At the second round of talks between Iranian and US diplomats here Tuesday, one message American Ambassador Ryan Crocker delivered was that the US wants Tehran to play a positive role in Iraq.
But ask many Iraqi Shiites, including Prime Minister Nouri al-Maliki, and they say their neighbors are doing just that. In fact, economic ties between Iran and Iraq are growing in the face of US criticism of Tehran's meddling, which includes arming militias. Such Iran-Iraq links are not only bolstered by common beliefs binding Shiite leaders but also, some experts say, by a US strategy to arm and support former Sunni insurgents – many of whom consider Shiites bitter foes – in the fight against Al Qaeda.
All of this puts Iran in a much stronger position in any future talks with the Americans, analysts say.
"The Iranians are running the ship in Iraq, not the Americans. They also have [many] more chips on the table in Iraq than the US," says Riad Kahwaji, who heads the Dubai-based Institute for Near East and Gulf Military Analysis. "The situation in Iraq is strategically more in favor of the Iranians than the Americans."
Trade between Iran and Iraq over the past year amounts to almost $1 billion, says Iraqi Finance Minister Byan Jabr al-Zubaidi. Trade between Iran and Iraq's semi-autonomous Kurdish region accounts for half of that.
Mr. Zubaidi adds that Iran just finalized a $1 billion loan deal with Iraq tied to specific investments. And he expects business ties to grow once Iraq passes a law regulating direct foreign investments.
Iran was also one of the first countries to sign a "friendship treaty" with Iraq's Parliament. Some of Iran's parliamentarians were in Baghdad last month to meet with top Iraqi officials where they offered to rebuild the Shiite shrine in Samarra that has been bombed twice.
Iran recently gave Mr. Maliki an Airbus 300 jetliner to use for government business.
The office of Iraq's president, Jalal Talabani, who visited Iran last month, said in a statement Monday that "he was happy with Iran's position and called it positive … hoping that Iran may use its influence over some Iraqi factions to cool down the situation in Iraq."
But that stands in contrast to the growing allegations from the US military, and ample evidence seen by officials and analysts, that the Iranians are arming, funding, and supporting Shiite militias that are targeting both US forces and other Iraqis.
"Roughly two months since our last meeting, we have actually seen militia-related activity that can be attributed to Iranian support go up and not down.... So I was as clear as I could be with the Iranians that this effort, this discussion has to be measured in results and not in principles and promises, and that thus far the results on the ground are not encouraging," said Mr. Crocker at a press conference after the meeting with the Iranians in Baghdad.
He said the parties discussed the formation of a security subcommittee that would address issues relating to violent militias, border security, and Al Qaeda.
The talks, he said, were limited to "security in Iraq, and we made it clear that that's the agenda ... there is not a broader agenda. This is not a forum to address other issues in the Iranian-US relationship," although it appeared that the Iranians were much more interested in a broader conversation.
But that narrow approach will only go so far, says Mr. Kahwaji. While he said the second round was "a good confidence building measure," they will go nowhere if the negotiations do not move to a much higher level, for instance involving direct talks with US Secretary of State Condoleezza Rice.
The Iranians view themselves as a superpower, he says, and want to discuss "a basket of issues," such as the standoff over their nuclear power program.
An Iraqi official who attended the first round in Baghdad on May 28, which broke a 27-year diplomatic freeze between both countries, hoped these latest talks would go beyond exchanging statements and messages as happened in the first one.
"I do not think this method or manner of talks will lead to any results that might be beneficial for Iraq. It's simply an opportunity for the Americans to say what they have to say to the Iranians and for the Iranians to do the same, and that's it and goodbye," said the senior official on condition of anonymity because of the sensitive nature of the talks. "That's what happened at the last meeting. I [had hoped] this second round would go beyond that."
Prior to the meeting, US State Department spokesman Sean McCormack said, "We think that this kind of engagement is important, that at the very least, we can have a direct message to the Iranians that if they truly do want a more stable, secure, prosperous Iraq, they're going to have to change their behavior."
For his part, Iranian government spokesman Ghulam Hussein Ilham said that his country's "top priority" during the talks was to demand the release of five of its nationals held by the US military in Iraq for the past seven months on charges of being senior members an elite force of the Iran Revolutionary Guard Corps (IRGC), which it claims has been arming Shiite militias in Iraq.
While Crocker said the US expressed concerns regarding the Iranian support of violent militias, the ambassador said Iran countered that it had nothing to do with the Islamic Republic.
The main US charge is that the Iranians are providing weapons, explosives, training, and payments of up to $3 million dollars per cell to a rogue offshoot of the Shiite Mahdi Army militia known as "Special Groups." The US military says those militants target mainly US forces and Sunni Arabs. The US asserts that these groups have been supplied with what the Army calls Explosively Formed Projectiles (EFPs), which are sophisticated roadside bombs that are capable of piercing armored vehicles.
Even as Iranian and US diplomats met, US and Iraqi forces were ringing the town of Husseiniyah, northeast of Baghdad, in an effort to flush out rogue elements of the Mahdi Army that were allegedly holed up inside.
The Dubai-based Kahwaji said Iran's assistance to Shiite militias is undisputed. "I have spoken to many Iraqi and coalition officials and they showed evidence," he said.
Now, say experts, with the US arming and supporting Sunni Arab insurgents and tribes in the fight against Al Qaeda, other more mainstream Shiite factions may look to Iran.
"We warned against arming and supporting some armed groups by multinational forces under the slogan of fighting Al Qaeda. This is a red line that must not be crossed," says Hadi al-Ameri, a senior member of parliament and head of the Badr Organization, a political party that maintains a paramilitary unit trained in Iran.
Hosham Dawod, a Paris-based Iraq expert, says, "The Americans want to rely on former Baathists, tribal, and Islamist elements among the Sunni Arabs. This definitely makes Iran nervous because these are the same people that confronted it in the past. It also troubles many of Iraq's Shiite parties and even the Kurds thereby pushing them closer to Iran because their interests are intertwined."