WASHINGTON (AP) _ An independent counsel investigating Attorney General Edwin Meese III is focusing on a $1 billion Iraqi oil pipeline project, calling a former National Security Council aide as a witness before a federal grand jury.

NSC aide David Wigg, a central figure in discussions of the proposed pipeline, went before the grand jury for both morning and afternoon sessions Thursday in the criminal investigation of Meese being conducted by independent counsel James McKay.

In the fall of 1985, Wigg was designated by then-national security adviser Robert McFarlane to expedite the project. The proposed pipeline was foundering over Iraq's desire for an insurance package. Iraq feared that Israel, its enemy for four decades, would destroy the project.

Wigg was involved in late 1985 in a plan, which was never approved, to use Pentagon budget money to ensure that Israel would not attack the proposed pipeline. Meese said last week through his lawyers that he had known nothing of the idea.

McKay's probe is focusing on a 1985 memo to Meese written by his longtime friend E. Robert Wallach which mentioned that a portion of up to $700 million from the pipeline would be paid directly to the Israeli Labor Party of then- Prime Minister Shimon Peres.

Wallach was representing one of the project's partners, Swiss oilman Bruce Rappaport, who has close ties to Peres.

Peres says that Rappaport offered Israel a $65 million to $70 million a year discount on oil purchases but says he didn't take the idea seriously and didn't inform other government officials. Peres denies that Rappaport proposed paying part of the money to the Labor Party.

The pipeline, to have been constructed by San Francisco-based Bechtel Group Inc., was never built.

McKay is investigating whether Meese may have violated the Foreign Corrupt Practices Act which makes it a crime for U.S. citizens, companies or their agents to bribe foreign officials for help in business matters and authorizes the attorney general to file suit to block such practices. Meese says he doesn't recall reading the portion of Wallach's memo pertaining to Labor Party payments.

Wigg now is a deputy assistant secretary for policy analysis in the Pentagon.