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Iran steadily building influence

The young, bearded diplomat stretches back on his black leather sofa, speaking with the satisfaction of a chief executive who has shattered Wall Street's forecasts.

"Iran has never been so powerful in the region," said Najaf Ali Mirzai, who is media and cultural attache at the Iranian Embassy in Beirut. "Iran is now comfortably assured that it can respond to any kind of American aggression."

Not since the 1979 revolution that brought the Islamic clergy to power has Iran been so strong. It has expanded its influence in Iraq, in Lebanon through the militant group Hezbollah, among the Palestinians, in Persian Gulf states such as Bahrain and Kuwait, and in parts of Afghanistan. It is improving its missiles and expanding a nuclear program that the West says aims to eventually produce bombs. Iran says the program is peaceful.

Its campaign to spread its influence, sometimes in direct conflict with U.S. interests, is causing concern in the region.

"Iranians are playing with so many variables and they have so many trump cards," said Abdullah al-Shayji, a professor in Kuwait, a key U.S. ally.

"We are completely vulnerable," he said. "We don't want to antagonize the Iranians, and at the same time we don't want to upset the Americans."

Predominantly Shiite Iran's most valuable card and potent source of influence may be Iraq, where it has longtime ties and influence over the three Shiite groups that control the government.

U.S. leverage in the Arab world against Iran could be hurt by its troubles in Iraq and its unwavering support for Israel. Although Arab countries such as Egypt remain strong U.S. allies, they say the tough situation in Iraq and America's support for Israel in its summer war with Iranian-backed Hezbollah is hampering U.S.-led efforts elsewhere.

The fighting created an unprecedented anti-American unity between traditional Shiite and Sunni Muslim foes in many parts of the Middle East.

It also sealed Iran's influence in the region, Mirzai contends. It was a strategic victory for Iran because Hezbollah held its own against the efforts of Israel's powerful army to crush it, he said. "The war made the world take notice of the extent of Iran's regional and international role," Mirzai said.