In October, as part of its ongoing effort to isolate and sanction Iran, the Bush Administration announced sanctions against several Iranian banks, companies and individuals linked to the Iranian Revolutionary Guard Corps (IRGC) and its special operations unit, the Quds (Jerusalem) Force, for their “support for terrorism.” The White House launched a worldwide effort to persuade other countries not to do business with the designees, including Iran’s Bank Melli. “Bank Melli provides banking services to the IRGC and the Qods Force,” said the Treasury Department. “Entities owned or controlled by the IRGC or the Qods Force use Bank Melli for a variety of financial services.”
Buried deep in the State and Treasury Department documents compiled in support of the sanctions–unnoticed by the media–is the address of a Bank Melli branch in a country occupied by US troops: “Location: No. 111-27, Alley 929 District, Arasat Street, Baghdad, Iraq.”
That a bank described by the United States as an Iranian facilitator of terrorism operates freely in the heart of Iraq’s capital is ironic, to say the least, given the Bush Administration’s near-declaration of war against Iran’s involvement in Iraq. Citing evidence that Iran supplies arms, money, logistical help and training to Shiite militias and insurgents, hawks in the Administration, including Vice President Cheney, have suggested that US forces in Iraq may strike supply lines, training camps and weapons depots across the Iranian border, even at the risk of igniting all-out war.
Despite its very public saber-rattling against Iran, however, the United States has spent most of the past five years in a de facto alliance with Iran in support of the Shiite-led (and US-installed) regime in Baghdad. The most powerful component of that regime, the Islamic Supreme Council of Iraq (ISCI) and its disciplined Badr Corps militia, is also Iran’s closest Iraqi ally. Taking advantage of the political vacuum created by the US destruction of Saddam Hussein’s government, Tehran has established a vast presence, both overt and covert, in Iraq, with enormous influence among nearly all of its western neighbor’s Shiite and Kurdish parties. “The American military occupation of Iraq has facilitated an Iranian political occupation of Iraq,” says Chas Freeman, a former US ambassador to Saudi Arabia.
As a result, the Iraq of 2008 is a tale of two paradoxes.
The first paradox, at once startling and ironic, is that Washington’s decision to topple Saddam’s government has put in place a ruling elite that is far closer to Iran than it is to the United States. As a result, the ayatollahs in Tehran have adroitly checkmated (a word derived from the Persian shah mat, “the king is dead”) US efforts to install a compliant, pro-American regime in Baghdad as the anchor of Washington’s interests in the oil-rich Persian Gulf. Now a proxy conflict between the United States and Iran is playing out on Iraq’s complex chessboard. Depending on the course that US-Iranian relations take over the rest of Bush’s tenure and the start of the next administration in Washington, Tehran has two options. If US-Iran ties improve, Tehran may try, at least in the short term, to broker a deal to stabilize Iraq, albeit one that fortifies the Shiite-led government in a way that accommodates Iran’s regional interests. Or, if relations with the United States worsen, Iran can use its allies and agents in Iraq to end the relative calm and send the country tumbling back into all-out civil war.