Meese: Israeli raid can't be allowed to foil Habib

President Reagan understands "both the sensitivities and complexities" of the questions raised by Israel's raid on Iraq's nuclear reactor project, says Edwin S. Meese III, counsel to the President and one of Mr. Reagan's closest White House associates.

In an interview with the monitor, Mr. Meese added that the President is "not indicating any actions he might take until the [State Department] review is complete -- in a week or two."

The President "realizes that all the merits are not on one side of the issue -- and there are things to be said on both sides," says Meese.

Asked if it is possible that in the end the United States will shut off arms shipments to the Israelis as the result of this incident, Meese responded: "In this particular case it appears that planes sold to Israel by the US were used in the raid. That's what brings the Arms Export Control Act into play.

"And that act requires that if American-provided materiel has been used in a way that violates the agreements that are a part of that act, then there is a requirement that further arms shipments be curtailed -- unless the President finds that it is in the interest of our national security to wave that provision. That's part of the review that will be carried out."

Meese noted that the review would take into consideration one hitherto muted element as a possible justification for Israel's act: that a state of war still exists between Israel and Iraq.

On other subjects Meese said:

* In Reagan's recent conference with the President of Mexico the subject of oil "was not a major agenda item" but "was discussed in passing." Meese stressed that Reagan was being very careful not to appear in any way to be attempting to exploit the energy resources of Mexico. With regard to Mexican immigrants, Meese said Reagan will be making some decisions in the next month or two.

* The US President and Cabinet will be reviewing, by late June or July, a Defense Department report on the MX missile and what to do about it.

* The President will be making his decision about development of the neutron bomb "in the course of the next several months."

Excerpts from the interview follow:

There is an appearance now of a president who is warily circling this Israeli raid incident. Is this true?

I wouldn't say he is warily circling it. . . . It is perhaps more correct to say that he understands both the sensitivities and the complexities of the situation. He realizes that all the merits are not on one side of the issue. . . .

His main concern, however, is that this incident not interrupt other activities that are going on toward trying to preserve stability and peace in the Middle East.

And most particularly he is concerned that it not disturb the mission of Ambassador [Philip] Habib who has tried to prevent military engagement in Lebanon.

The Haig letter to [Sen. Charles] Percy stops short of concluding that Israel violated the Arms Export Control Act. Does this mean that the administration is loathe to come to that conclusion?

No, what it means is that we were complying with the law, which requires an immediate report to Congress if, as the law says, it appears that there may be a violation of the Arms Export Control Act -- which we did.

Then the act provides that certain actions are to be taken. And it is this review of the situation to determine what further actions must be taken under the law which is going on at the present time. So we complied promptly with the letter of the law and the spirit of the law to make the report that is required to Congress. Now we go forward to review the situation to determine what, if any, sanctions should be taken under the law. And then we will have a subsequent report to Congress as to that.

We should not read too much then into the Haig letter in terms of what your subsequent actions might be.

Well, the subsequent actions are, of course, the actions required under the statute. But coincident with that -- because there is an implication in the law that this should be done -- we are suspending any shipment of some of the planes that were due to be delivered this week so we would have time to review the situation before deciding on what action to take.

Does this Israeli raid set a precedent for any nation to act similarly if it feels similarly threatened?

Well, it would set a precedent only if it were permitted to go ahead without condemnation or without appropriate attention by the rest of the world. There has been a general expression by most nations that this was an improper action.

Does this preemptive strike raise the specter of further preemptive strikes as other nations build a bomb? And could this sort of thing set off a global war?

I don't think it does [set a precedent]. But certainly, if it were a continuing practice that was repeated by other nations, it could have very dangerous possibilities as far as being a threat to world peace.

However, what it does point up now is that the nations of the world must find a better way to deal with nuclear proliferation and to make sure that nuclear weapons are not developed for offensive and aggresive use by any nation.

Do we know whether Israel has the nuclear bomb?

That is something that I could not comment on.

Was there absolutely no US knowledge that [Israeli Prime Minister Menachem] Begin contemplated such a raid?

That is correct. The only information we received was after the fact.

What did the raid do to the Habib visit and to the President's efforts toward achieving stability in the Mideast? It is too early to tell. It is our hope that it will not affect the Habib mission. That is why we made it known from the outset that in no way were we involved nor did we have any prior knowledge of this particular incident.

Then it is still possible that in the end the US will shut off arms shipments to the Israelis as the result of this incident?

In this particular case it appears that planes sold to Israel by the US were used in the raid. That's what brings the Arms Export Control Act into the play.

And that act requires that if American-provided materiel has been used in a way that violates the agreements that are part of that act, then there is a requirement that further arms shipments be curtailed -- unless the President finds that it is the interests of our national security to wave that provision. That's part of the review that will be carried out.Between one and two weeks will probably be sufficient to complete that review.

How much does domestic politics enter into the President's decision now on how to deal with Israel?I'm speaking of the powerful lobby that pushes Israel's interests.

I think you have to view this not from the standpoint of domestic politics. We must ask, what is our responsibility in the world and what is required of the administration in our continuing relationship with the Congress?

The basis on which the President will act is what's best for maintaining world peace and how can he best carry out the requirements of the law.

How would you describe the President's reaction when he heard about the raid?

Well, I think the President was surprised. And concerned at this action -- which he expressed.

He condemned the action, didn't he?

He felt it was necessary that this nation condemn this action based upon the circumstances. At the same time our review is considering the justification that has been advanced by Israel.

Justification. You mean the threat Israel saw in Iraq building a bomb?

That's right. Well, one of the facts that hasn't been mentioned too often is that there is an actual state of war that exists between Iraq and israel. So there is a legal status there that at least has to be considered.

The President't meeting with the President of Mexico: How do you assess the results?

It was the continuation of the very good relationship that has already existed between the two presidents. A second achievement was the setting up of a formal mechanism . . . for the consideration of common problems between our two nations. Third, there was a commitment by both nations to a program of economic aid for Latin America. Fourth, there was a candid duscussion of a variety of problems such as immigration, such as trade. Also a dedication was expressed by both men to solve problems that existed in those fields.

Does the President have a firm position on how to deal with the immigrants from Mexico?

We had a commission that, as you know, reported last year, that has been working on immigration for quite some time. We've had our own task force reviewing that commission report and going beyond it to provide the President with a variety of options.

The President indicated to the Mexican President that he wanted to talk the situation over with him and also have our officials talk with Mexican officials before any decisions are made.

So our Cabinet will continue to consider the matter . . . and ultimately some decisions will be made -- I would say in the course of the next month or two months.

Before becoming President, Mr. Reagan indicated that he thought one possible source of oil for the US would come from Mexico. Is that back of his mind now -- of getting oil from Mexico? Is that a possibility now?

The specific subject of oil was not a major agenda item at this conference. It was discussed in passing. The President was more interested in how we could be helpful to the Mexican government in terms of developing their resources perhaps as much for use in Latin America as it would be in this country.

But the President and this administration have been very careful not to appear in any way to be attempting to exploit the energy resources of Mexico, which has been such a sore point in prior administrations.

How assured are you that you can get House support for your three-year, across-the-board tax cut?

We realize it will be a difficult task. But we certainly think it is doable. And we are cautiously optimistic of success.

How close are you?

There are 15 to 20 votes that we think are there among the conservative Democrats. And we will be looking for additional votes among Democrats. And we are looking, of course, to be sure we have all the Republicans.

What will the President, himself, do to assure this victory? A major address?

We haven't decided yet precisely what measures have to be taken. But he will be working very hard personally, as he has on all aspects of the economic recovery program.

How concerned is the President about the continued high interest rates?

The high interest rates are a matter of great concern and are one of the consequences of the serious economic situation we now have.

That is why it is so extremely necessary that all aspects of the economic recovery program -- the budget controls, the tax cut, and the regulatory reform -- all be passed. Because this will provide the economic revitalization that will lead to lower interest rates.

Where does the MX now stand -- as the President sees it?

A commission appointed by the secretary of defense is in the process of completing its report and recommendations. This should come to the President some time late in June or early next month, at which time then it will be reviewed by the Cabinet.

How about development of the neutron bomb?

The enhanced radiation warhead is also an issue which now is being looked at by the Department of Defense. And its recommendations will be considered by the President in the course of the next several months.