Nearly a year and a half after Saddam crushed an Iranianbacked Shiite uprising in the aftermath of Desert Storm, Teheran is still meddling in southern Iraq. It trains Iraqi insurgents and provides them with money and arms. A major dissident group, the Supreme Council of the Islamic Revolution in Iraq, is based in Teheran. According to Hamid Yusef Hammadi, Iraq’s information minister, “a few thousand” Iranian agents are currently operating in the marshes. Iraq, of course, has every reason to play up the threat from Ayatollah Khomeini’s successors. It used that tactic successfully to win the support of the United States, among others, during much of its eight-year war against the Iranians in the 1980s.

Now American policy has shifted 180 degrees. But the fact is, a resurgent Iran terrifies the deeply conservative gulf Arabs, who worry that the Islamic revolution could spread to their own Shiite populations, the poorest and most discontented of their citizens. Washington has few illusions about Iran’s intentions. “Whether under the shah or the ayatollah, Iran has always regarded itself, by right, as the dominant power in the gulf,” says a senior U.S. official.

Yet recent American-led attempts to undermine the Baghdad leadership may be helping Iran to gain the upper hand in the region. “The logical consequence of the no-fly zone, if it persists for long, is the disintegration of Iraq,” says Martin Indyk, director of the Washington Institute for Near East Policy. “And if that occurs, the Iranians are better positioned than anyone else to have influence over a new Shiite state in the south.” That same reasoning persuaded the allies not to back the Shiite rebellion in March 1991. So why is the West suddenly reversing itself-and seemingly inviting Iran to become the major player in the Persian Gulf?

Washington is engaging in some risky wishful thinking. While U.S. officials deny they are trying to dismember Iraq, they are determined to topple Saddam. The no-fly zone is the latest pressure tactic, designed to convince Iraqi military and party officials that Saddam’s continued rule risks their country’s dismemberment. U.S. officials have warned Iran not to take advantage of the situation. After Saddam’s fall, they hope, a post-Saddam coalition government in Baghdad will be strong enough to stand up to Teheran. “Saddam is the immediate risk to stability in the region, so getting rid of him has to be the immediate priority,” says a top U.S. official. “Are we blind to the prospects for greater Iranian influence? Of course not. But we think they are self-limiting-at least for now.”

As if to assuage Washington’s concerns, Iran has kept a fairly low pro. file. There is no sign yet that it is exploiting the no-fly zone, say Western diplomats in Teheran. For one thing, a splintered Iraq would mean independence for the Kurds in the north–a dangerous inspiration to Iran’s 7 million Kurds. Besides, as long as the West is doing the job of weakening Iraq, why should Iran interfere?

Not that Iran has pulled in its horns. It is still acquiring weapons of mass destruction and sponsoring terrorist organizations in other countries. But it is also trying to repair relations with its gulf neighbors, turning down the volume of its revolutionary rhetoric. Spiritual leader Ayatollah Ali Khameini issued a decree to the faithful not to start trouble at this year’s hajj in Saudi Arabia. Still, Teheran’s call for a gulf security arrangement under its leadership has made nearby Arab states nervous. “Kuwait has been in the process of reaching out to the Iranians for months now,” says a Western diplomat in Kuwait. “They’ve been watching Iranian actions very closely, and now they’re not very happy.” They can hardly be pleased about the planned acquisition of a Chinese-made nuclear power plant and the expertise that could contribute to Iran’s suspected nuclear-weapons program. Last week Teheran repeated its claim to three islands near the Strait of Hormuz, enraging other gulf states and giving rise to suspicions of its real intention-regional hegemony.

The longer it takes to bring about a new Iraqi regime, the stronger Iran becomes. “If Saddam doesn’t collapse and new institutions are created in the south as they are now in the north,” says a gulf official, “it will be a lot easier for an outside power to come in and co-opt the system.” In that event, who would stand up to Iran? Not the Saudis or the Kuwaitis–not alone, at least. “I think we will be there playing the role, holding the balance,” suggests Richard Murphy, a senior fellow at the Council on Foreign Relations and former assistant secretary of state for the Middle East. “I think we’re there for the long haul. We can’t do it indirectly.” Given past U.S. peacekeeping in the region, that’s a chilling thought.