The Gulf War poses serious risks to Israel, the nation's consul-general told a Harvard Business School audience yesterday.

Yakov Levy, describing a history of problems in the Middle East, told a crowd of more than 120 students that his main intent was "to show how complex the situation is."

Throughout the hour-long lecture, Levy said Israel's position has been made tenuous by its proximity to hostile Arab neighbors.

"Every nine, ten years, there is a war," Levy said. "Israel has a very small margin of error. If we make a mistake, we are risking a large portion of our population."

In the lecture--the Business School's third session on the crisis this academic year--Levy noted that six Arab states have technically been in a state of war with Israel since the last conflict in 1973. He called on Arab leaders to engage in a dialogue with their Israeli counterparts.

"Sharing the forum with me is recognizing the reality of Israel," he said. "If you confront the reality, then maybe you better come to terms with it."

Levy discussed past history before delving into the modern Arab-Israeli conflicts and the current Persian Gulf crisis. He stressed the importance of "the historical link with the land" which he said the Jewish people had established in biblical times.

Emphasizing the significance of "the existential threat" to Israel, Levy said this motivation accounted for the Israeli victories over numerically superior Arab forces in the four wars since the country's establishment in 1948.

"What [the Arabs] didn't factor in was the motivation of the Jewish people after 1900 years in exile to create a place of their own," he said.

"[The Arabs] were fighting to gain some territory," he added, referring specifically to the 1967 war. "The Israelis were fighting for their lives."

This "existential threat" has become particularly significant in light of the current crisis, Levy said.

"It comes home today with these SCUD attacks," he said, adding that the Iraqi threat of gas attacks was a deliberate attempt to recall the horror of the Holocaust.

"[The Iraqis] figure it would play well among certain radical Arab elements," Levy said. "It does."

Despite his criticisms, Levy stressed the importance of reconciling Israeli differences with both its Arab neighbors and the Palestinian people.

On the Palestinian question, Levy said Israel plans to hold elections among Palestinians in the West Bank and Gaza after the current crisis is over.

Although Levy said Israel hopes to open talks with the elected officials, he said Palestine Liberation Organization leader Yassir Arafat and his lieutenants are not legitimate representatives of the Palestine people.

But when a student asked Levy whether he would negotiate with Arafat if the Palestinian were elected, the consul-general was less than enthusiastic.

"We wouldn't speak to him," he said.