In a spy investigation that could strain U.S.-Israeli relations and muddy the Bush administration's Middle East policy, the FBI is investigating whether a Pentagon (search) analyst fed to Israel secret materials about White House deliberations on Iran.
No arrests have been made, said two federal law enforcement officials, speaking on condition of anonymity because of the continuing investigation. A third law enforcement official, also speaking anonymously, said an arrest in the case could come as early as next week.
The officials refused to identify the Pentagon employee under investigation but said the person is an analyst in the office of Douglas J. Feith (search), undersecretary of defense for policy, the Pentagon's No. 3 official.
The link to Feith's office also could prove politically sensitive for the Bush administration.
Feith is an influential aide to Defense Secretary Donald H. Rumsfeld (search) who works on sensitive policy issues including U.S. policy toward Iraq and Iran. Feith's office includes a cadre assigned specifically to work on Iran.
He also oversaw the Pentagon's defunct Office of Special Plans, which critics said fed policy-makers uncorroborated prewar intelligence on President Saddam Hussein's Iraq, especially involving purported ties with the al-Qaida terror network. Pentagon officials have said the office was a small operation that provided fresh analysis on existing intelligence.
The Pentagon said in a statement that the investigation involves an employee at "the desk officer level, who was not in a position to have significant influence over U.S. policy. Nor could a foreign power be in a position to influence U.S. policy through this individual."
One of the law enforcement officials said the person was not in a policy-making position but had access to extremely sensitive information about U.S. policy toward Iran.
The investigation centers on whether the Pentagon analyst passed secrets about Bush administration policy on Iran to the main pro-Israeli lobbying group in Washington, the American Israel Public Affairs Committee, which then was said to have given the secrets to the Israeli government, one official said. Both AIPAC and Israel deny the allegations.
President Bush has identified Iran as part of an "axis of evil," along with North Korea and the Iraqi government deposed by the U.S.-led invasion last year.
Yet his administration has battled internally over how hard a line to take toward Iran. The State Department generally has advocated more moderate positions, while more conservative officials in the Defense Department and some at the White House's National Security Council have advocated tougher policies.
Israel, one of the United States' strongest allies, has worked behind its conservative prime minister, Ariel Sharon, to push the Bush administration toward more toughness against Iran. The Israeli tactics have raised questions whether inside information may have been used to try to influence U.S. policy.
David Siegel, a spokesman for the Israeli Embassy in Washington, said: "We categorically deny these allegations. They are completely false and outrageous."
AIPAC said in a statement that the lobbying group was "fully cooperating with the governmental authorities and will continue to do so."
It said any allegation of criminal conduct by the group or its employees was "baseless and false," adding that it "would not condone or tolerate for a second any violation of U.S. law or interests."
Pentagon officials refused to comment, referring all questions to the Justice Department.
The Pentagon investigation has included wiretapping and surveillance and searches of the suspected Pentagon employee's computer, the law enforcement officials said.
Israel and Iran have been in an increasingly harsh war of words in recent months. Senior Israeli officials have left open the possibility of an Israeli attack on suspected Iranian nuclear weapons development sites.
In response, Iran threatened last week to destroy Israel's Dimona reactor should Israel carry out such an attack.
In 1981, Israel destroyed a nuclear facility in Iraq after becoming suspicious that Saddam was developing a nuclear weapons capability.
Rep. Ike Skelton of Missouri, top Democrat on the House Armed Services Committee, said he received information about the investigation before news of it became public Friday and was "deeply concerned and angered."
"This is a very, very serious allegation, and we just can't tolerate anything like this at all," Skelton said.
Despite the close U.S.-Israeli relations, this is not the first allegation of spying on Israel's behalf.
Jonathan Pollard, a former naval intelligence officer, was convicted of giving top-secret documents to Israel in the mid-1980s. He continues to be a point of contention in U.S.-Israeli relations. The Israeli government has repeatedly pressed for his release, but intelligence officials have called the information he passed to the Israelis highly damaging.
Pollard was caught in Washington in November 1985, and was arrested after unsuccessfully seeking refuge at the Israeli Embassy.