitals in Iran, where Iranian agents
sometimes try to recruit them.

But the most visible evidence of the new strategic
partnership between the Palestinian Authority and Iran came
in the case of the Karine A, a ship laden with 50 tons of
mortars, rockets, missiles and explosives from Iran that
was seized by Israeli commandos in early January.

The Karine A was a direct outgrowth of the secret meeting
in Moscow last May between Mr. Arafat's representatives and
Iranian intelligence officers, senior Israeli security
officials said.

The shipping venture followed several failed attempts to
smuggle weapons from Lebanon by sea into the Gaza Strip.
One had occurred early last May when Israeli authorities
intercepted the Santorini, a fishing vessel carrying
weapons bound for Palestinian extremists. Israeli officials
said there were at least three bungled attempts before
that, including one earlier shipment by the Santorini.

In response to those failures, the Israeli security
officials said, Mr. Arafat sought a deal with the Iranians
for a more serious alliance. In exchange for a more
professional approach to arms support, Mr. Arafat agreed to
provide Iran with access to Palestinian intelligence on
Israeli military positions and defenses, they said.

The arrangement was completed in Moscow, where the
Palestinian leader instructed two trusted aides to meet
with Iranian government officials, Israeli intelligence
officials said.

The Israelis declined to identify the Iranians involved,
but the Arafat aides were identified as Fuad Shobaki, the
chief financial officer for military operations for the
Palestine Liberation Organization and part of Mr. Arafat's
inner circle, and Fathi al-Razem, deputy commander of the
Palestinian naval police.

Follow-up meetings were also held between the Palestinians
and the Iranians, but Israeli officials said the Iranians
were careful never to hold any of the meetings in Iran for
fear of exposing their involvement.

Israeli officials said the Karine A was a highly
sophisticated operation, planned to give the Palestinians a
quantum leap in firepower and change the military calculus
in the uprising.

Evidence of Arafat's Role

The Israelis have been unable to tie the shipment directly
to Mr. Arafat, but Israeli officials said the involvement
of senior Palestinian Authority officials and Mr. Arafat's
well-known attention to financial details created a strong
circumstantial case for his knowledge.

American officials agreed that Mr. Arafat's representatives
met with Iranian government officials in Moscow, though the
Americans said they were uncertain whether the meeting was
to complete the arms shipment or was one of several
meetings.

"But there is no question that at some point the Iranians
and people very close to Arafat came together and that
Arafat was fully aware of it," said a senior State
Department official.

The ship's captain was an officer in the Palestinian navy
who was living in Libya, and three of the crew members were
Palestinians, including one who tool diving lessons in
Lebanon provided by Hezbollah, Israeli security officials
said.

In addition, the officials said, a Palestinian naval
officer, Adel al-Mughrabi, bought the ship and was in radio
contact with its crew during the voyage from an island off
the coast of Iran where it picked up the weapons to the
point in the Red Sea where the ship was seized by Israelis.


The ship's captain, Omar Akawi, who said he was a 25-year
member of Mr. Arafat's Fatah organization, told news
organizations in interviews arranged by Israeli authorities
in January that he knew he was carrying arms to the
Palestinian Authority.

The ship contained an arsenal that could have escalated the
war between Palestinians and Israelis. Among the munitions
were 62 Katyusha rockets capable of reaching almost any
city in Israel, hundreds of mortars and grenades, antitank
and antipersonnel mines and two tons of explosives.

The explosives included a ton of C-4, which Israeli
authorities said is nearly three times more powerful than
the homemade explosives used by most Palestinian suicide
bombers.

The identifying markings on the munitions had been sanded
off, but most of them are manufactured only in Iran,
Israeli security officials said.

Mr. Arafat and his aides denied any knowledge of the
shipment, though they have said some Palestinian Authority
personnel were involved.

Within Palestinian political circles, moderates were
angered that Mr. Arafat had apparently struck a deal with
the Iranians, risking American wrath, a Palestinian
negotiator said. But other officials defended the attempt
as essential to combating the overwhelming firepower of the
Israelis.

The discovery sparked an intense debate within the Bush
administration, American officials said. Secretary of
Defense Donald H. Rumsfeld and some others argued that
relations should be broken off with Mr. Arafat, but
Secretary of State Colin L. Powell contended that there was
nothing to gain by cutting ties with the Palestinians.

In the end, Secretary Powell and President Bush chastised
Mr. Arafat publicly over the shipment, but the United
States did not end its relations with the Palestinian
leader.