THROUGH a combination of arms, money and political influence, Iran has established itself as one of the most powerful forces in postwar Iraq, where its Shia allies dominate local governments, the security services and parts of the economy.

More than two years after the US-led invasion of its neighbour, Iran is fast emerging as the only clear beneficiary of the war that overthrew its enemy, Saddam Hussein, and allowed its allies to rise to power.

After a series of attacks against British troops this summer, culminating in this week’s stand-off in Basra, there are fears that Iran is beginning to exert its new-found authority.

Iraqi and British officials interviewed this week said Iran’s growing influence is being felt from Basra in the south to Baghdad in the north, where Iranians are blamed for stoking sectarian tension, undermining the coalition and trying to create a breakaway Islamic state in southern Iraq.

Responding to the clashes in Basra this week, Donald Rumsfeld, the US Defence Secretary, accused Tehran of being “interested”, “involved” and “not helpful”.

Tougher language is being heard in the Arab world, where Iran has been a foe from the time of the Persians. Prince Saud al-Faisal, the Saudi Foreign Minister, said: “We fought a war together to keep Iran out of Iraq after Iraq was driven out of Kuwait. Now we are handing the whole country over to Iran without reason.”

Iran claims that it is being blamed for America’s failures in Iraq and says that it is behaving as a responsible neighbour should. But an investigation by The Times suggests otherwise.

Last month, for instance, 36 Sunni Muslim men were kidnapped from Baghdad, murdered, and their bodies dumped near the Iranian border. Sunni leaders in Iraq blamed Iran and its Iraqi allies.

The incident occurred not far from where Iraqi border guards were involved in an exchange of fire in July with gunmen who had crossed from Iran. The guards found a cache of explosives, timers and detonators.

The discovery appeared to confirm suspicions that Iran, or at least elements in the regime, are encouraging attacks against American and British forces. Six British troops and two British security guards have been killed in the past two months in bombings blamed on Iraqi Shias equipped with sophisticated explosives supplied by Iran’s Revolutionary Guards.

In the British area of operations in southern Iraq there are at least a dozen active Islamic groups linked to Tehran. They are blamed for orchestrating a campaign of terror that includes attacks on the British, imposing Islamic laws by force and intimidating and killing opponents such as journalists and former members of the regime.

The most recent group targeted were former Iraqi pilots who flew missions against Iran in the Iran-Iraq war. A resident of Basra said: “Once these people were heroes for us. Who else would want them dead?” Iraqis claim that it is now impossible to get a government job without the sponsorship of one of these groups, dominated by Iraqis who spent years in exile in Iran.

Locals also complain that Iranian goods are flooding local markets and that in many places Farsi has become a second language.

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