Iraq Could Offer Common Ground for US and Iran ; Iran Has Offered Iraq a Line of Credit and Access to Electricity and Gas Supplies

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Huge murals of the young "martyrs" who fell in the eight-year war with Iraq cover the sides of many buildings in Tehran. They are a constant reminder of the huge suffering inflicted on Iran by the devastating conflict Saddam Hussein unleashed in 1980.

Not surprisingly, Iranians are relieved to see the back of the Iraqi dictator. His removal has also enabled devout Iranians to visit Shiite holy places in Iraq, despite the dangers from mines and bandits.

For the fractured Iranian regime, however, the consequences of Mr. Hussein's fall and Iran's encirclement by US forces are far greater. The new situation presents opportunities as well as dangers that could shape both the internal power struggle and Tehran's relations with Washington.

American officials have accused Iran of trying to destabilize Iraq, but European diplomats in Tehran believe Iran has so far played a "reasonably constructive" role. Britain's former ambassador to the United Nations, Sir Jeremy Greenstock, agreed on Sunday, saying: "I think on the whole that they have been quite cooperative."

Iranian Foreign Minister Kamal Kharazzi has also promised Iraq credit of up to $300 million and offered cross- border electricity and gas supplies. A stabilized Iraq could boost Iran's regional power as the ally of Iraq's Shiite Muslim majority.

By proving it can be an "anchor of stability" in Iraq, Iran could also reduce American hostility, analysts say. This could pave the way to an eventual restoration of ties with Washington, which polls show would be very popular with ordinary Iranians. US Deputy Secretary of State Richard Armitage said on Tuesday that Washington was prepared to restore limited contacts with Tehran, a change he tied to Iran sharing intelligence on Al Qaeda, a move Tehran has so far rejected.

Observers see Iraq as a potential patch of common ground between the two countries.

"Tehran has given the Iraqi governing council more legitimacy than any Arab country," a senior European envoy says. "Like the US, Iran wants an Iraq that is stable, prosperous, nonthreatening, and democratic, which would accord Iraqi Shiites their due weight in running the country."

While the US was willing to allow Iran to help in Afghanistan, neoconservative hawks in Washington appear determined to prevent Tehran from having any role in Iraq. …