A Senate Foreign Relations Committee member yesterday called on special Middle East envoy Philip C. Habib to resign because of his employment as a paid consultant to the Bechtel Group Inc., a construction firm that has major business dealings with Arab countries.
Sen. Larry Pressler (R-S.D.) said Habib "cannot be effective now that it has been revealed he is a paid consultant to Bechtel; even resigning the consultancy would not be sufficient."
The White House quickly rejected the resignation call and expressed "full confidence in Mr. Habib and in the work he is performing for us" in the Middle East. "Any implication of a conflict is absurd," assistant White House press secretary Anson Franklin said.
In Jerusalem, Washington Post correspondent Edward Walsh reported that Israeli leaders showed no concern about the Habib-Bechtel connection. "I don't think we in Israel look at Habib in a different light because of this," Walsh quoted one Israeli official as saying. "No doubt Phil Habib is sincere in his efforts and he will continue to receive any help we can give him."
Pressler yesterday sent a telegram calling for Habib's resignation to Secretary of State George P. Shultz, the former president of Bechtel, and another to Senate Foreign Relations Committee Chairman Charles H. Percy (R-Ill.). Pressler called for hearings on the Habib-Bechtel relationship and on the influence of international conglomerates such as Bechtel on U.S. foreign policy.
There was no immediate response to either telegram. A Percy spokeman said the senator was out of town and had not seen it; a State Department spokesman said there was no official comment.
However, one senior State Department official said yesterday he saw "no problems" in Habib continuing as special envoy and added that he had "endangered his health" and given up thousands of dollars in potential consultant fees by accepting the assignment as Middle East envoy.
Pressler said yesterday he felt "betrayed" that Shultz did not mention the Habib consultancy when he was questioned about the influence of Bechtel on government policy during Shultz' confirmation hearings two weeks ago.
"It never occurred to me to ask specifically if Phil Habib has a relationship with Bechtel, but surely it must have crossed Mr. Shultz' mind that that information was of interest to us," he said.
The senator said that Bechtel has lobbied over the years for a pro-Arab tilt to American foreign policy, most recently with its efforts last year in support of the sale of airborne warning and control system (AWACS) equipment to Saudi Arabia, a country with which Bechtel has multibillion-dollar construction and engineering contracts.
In addition to Shultz and Habib, two other key administration figures had Bechtel connections: Defense Secretary Caspar W. Weinberger and deputy energy secretary W. Kenneth Davis, both of whom are former Bechtel executives.
Habib's situation is different from that of the other three. Unlike the others, he is a private citizen, hired by the government on a contract basis. And unlike the others, he is maintaining an active financial relationship with Bechtel.
Company spokesmen have declined to comment on how much Habib is paid for his services, saying only that the sum is "very minimal." A spokesman said yesterday that Habib was personally hired last year by his old friend, Shultz, and that he was to give advice on dealings with countries in the Pacific basin, where Bechtel also has major contracts.
Pressler said yesterday that Habib still is covered by administrative statutes calling for anyone in government service to avoid the "appearance of a conflict of interest," as well as a conflict itself.
Habib apparently has chosen not to take certain private consultancies while he is negotiating for the administration during the Lebanon crisis, but to continue others and take on still others.
In May, Habib was elected to the board of directors of Pacific Resources Inc., a Hawaii-based energy company that last year signed an agreement in principle with the Kuwait Petroleum Corp., the national oil concern of Kuwait, to develop an equally owned, joint energy-related venture in the Pacific Basin.
At the time Habib accepted the directorship, which pays $2,000 quarterly plus $500 for each meeting, he was not on the government payroll. His episodic Middle East shuttle diplomacy tailed off earlier this year and did not resume until Israel invaded Lebanon in June.