Of the more than 1 million Shiites assembled in Karbala on March 2 to commemorate the death of their revered Imam Hussein (d. AD 681), an estimated 100,000 had come from Iran, and of some 185 pilgrims killed by the terrorist blasts that day, more than forty-nine were Iranian. These figures underline the affinity that exists among the Shiites of Iran and Iraq–a crucial factor in the shaping of post-Saddam Iraq. Bush officials find this religio-political fact so unpalatable that they refuse to acknowledge it publicly. At the same time, it is this factor that explains their present approach toward Tehran.

All three leading Iraqi Shiite clerics–Grand Ayatollah Ali al-Sistani, Ayatollah Abdul Aziz al-Hakim and Muqtada al-Sadr–are beholden to Iran. Sistani was born and brought up in the Iranian city of Mashhad, and despite his fifty-three years in Iraq, speaks Arabic with a Persian accent. Most of the nine charitable ventures listed on his website, which primarily provide housing for pilgrims and theology students, are in Iran. So too are the four religious foundations he sponsors.

Hakim, an important Iraqi Governing Council (IGC) member, is leader of the Supreme Council for the Islamic Revolution in Iraq (SCIRI), established in 1982 in Tehran by the Iranian government. Its 10,000-strong militia, called the Badr Brigade, has been trained and equipped by Iran. Hakim underscored his continued closeness to Iran on February 11, the twenty-fifth anniversary of Iran’s Islamic revolution. Unveiling a book fair in Baghdad sponsored by the Iranian Embassy, he praised the Vilayat-e Faqih (Rule of Religious Jurisprudent) doctrine on which the Iranian Constitution is founded.

Muqtada al-Sadr, the only surviving son of the assassinated Grand Ayatollah Muhammad Sadiq al-Sadr, has a wide following among working-class Shiites. His religious standing rose sharply when, on April 7 of last year, the Iraq-born Grand Ayatollah Kadhim Husseini al-Hairi, based in the Iranian city of Qom, appointed him as his deputy in Iraq. Hairi had gone to Qom as a protégé of Muhammad Baqir al-Sadr, the grandfather of Muqtada, for further studies in 1973, never to return home.

Hakim joined the US-sponsored Iraqi opposition before the Anglo-American invasion of Iraq, with a tacit nod from Iran’s Supreme National Security Council, in August 2002. After the overthrow of Saddam’s regime, he agreed to join the IGC. By contrast, Sadr has been unfriendly toward the Coalition Provisional Authority (CPA) and the CPA-appointed IGC. And Sistani has refused to meet CPA chief Paul Bremer or his envoys, limiting his contacts strictly to IGC members.

Tehran has also forged links with al-Daawa al-Islamiya (The Islamic Call), a Shiite group that split from SCIRI in 2002 when the latter decided to cooperate with the US-sponsored Iraqi opposition groups. But al-Daawa decided to join the IGC and its former partners after the US conquest, considering that to be the best chance to wield influence over Iraq’s future.

Outside official circles, there are signs of growing Iranian influence among Iraqi Shiites. The religious foundations run by pre-eminent clerics in Iran are partially funding the social welfare services being provided to Iraqi Shiites by their mosques at a time when Iraqi unemployment is running rampant.

Finally, Iranian Shiites are pouring into Iraq, which has six holy Shia sites, across the unguarded border at the rate of 10,000 a day, according to The Economist. They are thus bolstering the Iraqi economy to the tune of $2 billion a year, amounting to two-fifths of Iraq’s oil revenue in 2003. And, despite the recent killings of scores of pious Shiites in Karbala and Baghdad, the Iraqi Shiite religious establishment remains in a quiescent mode, intent on maintaining peace in order not to impede the political process leading up to elections. (The clerical authorities in Tehran share this approach.)

Meanwhile, the Bush Administration is holding its breath. A CPA dignitary assured a visiting American terrorism expert at a Washington think tank that “we are relying on Iranian good will.” But four high-ranking US military and State Department officials told USA Today that Iran was covertly tying to influence the transition process, and one of them, a US military commander in Baghdad, expressed concern that Iran was establishing armed civilian cells “to intimidate Iraqis.”

If so, Washington has only one option to pressure Iran: to activate the Mujahedin-e Khalq (MEK), the exiled Iranian anti-clerical party that operated out of Baghdad from 1986 to 2003. Its activists could be unleashed against the mullahs in Tehran as a preamble to bringing about regime change there.

When, during the Anglo-American invasion of Iraq, the Patriotic Union of Kurdistan (PUK) militia attacked MEK bases to avenge the MEK’s assistance to Saddam to crush the Shiite and Kurdish uprisings after the 1991 Gulf War, the Pentagon intervened swiftly to save the MEK from total annihilation. Following the White House’s decision to disarm the MEK, the Pentagon was deliberately lax toward the organization, permitting the MEK to run its radio station and possibly allowing it to bury its weapons and ammunition.

The Tehran government demanded that MEK fighters be sent to Iran for trial since they had admittedly committed terrorist actions against Iranian territory. Bremer refused. But as Sistani raised the ante, demanding direct elections for the transitional government and marshaling his followers in the streets, he relented. To mollify Tehran, Bremer closed the MEK radio station in January and took DNA samples from MEK detainees as a prelude to charging some of them with terrorist crimes during Saddam’s rule. In sum, Iran and America, holding equally strong cards, are watching each other warily and following a negative policy of not alienating each other –a game that is likely to continue until the US presidential election in November.