Nervous and embarrassed members of the Israeli establishment say they fear a retired general's involvement in an alleged attempt to smuggle U.S.-made weapons to Iran may further damage Israel's reputation in Washington, already tarnished by a spy scandal late last year.

Israeli officials moved quickly last week to dissociate themselves from the alleged plan -- considered implausible by many Israelis -- of Brig. Gen. Avraham Bar-Am and other Israelis detained Monday in Bermuda at the request of the U.S. government.

In all, 17 people, including American and West German nationals, were charged by federal prosecutors in New York with attempting to smuggle U.S.-made jet fighters and Israeli-made air-to-air missiles to Iran through other countries.

Menachem Merom, the Defense Ministry director general, immediately told the U.S. charge d'affaires here, Robert Flaten, that the Israeli government was not involved and had long ago stopped supplying war materiel to Iran in keeping with Washington's arms embargo in the Iranian-Iraqi war.

This prompt denial contrasted with the tortured silence and then partial acknowledgment -- 11 days after the arrest in Washington last November of Jonathan Jay Pollard -- that a special Israeli unit may have been conducting intelligence operations against the United States. Pollard, a civilian U.S. Navy intelligence analyst, was accused of spying for Israel and is awaiting trial.

Despite official and private disclaimers here, the Bar-Am scandal remains embarrassing because of Israel's long relationship with Iran, which officially extended well beyond shah Mohammed Reza Pahlavi's fall in 1979 and, according to some reports, may have involved clandestine arms shipments as late as last September.

Israel has a long record of helping anyone fighting Arab regimes, and for years it also attempted to improve conditions for the Jewish community in Tehran, which now is much reduced. It also reportedly hoped to aid Iranian officers trained by Israel under the shah in a possible overthrow of Iran's revolutionary regime -- but most of those are gone from Iran now or no longer in positions of authority.

In 1981 and 1983, according to French press accounts, Israel shipped spare parts for U.S. weaponry to Iran. Last Sept. 15, an Iranian DC8 cargo plane took off from Tabriz, Iran, and then landed in Israel, according to published reports. That incident sparked unconfirmed rumors that the Israeli military pipeline to Iran had reopened.

Some elements of the Israeli establishment -- including sources close to the Defense Ministry -- suggested U.S. Customs officials were picking on Israel. They noted that in December customs agents staged a much-publicized, but inconclusive, raid on three U.S. factories in a probe of Israel's acquisition of weapons technology.

Based on the incomplete version of the present case available here, many Israelis say they would like to believe that Bar-Am and amateurish associates never intended to deliver the promised arms to Iran.

Rather, it has been suggested by press accounts and Israeli sources, they intended to disappear after persuading their potential Iranian customer to make a sizable down payment.

Bolstering this version for knowledgeable Israelis was a number of what they saw as inconsistencies in the known elements of the case.

Among the U.S. aircraft the Israelis reportedly were offering for sale, for example, were F5s, which are not in Israel's arsenal, and F4s, the old workhorse of the Israeli Air Force now undergoing major refitting for a more powerful engine and improved electronics systems.

Similar doubts were expressed about Israel's willingness to part with so many of its own state-of-the-art Python missiles. Even if the Israeli government had been involved, specialists said, they doubted they could keep such a large-scale deal secret.

But beyond such technical considerations, specialists said that Bar-Am and his alleged Israeli associates, Guri Eisenberg and Israel Eisenberg, both described as sometime insurance agents, and William Northrop, an American living in Tel Aviv, were scarcely the kind of instruments that Israel would choose if the government had sought to skirt the U.S. arms embargo against Iran.

"The authorities would not use Israelis directly, they would not use an Israeli general, even retired, and they would not use that general," one specialist said.

Bar-Am, 52, a decorated 30-year Army veteran and war hero, was disciplined in 1978 and denied a new government position for having provided privately held, but unlicensed, weapons to unauthorized civilians rumored to be connected with the underworld.

Along with about 1,000 other retired senior officers, Bar-Am applied for, and was issued, an apparently routine Defense Ministry document authorizing the holders to prospect abroad for sales of Israeli arms but specifically banning their participation in actual negotiations.

Negotiations involving Israel's biggest export earner are handled by Defense Ministry personnel who Israeli specialists insist would never have cooperated in such a plan.

Sales are subject to close scrutiny by an interministerial committee including high-ranking civil servants and politicians as well as the military.

But the Bar-Am case has touched off editorials, including one in the daily Haaretz, calling for a review of such practices to calm U.S. public opinion.

Prof. Mordechai Abir, a Middle East studies specialist at Hebrew University with wide experience in government circles, said Bar-Am was typical of "a couple hundred disgruntled Israeli ex-generals around the world" trying to make a second career in arms sales after retirement.

"They have nice pensions," Abir said, "but nothing like the rank, authority and perks they enjoyed in the military. And they miss the limelight."

With the military budget slashed and 2,000 career soldiers retired in each of the past two years, "the opportunities for 'double-dipping' are much diminished," he added. Private industry, which once freely provided former senior officers with executive jobs, now reportedly is proving more selective.

But Bar-Am and other retired senior officers still can trade on their connections with the Israeli military. Bar-Am told Israeli reporters by telephone from Bermuda that friends in Mossad, one of Israel's most important intelligence organizations, had checked out the participants in the arms deal. The local press reported he also telephoned the Israeli military attache in Washington after his arrest.

"They can dial numbers that others do not have and get information," Abir added, referring to retired officers. "It's hard to turn down a battlefield friend, a one-time hero of Israel."

But because of similar problems with retired officers in recent years -- which apparently were kept quiet -- the Israeli government specifically warned that anyone caught defying the U.S. arms embargo against Iran could not expect help from "old school-tie buddies," Abir said.

In any case, Bar-Am has had worse luck than Rafael Eitan, the former deputy head of Mossad who was cashiered for his central role in the bureau that allegedly recruited Pollard.

The Jerusalem Post said last week, "Exemplifying the unwritten rule that Israeli spooks never fade away but end up in luxurious board rooms, Eitan retired into the lucrative chairmanship of Israel Chemicals, a job arranged by his patron," former defense minister Ariel Sharon, now minister of industry and trade.