A leader of the pro-Iranian Hezbollah group acknowledged his men are holding kidnapped Marine Lt. Col. William Higgins, but he rejected U.N. demands for the American's release.

"Higgins' presence in southern Lebanon constituted one of the most dangerous schemes against our struggle," said Sheikh Abbas Al Musawi, a key figure among Lebanese Shiite clergymen guiding the Hezbollah. "We consider abducting that agent as part of defending our nation."Musawi's comments constituted an acknowledgment that the Iranian-inspired, Shiite Moslem militia group is holding Higgins.

The "Higgins affair is linked to our struggle against the Israeli enemy, combating American bases and presence in the region," Musawi said in apparent reference to the U.S. military deployment in the Persian Gulf, where Iran and Iraq have been fighting for nearly eight years.

"The case of Higgins is also related to American intelligence activities against our Moslem strugglers in southern Lebanon," the bearded fundamentalist clergyman told a rally in the Shiite village of Mashghara, 19 miles southeast of Beirut.

In his response to a call by the U.N. Security Council on Friday to release him, Musawi said that "according to American media reports," Higgins was spying on Hezbollah's activities in the south.

Higgins, 43, was commander of the 75-member U.N. Truce Observation Organization when he was kidnapped Feb. 18 near the port city of Tyre in southern Lebanon. He was snatched from a U.N. vehicle after a meeting with officials of Hezbollah's rival pro-Syrian Amal militia group in Tyre.

The clandestine Organization of Oppressed People on Earth, believed to be a faction of Hezbollah, claimed responsibility for the abduction of Higgins and charged that he spied for the CIA in southern Lebanon.

U.S. officials have denied on several occasions the charges that Higgins was a spy, describing the allegations as "nonsense."