ARAB AFFAIRS - Jan 1 - Iran Lays Down A Challenge To Arab Leaders.

On a recent trip to Bahrain, a self-assured Iran's FM Manouchehr Mottaki, professes to have the answer to the Gulf's troubles. Speaking to a largely Arab and western audience, he suggested Gulf stability was best achieved by removing American forces, well entrenched across the region, and setting up, with Tehran, a regional security alliance. The call for more self-reliance in the Gulf has some appeal among ordinary Arabs, resentful of the US and frustrated by their own governments' over-dependence on American security. But official circles, in both the Gulf and the US, see his suggestions as a reflection of Iran's suspected ambition for regional superpower status. "It's amusing", says one American official. "Iran is saying, 'Get rid of foreign forces and take us as the regional power.'" The events of the past year have underlined Iran's growing influence in the Middle East and its determination to become a nuclear power. But they have also reinforced the perception of Shi'ite Iran as the biggest strategic threat to Washington's Sunni allies in the Gulf, home to two-thirds of the world's oil reserves. Tehran's regional strategy has been to back militant groups that confront Israel, positioning itself as a stronger defender of Arab and Palestinian rights than its Arab neighbours. This approach worked remarkably well in the summer, when the Iranian-backed Hizbullah group in Lebanon stood its ground against a month-long Israeli offensive. Arab leaders who had criticised Hizbullah's kidnapping of two Israeli soldiers, the act that sparked the war, emerged from the conflict weakened while Iran was emboldened. What now alarms the Sunni Arab regimes most, however, is that an American failure to rescue Iraq from sectarian conflict could shift the balance of power in the region even more in favour of Iran. Arab leaders largely back the minority Sunni in Iraq. Iranian officials say they support the central Iraqi government, dominated by the Shi'ite majority. But according to senior Iraqi officials, Tehran's strategy is more complex, and involves support for individual Shi'ite groups, with the apparent aim of building separate links to Tehran. Arab officials say Iran's resurgence should not be exaggerated: its pursuit of a nuclear programme will bring greater international isolation, and this carries economic costs that will gradually become more apparent. But the Arab Gulf states have yet to formulate a coherent or common approach to address the perceived Iranian challenge. Reluctant to throw their lot even more decisively behind a weakened and seemingly confused America, most are also worried about a potential dialogue between Washington and Tehran, fearing it could affect their own interests. Saudi Arabia has been holding its own bilateral talks with senior Iranian officials but people close to its government say little progress has been made on easing regional tensions. In an unusually bold move the Arab Gulf states announced this month they would study the possible development of nuclear technology, insisting - as Iran does - that the purpose would be energy production, not atomic weapons. Seen as a message to Tehran, the announcement also raised concerns about proliferation in the region. The US, for its part, has been seeking to underline that its commitment to the Gulf is unwavering, whatever happens in Iraq. Washington has launched a security initiative designed to strengthen security and defence ties with the Arab Gulf states, while the US has increased its naval presence in the region. But Washington's ultimate ambition to create a multi-lateral security system has received a cool response. Wary of each other, the Arab countries prefer to focus on deepening their bilateral defence ties with the US. "The Gulf knows it needs to beef up its defences. But for the set-up that the US wants, which is to deal with the region as one institution, Gulf countries need to have a different relationship between each other", says one senior Arab official. US officials acknowledge that some of the smaller Gulf states are also weighing their military relationship with the US against the risk of alienating Tehran. The Bush administration has been particularly concerned about gas-rich Qatar, where the US maintains its largest military base in the region. One US official says Washington has been seeking explanations from the Qatari government about recent decisions at the UN and the Arab League that have appeared more supportive of Iran's regional interests rather than those of the pro-western Arab states. Arab regimes, meanwhile, have been pleading with Washington to press for progress on the Palestinian-Israeli conflict, hoping moves towards the creation of a viable Palestinian state will help tip the strategic balance in the region back in their favour. Some Iraqi officials argue that the Arab states' best strategy to check Iran's influence is to build bridges with Iraq's Shi'ite majority. "The Shi'ite in Iraq are Arabs [not Persians] and they feel the Arabs have rejected them", says an Iraqi official. "What the Arabs should do is embrace the Shi'ite government of Iraq and try to make it a counter balance to Iran". Officials in Baghdad say this message, regularly relayed to Arab rulers, is only now starting to sink in.