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The CIA yesterday presented an annual report to the U.S. Senate in which the American intelligence agency said it "remains concerned about Syria's intentions regarding nuclear weapons."

The report, published as a declassified summary, says that "Syria maintains a ballistic missile and rocket force of hundreds of FROG rockets, Scuds, and SS-21 SRBMs. With considerable foreign assistance, Syria progressed to Scud production using primarily locally manufactured parts. Syrian regional concerns may lead Damascus to seek a longer range ballistic missile capability such as North Korea's No Dong medium range ballistic missile."

The U.S. intelligence comunity, says the report "believes Iraq has retained a small, covert force of Scud-type missiles, launchers, and Scud-specific production equipment and support apparatus. For the next several years at least, Iraq's ballistic missile initiatives probably will focus on reconstituting its pre-Gulf war capabilities to threaten regional targets."

"With substantial foreign assistance, Baghdad could flight-test a domestic mid-range missile by the middle of the decade," says the report, explaining that without international monitoring, and with help from Russia, China and North Korea, Iraq could renew its capabilities as they existed in 1991, before Desert Storm. New, liquid fuel al-Samud missiles, with ranges up to 150 kilometers, will soon be deployed in Iraq, and Baghdad could extend their range, says the report.

According to the CIA, the Iranian-developed Shihab-3, based on the North Korean No Dong missile, is in advanced stages of development, and Iran could launch it during a conflict. Its range, 1,300 kilometers, puts it within reach of Israel. The American intelligence community says that Iran still doesn't have a nuclear capability, but could have one by the end of the decade - or sooner, if it gets foreign help.

The American intelligence estimate is less foreboding than the one voiced by Defense Minister Benjamin Ben-Eliezer last week in a speech to the Council for Peace and Security, an organization of former senior officers in Israel's defense establishment. He said that he sees "a gradual move from the threat of conventional warfare to non-conventional warfare, which is turning realistic, worrisome and significant. So far, we've dealt with the nuclear weapons only as a theoretical threat, far from us, but around 2005 Iran will have nuclear capabilities that will threaten us, the region and possibly the entire world's security. Iran unceasingly supports terror organizations and we assume that getting nuclear weapons will increase its support for terror and for regional violence."

According to Ben-Eliezer, the "new alliance" between Iran, Hezbollah and the Palestinian Authority is the worrying issue exposed by the Karine A weapons ship episode. The defense minister believes that this new development is even more important than the personal involvement of the PA Chairman Yasser Arafat in the weapons smuggling scheme. He said if the PA had used the weapons found on the ship it would have changed the fighting from a limited conflict, to something much wider.

"Behind the smuggling attempt was cooperation between the PA, Iran and Hezbollah," said Ben-Eliezer, "and the latter two are strategic threats to Israel. The ship incident proves the potential of regional threats from their most significant source."

Since last week's capture of the ship, the intelligence community has accumulated evidence of the involvement of Hezbollah activist Imad Mugniyah, on the U.S. most wanted terrorist list, in the Karine A affair. Mugniyah is connected to the Iranian organization involved in foreign terror attacks, and is wanted by the U.S. for his involvement in airline hijackings.