The Bush administration is exploring several steps aimed at containing Tehran's growing influence in Iraq, according to U.S. officials, who say a split between the Pentagon and the State Department has paralyzed the administration's ability to craft a long-term policy on Iran for three years.
As one measure, the United States has earmarked $40 million to help Iraq's political parties mobilize -- and, subtly, to counter Iran's support for its allies in an emerging race to influence the outcome, U.S. officials said.
With the election in Iraq four months away, the administration has grown increasingly alarmed about the resources Tehran is pouring into Iraq's already well-organized Shiite religious parties, which give them an edge over struggling moderate and nonsectarian parties, the officials said.
Over the past year, Iran has provided tens of millions of dollars and other material support to a range of Iraqi parties, including the Supreme Council for Islamic Revolution in Iraq, the Islamic Dawa Party and rebel cleric Moqtada Sadr's Mahdi Army, U.S. officials say. The U.S. funds will in theory be available to all Iraqi parties, although the U.S. goal is to bolster the prospects of secular groups -- on the premise that Iranian-backed parties are unlikely to turn to America for training or money, U.S. officials said.
In another diplomatic move aimed partly at Iran, the United States has been promoting a plan for a conference that would bring the United States together with Iraq's neighbors, including Iran, plus representatives of the European Union, the Group of Eight industrialized nations, the Organization of the Islamic Conference, the Arab League and the Gulf Cooperation Council.
Secretary of State Colin L. Powell lobbied for the conference at the United Nations this week, knowing it would provide a setting in which he and Iran's foreign minister would participate, U.S. officials said. The meeting is tentatively planned for mid-November, after the end of the holy month of Ramadan, in Egypt.
"It's not an attempt to open a channel to Iran. It's a way to talk about how all Iraq's neighbors and special friends and others can help the Iraqi government, and that includes Iran," said a senior State Department official who spoke on the condition of anonymity because of ongoing diplomacy. "It's about how to be responsible neighbors and one of our concerns is that Iran is not being a responsible neighbor. It's a way of addressing one of the issues we have with Iran."
The two moves follow a decision by the administration's top foreign policy team this summer to initiate steps to prevent Iran from gaining a major behind-the-scenes role in shaping the Iraqi government due to be elected in January, U.S. officials said. But they also reflect U.S. recognition that attempts to keep Iran out of Iraq, given strong religious, geographic and ethnic ties dating back centuries, are likely to fail and could even backfire, U.S. officials said.
"The idea that you can prevent Iran from having influence or playing a role is totally misplaced, given connections between the clergy, geographic proximity, a long border, family connections, the large community of Shiites from Iran and all the mullahs who studied in the same schools under the same teachers," said Shaul Bakhash of George Mason University, an expert on Iran and author of "The Reign of the Ayatollahs: Iran and the Islamic Revolution."
The measures are an attempt to fill a policy vacuum created by divisive debates within the administration -- mainly between the Defense and State departments. The internal splits have prevented agreement on a formal presidential directive on Iran that would clarify the administration's overall, long-term approach, U.S. officials said.
The initial draft of the directive called for a carrot-and-stick combination of pressure and containment, with the prospect of dialogue on some issues of mutual concern, including Iraq and Afghanistan, according to U.S. officials familiar with the document. But some Pentagon policymakers wanted to insert tougher language calling for a change in Tehran's government, the sources said.
The deadlock has left Washington with limited choices in developing a broader strategy and in trying to contain or punish Iran if it goes ahead with uranium enrichment in defiance of the U.N. nuclear watchdog, the International Atomic Energy Agency.
The United States has been attempting to garner support among other nations for referring the matter to the U.N. Security Council, which could impose sanctions, including an oil embargo, if Iran does not meet demands that it end all nuclear activities that could be used to develop weapons. Iran has insisted its nuclear program is aimed at energy production.
The realities of today's oil market, however, make any type of embargo unlikely, if not impossible, say oil analysts.
An international embargo on Iranian oil could jack up the price of oil from the current price, now approaching $50 a barrel, to about $80 per barrel, said Robert E. Ebel, chairman of the energy program at the Center for Strategic and International Studies. In prices adjusted for inflation, that would be higher than when oil prices peaked in 1981.
Worldwide oil production is near capacity and demand has been increasing, especially in China and India, Ebel said. "The Security Council would not accept an oil embargo on Iran, particularly when it's unlikely Iraqi oil will come on the market in a measurable way anytime soon," added Ray Takeyh, a Council on Foreign Relations specialist on Iran.
Iran produces an average of 3.9 million barrels of crude oil a day, about 5 percent of world production, the Energy Department said. It exports about 2.6 million barrels per day. Even trying to ban foreign oil companies' investments in Iran would drive up prices, analysts said.
"Assuming a consensus on sanctions of any kind -- and I don't assume that -- then what you're left with are secondary, watered-down sanctions of limited impact on Iran's economic viability, such as on access to lending institutions, certain technologies and travel by diplomats," Takeyh added. "And those types of sanctions aren't going to discourage a serious proliferator, especially a country that believes nuclear weapons are essential for its survival."