Arafat murder was foiled by Malta killing

Death in Valletta: When the Islamic Jihad chief was shot, he and Iranian agents had been planning assassination of the PLO 'traitor'

Fathi Shkaki, leader of the militant Palestinian Islamic Jihad organisation, who was shot dead in Malta in October, had just met a senior Iranian envoy in Libya to discuss the assassination of Yasser Arafat, the chairman of the PLO.

Iran believes the PLO passed details of Shkaki's travel plans and false passport to Israel, which then arranged for him to be killed outside his hotel in Valletta, a source with access to Iranian intelligence has told the Independent.

Shkaki, whose group has carried out a series of suicide bombings against Israeli targets, was based in Damascus. In October he went to Libya, where he met Hussein Shaikholeslam, Iranian deputy minister for foreign affairs with responsibility for the Arab world, who is also believed to be deputy head of Iranian intelligence.

The source says they discussed the murder of Mr Arafat, hated by Iran and Islamic Jihad for his co-operation with Israel and the US in signing the Oslo peace accords. It is not clear that Libya was aware of what they were discussing, though Muammar Gaddafi, the Libyan leader, is opposed to Oslo and recently started to expel 30,000 Palestinians from Libya to put pressure on the PLO.

Mr Shaikholeslam has long played an important role in Iranian covert operations. He was a leader in the takeover of the US embassy in Tehran in 1979. In 1983 US intelligence believed he helped to organise the suicide truck bomb which killed 241 American Marines in Beirut. He is the liaison between the foreign ministry and the Vezarat-e-Ettelat, or information ministry, which is in fact Iranian intelligence.

There was a good reason why Shkaki and Mr Shaikholeslam chose to meet in Libya. Islamic Jihad has its headquarters in Damascus, but is closely watched by Syrian intelligence. Iran, although allied to Syria, fears Syria will start negotiations with Israel. Col Gaddafi, on the other hand, allowed Abu Nidal to use Libya as a base when he had Abu Iyad, Mr Arafat's chief lieutenant, assassinated in 1991.

On the morning of 26 October Shkaki returned by ship to Malta from Libya. He may have travelled with Mr Shaikholeslam, who later lamented on Iranian radio that Shkaki had decided to break his journey in Malta at the last moment. He was wearing a wig, had shaved off his beard and had a forged Libya passport in the name of Ibrahim Dawish. He took a room in the Diplomat hotel in a suburb of Valletta, where he had stayed before.

Soon after he checked in, Shkaki went out to some local shops to buy shirts for his children, according to a Maltese police investigation. On his return two men were waiting for him on a motorcycle, one of whom walked up to him and shot him six times in the head. As Shkaki fell, his assassin jumped on to the motorcycle, which was driven off and was found abandoned under a bridge by the jetty of a yacht harbour. Investigators believe the killers were taken off by boat.

Mossad, the Israeli external intelligence organisation, does not lay claim to assassinations, but was widely assumed in Israel to be behind the killing. Ephraim Sneh, the Health Minister, came close to admitting it.

Could PLO intelligence have tipped off Mossad about the whereabouts of Shkaki, as the Iranians believe?

Mossad had reportedly been looking to kill Islamic Jihad leaders ever since two of its suicide bombers killed 21 Israeli soldiers at Beit Lid in Israel in January. Israel also has every reason to try to keep Mr Arafat alive, since the implementation of the Oslo accords depends on his survival. For the same reason Islamic Jihad and the Iranian leadership, who see Oslo as a betrayal of the Palestinians, have a good reason to kill the PLO chairman.

Once relations were warmer. After the overthrow of the Shah by Ayatollah Khomeini in 1979 Mr Arafat was the first foreign leader to be received by the revolutionaries in Tehran. He said: "Every Iranian freedom fighter is represented in the Palestinian revolution."

But Mr Arafat was neither militant nor Islamic enough for the alliance to last. By March this year he was accusing Iran and Syria of fomenting trouble in the Middle East and creating unrest for the Palestinian authority, now established in Gaza and Jericho.

He warned Iran "to stop supporting terrorists" and said: "Your oil, your money and your bombs will not open the smallest footpath for you on one centimetre of Palestinian soil."

Mr Arafat's security forces were also putting pressure on Islamic Jihad in Gaza and were being accused of collaborating with the Israelis. On the West Bank, Jibril Rajoub, head of Palestinian Preventive Security, based in Jericho, has notoriously cordial relations with the Israeli Shin Bet domestic security service. In October the second stage of the Oslo agreement was signed by Mr Arafat and Yitzhak Rabin. The peace deal was becoming irreversible.

Iran was distraught at the death of Shkaki. He was their closest ally among the Palestinians and considered a "son" of the Islamic revolution. He had written a book entitled: Khomeini, the Alternative Solution. He said once that when the Iranian revolution succeeded "I realised that Islam could overcome even a country like the United States". There are Jihad training camps near Qom, 100 miles south of Tehran.

When Shkaki's death was confirmed, Iran declared a day of mourning and the radio news was devoted entirely to tributes to him. On 1 November there were marches with slogans in praise of the dead Jihad leader and against Zionism, the US and Mr Arafat. When Rabin was assassinated three days later, Iranian radio said: "While Arafat said he was shocked by the news of Rabin's assassination, Palestinian people rejoiced, distributed sweetmeats, thanked God and danced."

The source close to Iranian intelligence says it is still intent on promoting Mr Arafat's assassination. It has talked with Ahmed Jibril, head of the Popular Front for the Liberation of Palestine-General Command, which has long had offices in Tehran. Jihad launched two failed suicide bomb attacks against Israeli targets in the Gaza Strip soon after its leader died but has since been silent. The organisation was small and very much a one- man band under Shkaki, so it may be severely disrupted by his death.

Mr Arafat, who has heard reports of Iranian plans to assassinate him, said mildly in an interview with the Independent in Gaza that "a large majority of the Iranians are supporting the Palestinian people". He reminded Iranian leaders that he had supported them in the past, adding: "No one can affect the Palestinian independent decision. It belongs only to the Palestinian people."