"While pointing a sharply accusing finger at Iran, Israel suddenly finds itself on a high terror alert against an imminent terror threat from Iraq, timed for January 15 or thereabouts. Israeli security authorities are taking into account that Baghdad is capable of striking through its Palestinian terrorist surrogates.

According to DEBKAfile’s military sources, Israel obtained intelligence information of an Iraqi terrorist plan ten days ago. That information included Baghdad’s relay of its plan to Palestinian leader Yasser Arafat. In response, Arafat sent his liaison man with the Iraqi regime, Azzam al-Ahmad, to Baghdad, to find out the details and work out how Iraq and the Palestinian Authority could work together. DEBKAfile’s Middle East sources confirm that Saddam Hussein personally received Al Ahmad to discuss operational aspects of the Iraqi plan.

In the view of American and Israeli authorities, the Iraqi president felt driven to action on behalf of the Palestinians by the exposure of Iran’s involvement in the Palestinian uprising as a result of the Karin-A’s interception. He aims to correct the impression that Iraq is doing nothing for the Palestinians.

Sunday, January 13, saw the sudden return to the streets of Baghdad of thousands of 'volunteers' who swore to fight alongside the Palestinians in the 'Al Aqsa' campaign against Israel.

DEBKAfile’s military sources are taking into consideration that Baghdad could launch its terror offensive by means of the Iraqi military intelligence cells it has planted in Palestinian areas of the West Bank or through Palestinian hirelings ... Saddam may be contemplating chemical or biological warfare, mass-casualty strikes or raids on military and strategic locations. Against this danger, security has been stepped up at Israeli aviation industries factories at Ben Gurion airport and around the country, at electricity installations and at fuel and gas depots.

Sunday’s special consultation between prime minister Ariel Sharon, defense minister Binyamin ben Eliezer and foreign minister Shimon Peres - reported officially as a planning session in advance of the return of US Special Envoy Anthony Zinni - focused in fact on the looming Iraqi menace.

Top-level exchanges between the United States and Israel are reported by DEBKAfile ’s political sources as currently in progress for up-to-the-minute briefings on possible developments."