U.S. government sources confirm to NBC News that the Israeli diplomat suspected of receiving U.S. secrets is Naor Gilon — political advisor to the Israeli embassy in Washington.
Gilon was already under surveillance by the FBI when he was reportedly spotted at a meeting with Pentagon analyst Larry Franklin, who's under investigation for possibly passing classified information to the Israelis on the Bush administration's policy debate over Iran.
At least two members of the American Israel Public Affairs Committee (AIPAC) — a pro-Israel lobby group — are also under investigation. Armed with a search warrant, the FBI seized documents and e-mail records from AIPAC headquarters in Washington last week.
"The allegations are baseless, they're false. They're based on speculation and we haven't heard anything official from the administration on this," says Israeli spokesman David Segal.
But why might Israel spy on the U.S.?
Gilon is also identified as a specialist on Iran's nuclear program. Iran's recent announcement it was resuming enrichment of uranium, and its potential to produce nuclear weapons is of grave concern to both Israel and the U.S.
But experts say Israel fears that, ultimately, the U.S. won't be tough enough in attempting to halt any possible weapons production.
"Or they won't know exactly what the U.S. government is deciding to do, and so it may want to conduct espionage just to hedge its bets," says former U.N. weapons inspector David Albright.
Government sources tell NBC News if the FBI determines the Israeli diplomat Gilon did illegally accept classified information he could be declared "persona non grata" and ordered to leave the U.S.
Defense analyst Larry Franklin is cooperating with federal investigators, and sources say the government may be willing to accept a plea bargain in exchange.
The cases for Franklin and the two AIPAC members could go before a federal grand jury next week.
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