Inside Iran's Secret War for Iraq

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A former Iraqi official and member of Saddam's armored corps, who identifies himself as Abu Hassan, told TIME last summer that he was recruited by an Iranian intelligence agent in 2004 to compile the names and addresses of Ministry of Interior officials in close contact with American military officers and liaisons. Abu Hassan's Iranian handler wanted to know "who the Americans trusted and where they were" and pestered him to find out if Abu Hassan, using his membership in the Iraqi National Accord political party, could get someone inside the office of then Prime Minister Iyad Allawi without being searched. (Allawi has told TIME he believes Iranian agents plotted to assassinate him.) And the handler also demanded information on U.S. troop concentrations in a particular area of Baghdad and details of U.S. weaponry, armor, routes and reaction times. After revealing his conversations to U.S. and Iraqi authorities, Abu Hassan disappeared; earlier this year, one of his Iraqi superiors was convicted of espionage.

Intelligence agencies say Tehran still funds various political parties in Iraq. Documents from Iranian Revolutionary Guard Corps files obtained by TIME include voluminous pay records from August 2004 that appear to indicate that Iran was paying the salaries of at least 11,740 members of the Badr Corps. British and U.S. military intelligence suspect those salaries are still being paid, although Badr leader Hadi al-Amri denies that. "I've told the American officers to bring us the evidence that we have a deal with Iran, and we will be ready, but they say they don't have any," he says.

What remains murky is the extent to which Iran is encouraging its proxies to stage attacks against the U.S.-led coalition. Military intelligence officers describe their Iranian Revolutionary Guard Corps counterparts' strategy as one of using "nonattributable attacks" by proxy forces to maximize deniability. What's uncertain, says a senior U.S. officer, is what factions within Tehran's splintered security apparatus are behind the strategy and how much the top leaders have endorsed it. Intelligence sources claim that Brigadier General Sullaimani ordained in a meeting of his militia proxies in the spring of last year that "any move that would wear out the U.S. forces in Iraq should be done. Every possible means should be used to keep the U.S. forces engaged in Iraq." Secret British military-intelligence documents show that British forces are tracking several paramilitary outfits in Southern Iraq that are backed by the Revolutionary Guard. Coalition and Iraqi intelligence agencies track Iranian officers' visits to Iraq on inspection tours akin to those of their American counterparts. "We know they come, but often not until after they've left," says a British intelligence officer.

Shi'ite political parties do not dispute that the visits occur. And a steady flow of weapons continues to arrive from Iran through the porous southern border. "They use the legal checkpoints to move personnel, and the weapons travel through the marshes and areas to our north," says a British officer in Basra. Top diplomats and intelligence officials know that some Iranian officers are providing assistance to Shi'ite insurgents, but it's dwarfed by the amount of money and matériel flowing in from Iraq's Arab neighbors to Sunni insurgents.