This is by an Israeli writer in antiwar.com The whole article is well worth reading.
I am not sure that there was a divergence of policy in Israel arming Iran while US armed Iraq and Hussein. It was more a division of arms markets.
Napoleon said that to understand a country's policy, one has only to look at the map.
If we do this, we shall see that there is no objective reason for war between Israel and Iran. On the contrary, for a long time it was believed in Jerusalem that the two countries were natural allies.
David Ben-Gurion advocated an "alliance of the periphery." He was convinced that the entire Arab world is the natural enemy of Israel, and that, therefore, allies should be sought on the fringes of the Arab world – Turkey, Iran, Ethiopia, Chad, etc. (He also looked for allies inside the Arab world – communities that are not Sunni-Arab, such as the Maronites, the Copts, the Kurds, the Shi'ites, and others.)
At the time of the shah, very close connections existed between Iran and Israel, some positive, some negative, some outright sinister. The shah helped to build a pipeline from Eilat to Askelon, in order to transport Iranian oil to the Mediterranean, bypassing the Suez Canal. Israel's internal secret service (Shabak) trained its notorious Iranian counterpart (Savak). Israelis and Iranians acted together in Iraqi Kurdistan, helping the Kurds against their Sunni-Arab oppressors.
The Khomeini revolution did not, in the beginning, put an end to this alliance, it only drove it underground. During the Iran-Iraq war, Israel supplied Iran with arms, on the assumption that anyone fighting Arabs is our friend. At the same time, the Americans supplied arms to Saddam Hussein – one of the rare instances of a clear divergence between Washington and Jerusalem. This was bridged in the Iran-Contra Affair, when the Americans helped Israel to sell arms to the ayatollahs.
Today, an ideological struggle is raging between the two countries, but it is mainly fought out on the rhetorical and demagogical level. I dare to say that Ahmadinejad doesn't give a fig for the Israeli-Palestinian conflict, he only uses it to make friends in the Arab world. If I were a Palestinian, I would not rely on it. Sooner or later, geography will tell and Israeli-Iranian relations will return to what they were – hopefully on a far more positive basis.
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