Israel scrambles to mend US ties. Apologizes for alleged role in Pollard spy case

Israeli Prime Minister Shimon Peres apologized publicly to the United States Sunday for what he termed ``the alleged spy case'' and promised it would not happen again. In a statement issued to reporters after the Cabinet met, Mr. Peres said that his government's investigation of the Jonathan Pollard affair is not yet complete but is ``progressing vigorously.''

The government went far toward admitting that Mr. Pollard, a civilian working with US Navy intelligence, indeed had spied for Israel. US Secretary of State George Shultz said Sunday, ``We are satisfied by [the apology] and wholeheartedly welcome it.'' He told reporters Israel had assured Washington of its cooperation in determining the extent and manner of the espionage operation.

The affair has confronted Israel's most senior officials with a dilemma they seem unable to resolve -- how to satisfy American demands for disclosure with Israel's need to limit the damage.

The apology came in response to growing pressure on the government to make public the results of its Pollard investigation. The statement said if any unit proves to be involved in the espionage activity, it ``will be completely and permanently dismantled,'' and that ``spying on the United States stands in total contradiction to our policy. Such activity, to the extent that it did take place, was wrong and the government of Israel apologizes.''

Pollard, arrested in Washington Nov. 21, allegedly had sought asylum in the Israeli Embassy together with his wife who also has been charged. According to court testimony in the United States, Pollard sold hundreds of top-secret documents to Israel in the past 18 months. These documents reportedly include information on Arab nations' armies and Soviet weapons.

Israel's slow response to US demands for full cooperation in the Pollard case had strained relations between the two governments in the past week. US administration officials had grown increasingly impatient with the Israelis.

``I think the statement goes as far as we can go,'' said one worried Israeli official. ``But I don't know if it will satisfy the Americans. We hope they will give us a break now.''

President Reagan, in his weekly radio broadcast Saturday, said that ``events of recent days have made clear, many nations spy on the United States.'' Mr. Reagan did not refer to Israel by name, but said, ``We will not hesitate to root out and prosecute the spies of any nation.''

Reagan's remarks came a day after State Department spokesman Charles Redman said that the Israelis ``have not yet provided the full and prompt cooperation we requested a week ago.''

Added to the chorus of criticism were the voices of American Jewish leaders who have been bombarding top Israeli officials with pleas for full, quick disclosure.

The Israeli government has gone through a three-phase reaction, analysts here say. It's first response was one of shock, as the prime minister, foreign minister, and defense minister tried to determine the facts of the case.

The second response was one of anger: Peres, Defense Minister Yitzhak Rabin, and Foreign Minister Yitzhak Shamir were all described by aides to be ``furious.''

A message sent to the US said that``the appropriate conclusions will be drawn'' if it was learned that Israeli officials indeed had paid Pollard to provide military secrets to Israel. That phrase is generally an Israeli euphemism for saying that those found responsible would be fired.

But in the third phase, to the dismay of some Israeli observers and the American Jewish community, the Israeli government's latest response seemed to pull back from its initial promise to cooperate with the Americans' investigation of Pollard.

It was revealed that two Israeli diplomats, one in Washington and one in New York, were recalled last week. The diplomats were officially scientific attach'es, but are also alleged to have been Pollard's contacts in the US.

There is evidence that the two diplomats may have been involved with a secret intelligence-gathering unit attached to the Israeli Defense Ministry. The US wanted to question the men. The Israeli government has said they can be questioned, but only in Israel and not in the US.

Mr. Peres, in a television interview Thursday, said that when Israel's investigation of the Pollard affair is concluded ``the conclusions that will be drawn will be designed to prevent hitches in the future.'' That seemed to indicate that rather than firing responsible officials, the government may simply reorganize the intelligence branches.

As the US sharpened its requests for cooperation, Israel grew increasingly defensive.

Reports started to appear in the Israeli press about US diplomats quietly sent home over the years at Israel's request because they were suspected of spying. Deputy Prime Minister David Levy called on the US government to take a more balanced approach to the matter, noting that no harm had been done to US security interests.

The problem, according to analysts here, is that the Pollard affair does not seem to be the limited incident it was first said to be in press accounts here.

``We were all misled,'' says one analyst. ``There was a lot of wishful thinking that this was a totally unauthorized and rump operation . . . that it was all extralegal and extraterritorial.'' But the recall of the diplomats, this analyst continues, ``would clearly negate the vigilante theory.''

Given Israel's shaky coalition government, the impact could be devastating if it were revealed that any one of the nation's top three government figures were responsible for the recruitment of Pollard.

The implication of either Peres, Shamir, or Rabin would almost surely lead to the collapse of the government and could end the political career of any one of the three men.

Presidents of the major American Jewish organizations, meeting in Jerusalem this week, are expected to push hard for disclosure, says David Clayman, representative here of the American Jewish Congress.

``There is anger in American Jews that they've been betrayed by Israel,'' says Mr. Clayman. ``They will express anger to the Israeli establishment for having ruptured their confidence that there's a complete identity of interests between Israel and the United States.''

``All of our efforts are aimed at gaining and keeping support for Israel in the United States. Suddenly, there is this tremendous erosion,'' he said.