Much to Washington's discomfort, Iran's influence may prove the key to avoiding the sectarian disintegration of Iraq. However, this will be hard to square with Tehran's nuclear program and Israel's counter threat of unilateral military action, while a US military strike could stir up Shi'ite passions across the region. Kate Dourian investigates.

Trace a curved line from Iran, through Iraq and down across the abundant oilfields of Saudi Arabia's Eastern Province and you would draw a perfect crescent. Some commentators called it the "Shi'ite Crescent" and predict that it could take on a more meaningful political identity if Iraq disintegrates along sectarian lines. The predominantly Shi'ite Islamic Republic of Iran would be in the ascendant amongst the troika of Middle Eastern oil producing giants.

Fear of Iranian dominance among the mainly Sunni Muslim-dominated Arab Gulf states has shaped policy in the region for decades. It is why the Saudi-led Gulf Cooperation Council countries banded together to oppose Tehran when the now disgraced Iraqi president, Saddam Hussein, marched against Iran in 1980. It is also why they fear the break-up of a post-war Iraq, where the Shi'ite majority has taken power following the fall of Hussein's minority Sunni Muslim regime, but where the political situation remains unstable.

Iyad Allawi, the former Iraq prime minister, calls it civil war. "It is unfortunate that we are in civil war," said Allawi on BBC television March 19, the eve of the third anniversary of the US-led invasion that overthrew Hussein. His remarks were rebutted by Iraq's Kurdish president and by US President George Bush on March 22, but with the body count in Iraq rising by the day, Arab analysts back Allawi's prognosis.

"We are losing each day an average 50 to 60 people throughout the country, if not more. If this is not civil war, then God knows what civil war is," Allawi told the BBC. "Maybe we have not reached the point of no return yet, but we are moving towards this point...It will not only fall apart, but sectarianism will spread throughout the region -- and even Europe and the United States would not be spared all the violence that may occur as a result of sectarian problems in this region."

The fragmentation scenario would have Iraq's three main cities -- Baghdad in the center, Basra in the south and Mosul in the north -- serve as capitals of Iraq's three main provinces, which would divide the country along sectarian lines. The Shi'ites would rule the south and control the vast Basra oilfield; the Kurds would have control of the northern territories and the Kirkuk oilfield and the Sunnis would rule in a weakened center with hardly any energy resources at all.

Unlikely bedfellows One analyst writing in an Arab newspaper says it is a mistake to pronounce US policy a failure because the policy of divide and rule may have been the original purpose of the invasion. But this does not explain US and Iranian moves towards dialogue over Iraq, a development that some Sunni Muslims in Iraq have condemned as interference in their country's internal affairs and which prominent Arabist Patrick Seale says is certain to be opposed by Israel, which he believes has long feared that the escalation of the nuclear issue would lead to this.

The US, putting its row with Iran over the latter's nuclear program in a separate compartment, is looking to negotiate a deal with Tehran whereby the Iranian government would convince Iraq's Shi'ite Muslims to come to an agreement with the Sunnis and create a national unity government in Baghdad. This would avert the catastrophic disintegration of a nation formerly held together by a dictator. No firm date has been set for the talks.

Shi'ite Petrolistan

Iraq has held two general elections since the end of the US-led war of March 2003, but its estimated 23 million people have yet to see a peaceful resolution to the sectarian strife that plagues the Arab oil-producing state. The London-based think-tank, Chatham House, in September 2004, published what may prove to be a prescient report in which its authors predicted that the fragmentation of Iraq could potentially lead to the creation of a Shi'ite Muslim controlled "Petrolistan" in the Gulf and turn oil power Saudi Arabia into a "cauldron of tensions, hatreds and divisions."

Entitled Iraq in transition, the report was written by a distinguished group of specialists working under the institute's umbrella. It considers the prospect of the emergence of a significantly more assertive Shi'ite power in Iraq, saying that "increased unity with their ideological brothers in the region would have serious implications for Saudi Arabia."

The report argues that, "the Shi'ites could awake to the geographical accident that has placed the world's major oil supplies in areas where they form a majority -- Iran, Bahrain, the Eastern Province of Saudi Arabia and southern Iraq _ a powerful Commonwealth of Petrolistan. From being the region's losers of the last few decades, the Shi'ites could now redress the balance, settle old scores and control the wealth of Petrolistan. This struggle could be long and bloody."

This is why Riyadh fears a nuclear bomb in the hands of hard-line Iranian president Mahmoud Ahmadinejad and why Saudi Arabia is said to be engaged in highly secret talks with Iran to try and defuse the crisis.

Military conundrum

Tehran, which has resumed its uranium enrichment program, insists that it is developing nuclear power for peaceful purposes, but its intentions have been questioned by the United States and its allies, who fear it wants to build a nuclear arsenal. The case has been referred to the UN Security Council, which may vote to impose sanctions, although an oil embargo is not expected.

Washington-based analysts PFC Energy said in a recent report on Iran that the Pentagon was drawing up contingency plans to attack Iranian nuclear sites, but that a military strike was likely to prompt Tehran into a backlash in the Gulf targeted at US forces in Iraq and assets in Qatar. The March 9 report said the world body is expected to adopt an "escalatory approach," giving Iran a chance to yield at each stage, rather than impose sanctions outright and risk opposition from Russia and China. Contingency plans were being draw up by the Pentagon for a "large scale" air campaign targeting key nuclear installations, and US hawks, notably Washington's permanent representative to the UN, John Bolton, have hinted that the use of force remains a possibility.

PFC said that were the White House to opt for a military solution, it would do so without backing from its international allies. "Moreover, it would risk an Iranian backlash in the Gulf targeted almost certainly against US forces in Iraq, as well as assets in Qatar, Bahrain and the United Arab Emirates. Military action would also probably accelerate any Iranian nuclear weapon program in the longer term."

Claims by the US envoy to the International Atomic Energy Authority that Iran has enough weapon-grade uranium to produce 10 small bombs are incorrect and most analysts agree that Iran will not be able to produce a nuclear weapon within five years at the earliest, PFC said. However, the next six to 12 months are crucial if "weaponization" is Iran's goal, it said.

"During that time, it could acquire the necessary high-level enrichment technology needed eventually to go nuclear," said PFC, adding that this explains the urgency for the US and European governments to find a solution. Washington is also aware that the Israeli government has made it clear that if the international community does not act before Iran acquires this expertise, it would act unilaterally, a move the US wants to avoid.

Bush said on March 20 that he hoped to resolve the nuclear dispute with Iran with diplomacy, but warned Tehran he would "use military might" if necessary to defend Israel. "The threat from Iran is, of course, their stated objective to destroy our strong ally Israel. That's a threat, a serious threat. It's a threat to world peace," the US president said after a speech defending the war in Iraq. "I made it clear, and I'll make it clear again, that we will use military might to protect our ally Israel," said Bush, who was apparently referring to Ahmadinejad's call for the destruction of Israel.

These types of remarks make the Arab states uneasy. They do not want to see a nuclear Iran dominant in the Middle East, but nor do they want Israel given the type of unqualified US backing which makes it easy for Tel Aviv to act with impunity against Palestinian Arabs.

PFC, which published its report before Bush made his latest remarks, said that while military action is by no means inevitable, there are certain factors that would influence a decision to go to war against Iran. Once US congressional mid-term elections are out of the way and an expected drawdown of forces from Iraq begins later this year, "the White House may perceive fewer domestic constraints to the use of force in the event all other options have failed. The Bush administration is certainly likely to find military force more palatable than relying on Tehran's word that its program is designed for civilian purposes," PFC said.

Iranian dominance

The bombing of the Golden Mosque shrine, revered by Shi'ite Muslims, was a watershed for sectarian relations in Iraq. The region's Arabs fear that Iraq's Shi'ites will turn to Tehran for protection, which they feel the US military is unable to provide. Prominent Arab commentator Jihad al-Khazen said in an editorial in the pan-Arab daily al-Hayat on March 8 that the US invasion of Iraq and the destruction of the Afghan Taliban, had worked in Iran's favor. ". . . the Bush administration made [Iran] stronger by destroying its two enemies, the Taliban to the east and Saddam Hussein to the west, and then by giving them enormous influence in Iraq..." said Khazen.

"Were the US to attack Iran's nuclear installations, president Mahmoud Ahmadinejad would be able to mobilize Iran's supporters within Iran itself, in Iraq, Syria and the Hizbollah (pro-Iranian movement) in Lebanon and in the Gulf," said Khazen, while noting that it was not as if Iran had any warheads that threatened the US.

One Gulf oil official, speaking privately, says that Iran has the capacity to disrupt crude oil supplies from Iraq through the Shatt al-Arab waterway, if attacked. That, incidentally, is the same waterway that forms the southernmost border between the two OPEC states, over which Saddam Hussein went to war against Iran in a bid to control his access to the Persian Gulf.

Although Arab commentators see a double standard in that Israel is known to have nuclear warheads hidden in its desert, while not being a signatory to the nuclear non-proliferation treaty, they fear being caught between two nuclear powers if Iran were to develop its own nuclear arsenal. Nor do they want to see a non-Arab state become the dominant power in the Middle East.

An editorial in the Saudi-owned al-Hayat late last year captured the true feelings of the Gulf Arab states when it said that a hard-line Iran could not be trusted with nuclear weapons nor did they appreciate talk by Ahmadinejad of exporting his revolution beyond Iran's borders. "There is no doubt that Iran is a big power in its region and it has a right to be treated appropriately and there is no doubt that Israel's possession of nuclear weapons has tipped the scales...but the question is whether the answer is for Iran to have a nuclear arsenal and what of the Arabs who would be caught between these two powers?"

Meanwhile, for Iran, the escalating row appears also to have slowed down its ability to attract foreign investment. The country has not been able to finalize any new agreements with major oil companies, both Western and Asian, with which it has been negotiating oil and gas development deals. Tehran announced last month that it planned to sign agreements with both Shell and Total for the development of two separate LNG projects within a few days, but nothing so far has emerged. Talks with a Japanese consortium for the development of the giant Azadegan oilfield also appear to have stalled, with Iran saying that if no accord is reached it will give the job to local companies. This would appear to contradict statements from Iranian oil minister Kazem Vaziri-Hamaneh in Vienna on March 8 that the ongoing dispute between Iran and the international community was not affecting relations with international oil companies.

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