JERUSALEM, Feb 11 (Reuters) - After decades of worrying about whether the Arab world would try to catch up with its nuclear capabilities, Israel may finally be facing the potential arms race it feared -- triggered by arch-foe Iran.
A slew of Arab nations, from North Africa to the Gulf, have declared recently they want to pursue peaceful nuclear energy programmes. Analysts say some may also be responding to Iran's perceived drive for atomic bombs, an ambition Tehran denies.
Israel could react in different ways to the new uncertainty about nuclear proliferation in its neighbourhood, experts say.
Some see the Jewish state opting to declare its own assumed arsenal in a bid to keep its strategic edge. Others suggest this could be a chance for sweeping curbs on weaponry, and perhaps even a nuclear-weapons free Middle East.
"What we are witnessing, the prospect of Iran and Arab states having a 'bomb in the basement', is a major change. From an Israeli perspective, it raises very serious questions," said Avner Cohen, author of the study "Israel and the Bomb".
For now, Israel seems in no rush to abandon a prized nuclear secrecy policy which, it argues, has allowed it to deter its enemies while avoiding the sort of public provocations that might have dragged them into a nuclear arms race.
Though two of the aspiring Arab nuclear powers, Egypt and Jordan, have now made peace with Israel and the rest look unlikely to go to war, this falls short of the regional calm that Israeli officials say must precede any strategic review.
Vice Premier Shimon Peres, Israel's atomic architect, recognised that some Arab states like Jordan could benefit from nuclear power as an alternative to oil but said they would meet big hurdles in terms of funding and mandatory foreign oversight.
"If Arab nations want to develop nuclear fuel for peaceful ends, they should do it within in the framework of international law. It's not something that could happen from one day to the next. It's not a problem," Peres told Reuters in an interview.
He described the Arabs as less of a threat to Israel than Iran, which says its nuclear programme is purely civilian but whose president has stirred war fears by urging that the Jewish state be "wiped off the map" and denying the Holocaust happened.
"Sane people do not cultivate the idea of a nuclear war," Peres said, adding that Israel must maintain good relations with moderate Arab nations and Western powers acting against Iran.
"Israel also has to preserve its restraint," Peres added, in apparent reference to the "ambiguity" policy he masterminded.
A FAREWELL TO ARMS?
Israel, which destroyed Iraq's atomic reactor in a 1981 air strike, has said it will not tolerate a nuclear-armed Iran.
But Israeli leaders have made clear that for now, the Jewish state is counting on its main ally, the United States, and Western nations to find a diplomatic solution.
Independent analysts say Israel will eventually come under pressure to accept more open regulation of its capabilities to allay any temptation by future nuclear-powered Arab states to pursue back-channel projects for bomb-making.
"If Egypt and other nations do expand their nuclear infrastructure, the question will arise of whether there are things Israel could do to help them decide to forgo enrichment and reprocessing," said Mark Fitzpatrick, non-proliferation scholar at the International Institute for Strategic Studies.
"I think it would have to be something in the area of arms control," Fitzpatrick said. He noted that if Israel were to decide it had enough bomb-grade plutonium reserves, shutting down its main nuclear reactor could be a strong bargaining chip.
But Fitzpatrick said such limited moves may be unacceptable to the Arab world, which has long perceived a double standard in the tacit Western acceptance of Israel's refusal to join the Non-Proliferation Treaty and admit foreign nuclear inspectors.
Gary Samore, a non-proliferation expert and vice president at the Council of Foreign Relations in New York, agreed.
"There is no doubt that if Iran develops nuclear weapons, the Arab countries led by Egypt will argue that the solution is a regional arms control agreement which will require Israel to give up its nuclear weapons," he said.
Cohen spoke in favour of such a proposal but said it would only be feasible in the broader context of regional peace talks: "At the end of the day, it is better that nobody has nuclear weapons, including Israel, than everybody having them."
But both Cohen and Samore noted that, with Iran and some Arabs adamant on not recognising Israel, the delicate diplomacy and mutual trust required for a major arms pact would be almost unachievable.
Samore said Israel should stay the course and hope Iran's nuclear plans can be stalled in time to prevent an arms race.
"It's important for Israel to continue to maintain its policy of ambiguity. If Israel were to openly announce or demonstrate its nuclear capacity, I think that would significantly increase the pressure on the Arabs," Samore said.
A senior Israeli defence official, speaking on condition of anonymity, said that if Israel lost its nuclear monopoly "this could mean a major shift in our policymaking. But for now, the main priority is to prevent Iran from getting the bomb."
