Inside Iran's Secret War for Iraq

The U.S. Military's new nemesis in Iraq is named Abu Mustafa al-Sheibani, and he is not a Baathist or a member of al-Qaeda. He is working for Iran. According to a U.S. military-intelligence document obtained by TIME, al-Sheibani heads a network of insurgents created by the Iranian Revolutionary Guard Corps with the express purpose of committing violence against U.S. and coalition forces in Iraq. Over the past eight months, his group has introduced a new breed of roadside bomb more lethal than any seen before; based on a design from the Iranian-backed Lebanese militia Hizballah, the weapon employs "shaped" explosive charges that can punch through a battle tank's armor like a fist through the wall. According to the document, the U.S. believes al-Sheibani's team consists of 280 members, divided into 17 bombmaking teams and death squads. The U.S. believes they train in Lebanon, in Baghdad's predominantly Shi'ite Sadr City district and "in another country" and have detonated at least 37 bombs against U.S. forces this year in Baghdad alone.

Since the start of the insurgency in Iraq, the most persistent danger to U.S. troops has come from the Sunni Arab insurgents and terrorists who roam the center and west of the country. But some U.S. officials are worried about a potentially greater challenge to order in Iraq and U.S. interests there: the growing influence of Iran. With an elected Shi'ite-dominated government in place in Baghdad and the U.S. preoccupied with quelling the Sunni-led insurgency, the Iranian regime has deepened its imprint on the political and social fabric of Iraq, buying influence in the new Iraqi government, running intelligence-gathering networks and funneling money and guns to Shi'ite militant groups--all with the aim of fostering a Shi'ite-run state friendly to Iran. In parts of southern Iraq, fundamentalist Shi'ite militias--some of them funded and armed by Iran--have imposed restrictions on the daily lives of Iraqis, banning alcohol and curbing the rights of women. Iraq's Shi'ite leaders, including Prime Minister Ibrahim al-Jaafari, have tried to forge a strategic alliance with Tehran, even seeking to have Iranians recognized as a minority group under Iraq's proposed constitution. "We have to think anything we tell or share with the Iraqi government ends up in Tehran," says a Western diplomat.

Perhaps most troubling are signs that the rising influence of Iran--a country with which Iraq waged an eight-year war and whose brand of theocracy most Iraqis reject--is exacerbating sectarian tensions between Sunnis and Shi'ites, pulling Iraq closer to all-out civil war. And while top intelligence officials have sought to play down any state-sponsored role by Tehran's regime in directing violence against the coalition, the emergence of al-Sheibani has cast greater suspicion on Iran. Coalition sources told TIME that it was one of al-Sheibani's devices that killed three British soldiers in Amarah last month. "One suspects this would have to have a higher degree of approval [in Tehran]," says a senior U.S. military official in Baghdad. The official says the U.S. believes that Iran has brokered a partnership between Iraqi Shi'ite militants and Hizballah and facilitated the import of sophisticated weapons that are killing and wounding U.S. and British troops. "It is true that weapons clearly, unambiguously, from Iran have been found in Iraq," Defense Secretary Donald Rumsfeld said last week.