Our correspondent on a concerted attempt to confront Iran and Shia Islam

Most people think that the bungled invasion of Iraq, climaxing last week with the bungled execution-assassination of Saddam Hussein, will go down in history as the ultimate symbol of the Bush Administration's hubris and incompetence. They should think again. With the dawning of a new year, the Bush-Blair partnership is working on an even more horrendous foreign policy disaster.

What now seems to be in preparation at the White House, with the usual unquestioning support from Downing Street, is a Middle Eastern equivalent of the Second World War. The trigger for this all-embracing war would be the formation of a previously unthinkable alliance between America, Israel, Saudi Arabia and Britain, to confront Iran and the rise of the power of Shia Islam.

The logical outcome of this "pinning back" process would be an air strike by Israel against Iran's nuclear facilities, combined with a renewed Israeli military campaign against Hezbollah in Lebanon, aggressive action by American and British soldiers to crush Iraq's Shia militias, while Saudi-backed Sunni terrorists undermined the increasingly precarious pro-Iranian Government in Baghdad.

Consider the ominous events that occurred in the Middle East and Washington over the holiday season, while most people were paying more attention to their turkeys and Christmas stockings. The first in this sequence of events was Tony Blair's abrupt announcement that members of the Saudi Royal Family accused of taking bribes from British defence contractors would be exempted from the application of British law. To risk a confrontation with the Saudi Royal Family, Mr Blair asserted, would have jeopardised Britain's security interests in Iraq and in the war against terrorism, as well as dashing hopes of progress towards peace between Israel and the Palestinians. This embarrassing announcement by Mr Blair was quickly followed by his Dubai speech, in which he called for an "arc of moderation" to "pin back" Iran's advances in the Middle East.

The second event, almost simultaneous with Mr Blair's bribery announcement, was the equally unexpected resignation of Saudi Arabia's Ambassador to Washington, Prince Turki al-Faisal, on December 15. Prince Turki has long been a key figure in the Saudi security establishment, whose last abrupt career move occurred in the autumn of 2001, when he suddenly resigned as liaison between the Saudi Royal Family and the Taleban terrorists that they had been financing until just before September 11. Turki was a leading member of a faction in the Saudi Royal Family that has for months been advocating a more conciliatory response towards the Shia hegemony in Iraq, including an effort to open direct negotiations between America and Iran, as recommended by James Baker's Iraq Study Group. The Turki group's main rivals in the Saudi establishment have by contrast argued for much tougher military action against what they called the "Christian-Shia conspiracy" created by the US toleration of Iranian influence over Iraq.

The Saudi power struggle came into the open through an article published in The Washington Post in mid-December, by Nawaf Obeid, a Saudi security consultant ostensibly working for Turki, but actually closer to the hardliners. Obeid cautioned that if American troops were withdrawn from Iraq prematurely, in line with the Baker report's recommendations, Saudi Arabia would have no choice but to intervene forcibly "to stop Iranian-backed Shi a militias from butchering Iraq's Sunnis". Turki immediately fired Obeid, but shortly afterwards was himself replaced by a hardliner.

Within Saudi Arabia itself, meanwhile, the anti-Iranian rhetoric is gathering strength. Take this example from al-Salafi magazine, quoted in The New York Times: "Iran has become more dangerous than Israel itself. The Iranian revolution has come to renew the Persian presence in our region. This is the real clash of civilisations."

The link between Israel and Iran in Saudi thinking brings us to the third event in this chillingly unfestive sequence: the confrontation over nuclear proliferation between the UN Security Council and Iran. If Iran is now really hell-bent on developing nuclear weapons, Israel has made it abundantly clear that it is equally hell-bent on stopping it — whether by diplomatic or military means. Whether Israeli bombing would in practice do serious damage to the Iranian nuclear programme is far from clear, but there are certainly hotheads in the Israeli Government and military establishment who are itching to try.

There is, however, one binding constraint on Israel's freedom of action against Iran. This is the US. It is unlikely that Israel would bomb Iran without explicit American approval and it is certain that a US president would stop Israel if he believed America's national interest demanded it.

That has been the situation until recently, since America has depended on Iranian-backed Shia politicians to prevent a total collapse of order and a humiliating Saigon-style expulsion of American soldiers in Iraq.

Although Israel has never signed the nuclear non-proliferation treaty, many Israeli politicians believe that they are entitled to punish Iran for its non-compliance with the treaty. For these trigger-happy Israelis, Iran's backdoor influence over Washington via the Iraqi Shia has become a nightmare. The same is true of the Saudi princes. The Saudi Royal Family rules a largely Shia country on the basis of a fanatically enforced state religion whose senior spokesmen denounce the Shia as heretic scum. These feelings are entirely mutual — Iran's mad mullahs hate the Wahhabis every bit as much.

Thus, if there is one country in the world more worried than Israel about an Iranian A-bomb, it is Saudi Arabia. And if there are two countries in the world with real influence on the Bush White House, they are Saudi Arabia and Israel. Now both these countries are telling President Bush that he must pull the plug on Iraq's Shia Government, tear up the Baker report, whose most important advice was to open diplomatic channels to Tehran, and prepare to attack Iran, either directly or using the Israelis as a proxy. This is the basis of the unholy alliance between Israel, Saudi Arabia and America, with Mr Blair contributing a few choice soundbites.

The anti-Iranian "arc of moderation" may seem like another meaningless Blairism, not nearly as threatening as Mr Bush's "axis of evil". But this soundbite could unleash a disaster on the Middle East, beside which the war in Iraq would be a mere sideshow.

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