The proof, they say, was found in files confiscated during raids earlier this year on the headquarters of Palestinian leader Yasir Arafat and gleaned from prisoner interrogations.
The Israelis captured tens of thousands of documents when they bulldozed into Arafat's compound in Ramallah in March. "It's basically all of their files, all of their documents. Everything that we could take out," says Col. Miri Eisen, a senior intelligence officer in the Israeli Army who oversees analysis of the documents the Israelis rolled up and carted away from Yassir Arafat's government.
The documents, obtained from the Ramallah compound earlier this year, are from the Palestinian Authority's most secret files, says Eisen. "We went into what is the equivalent of the Palestinian CIA, the Palestinian FBI, the Bureau of Education, the Treasury," Eisen tells Stahl. "We've taken their database."
Iraq has been infiltrating teams of operatives and weapons into Israel for what Israeli intelligence considers "mega-terrorism." This puts Iraq in the terror business to a far greater degree than the Israeli's had realized.
Ido Hecht, a senior Israeli intelligence official, says that the Israelis have caught and interrogated members of a Palestinian terrorist cell who admit they were trained by Iraqis this past June at a base near Tikrit, Saddam's home town and a Republican Guard installation.
The training included use of firearms, including shoulder-launched anti-aircraft missiles, equivalent to the American Stinger S-18.
"Ben Gurion is a civilian airport," he said. "So, the obvious target would be a civilian airliner." The Israelis say the cell was recruited by Abu Abbas, the notorious terrorist responsible for the 1985 hijacking of the Italian cruise ship Achille Lauro during which an American traveler was murdered.
Abbas' group, based in Baghdad, was recently reactivated by Saddam Hussein, say the Israelis, adding that there are documents showing that Arafat approved payments to members of Abbas' group operating in the West Bank.
The Israelis say they also have learned that the Palestinian Authority is earning kickbacks by illegally selling smuggled Iraqi oil. Israel believes that Palestinian officials are using the kickback money to help buy weapons like those confiscated from the freighter Karine A last January, including two tons of C-4 plastic explosive.
Those weapons and explosives, say the Israelis, come from Iran. Additional documents show how Iran is helping to finance terrorist organizations operating inside Israel. Some of those terrorists have been captured, say the Israelis, and they admit an Iranian connection. "We have been interrogating hundreds, thousands of Palestinians from April of this year, and talking to them, says Eisen. "We've found some that have been trained in Iran."
Major General Benny Gantz, head of Israel's Northern Command, claims Iran funds, equips, and trains Hezbollah, and tells it what to do. He says Iranians are even operating in the border between Israelk and southern Lebanon.
"A few weeks ago we had Iranian patrols, you know like supervisors or experts that came with Hezbollah and patrolled the entire area from the mountain to the ocean, along the border, Gantz says.
Eisen showed Stahl a document from Arafat's files about meetings of terrorist groups in late October, 2001, just six weeks after the terrorist attacks on the U.S. They were planning is a diversion from what happened at the World Trade Center and at the Pentagon to the violence in Israel.
Iran sent a message telling the groups you "must not allow a calming down at this period…carry out suicide attacks against Israeli targets in Gaza, in the West Bank and inside Israel."
Israeli intelligence continues to mine their treasure of Arafat's database, and to keep the Bush Administration informed. In fact, Israeli intelligence officers were at the White House just this week to brief the Administration.
In those meetings, Israelis also shared evidence about contacts" between al-Qaeda and senior members of Saddam's Ba'ath party and a threat from another Libya. They say Libya is getting close to having chemical weapons and the long-range missiles that deliver them.