Iran Pours Cash Into Afghanistan, Seeking Leverage Against U.S.

By Bill Varner

July 17 (Bloomberg) -- The flags of Iran, Afghanistan and Tehran-based Abad Rahan Pars Road & Construction Co. fly above a railroad work camp west of the Afghan city of Herat, signaling another commercial incursion from across the border.

Surrounded by a mud-brick wall in the style of an ancient desert fortress, the site houses 1,000 Afghans and Iranians building tracks to link Mashhad in northeastern Iran with Herat, about 200 miles away. The line will run alongside a highway the company completed in 2006 and transmission wires that feed Iranian electricity to Herat's 350,000 residents.

``Every single day Iran is trying to have more influence, and where there is money, there is political power,'' said Masoud Sana, the Herat Chamber of Commerce's international relations director. ``The Iranians are always trying to find out information about what the Afghan government is going to do next.''

While the world focuses on tensions between Afghanistan and Pakistan 800 miles to the east, U.S. officials keep watch on Iran's expanding presence in Herat and the surrounding province of 2 million people. The region might play a major role if conflict erupts over Iran's nuclear program.

Should Iran's nuclear ambitions spark hostilities, it would use its sway in western Afghanistan as a ``bargaining chip,'' said Afghan-born Zalmay Khalilzad, the U.S. ambassador to the United Nations and former envoy to Kabul. If attacked, Iran ``could make life difficult for us'' in Afghanistan, he said in an interview.

`Operatives Everywhere'

Iran has ``intelligence operatives everywhere, military commanders who work for them'' in the region who could be deployed to stir up trouble, including riots, said Barnett Rubin, an Afghanistan specialist at New York University's Center on International Cooperation.

For now, Tehran's investment of $500 million in the region has helped the U.S. by minimizing the influence of the Taliban extremists who once ruled the country and the sort of violence they have inflicted on southern and eastern Afghanistan. Iran paved half of Herat's streets and 40 miles of highway leading north, built schools and health clinics and partnered with Afghan companies in an industrial park.

``It's not just investments, but also trade,'' said Ali Shah Ahmedi, the 43-year-old manager of Herat's Tejarat Hotel. ``I have Iranian businessmen staying here all the time, coming to buy or sell goods'' such as packaged foods and motorcycles.

Afghanistan's `Dubai'

Sana, 42, holds forth from his office in the Herat Trade Center, a modern nine-story building of gleaming blue glass that helped inspire residents' nickname for their city: ``the Dubai of Afghanistan.'' A hotel, law offices and a finance company that supports farmers are connected by an Afghanistan rarity: an elevator.

Traffic lights in Herat work, in contrast to the capital, Kabul, so vehicles flow smoothly around the Blue Mosque, an 800- year-old, blue-tiled landmark. Herat is cleaner than Kabul, with more trees and parks, and less dangerous, with fewer visible police and troops.

Ties between Iran and Herat run deep. The city was the capital of 15th-century Persia, and Iran held Herat until midway through the 19th century. Heratis, mostly Sunni Muslims, today speak a dialect closer to the Farsi spoken in Tehran than the Dari used in Kabul.

Predominantly Shiite Iran opposed the Sunni Taliban -- who refused to educate girls when they ran Afghanistan, among other strictures -- as extreme.

Political Transition

After the Taliban were toppled for harboring the terrorists behind the Sept. 11, 2001, attacks, Tehran's government helped the U.S. and the UN begin the political transition that led to Hamid Karzai's election as president.

Iran's leaders feel that contribution wasn't properly acknowledged, said Manouchehr Mottaki, its foreign minister. The slight explains their refusal to help fight the Taliban's current insurgency, he said.

``We limit our cooperation with Afghanistan to helping reconstruct the country,'' Mottaki told reporters at the UN on July 2.

William Wood, the U.S. Ambassador to Afghanistan, said Iran now helps arm the Taliban. Tehran's policy is to ``make everyone a loser'' in Afghanistan, he said in a Kabul interview.

Karzai is ``walking a very fine line'' and doesn't accuse Iran of actively supporting the insurgents, said Humayun Hamidzada, the president's chief spokesman.

`Positive Role'

``President Karzai believes Iran has a positive role to play in Afghanistan,'' Hamidzada said last week in Kabul. ``We are working with the U.S. and Iran, and don't want to become the battleground for their conflict.''

Iran's presence in Afghanistan will be an issue for the next U.S. president. Democratic candidate Barack Obama and Republican rival John McCain both view Iran's regional influence as a threat, though they differ on how to contain it. The two said this week that Afghanistan needs more U.S. military might to battle the Taliban and al-Qaeda terrorists.

Some Afghans view Iran's involvement in Herat as less than benevolent. Iran forced 200,000 Afghan refugees back across the border in recent years, some of whom contributed to crime and poverty in Herat, said Jamila Naseri, a lawyer with the Legal Aid Organization of Afghanistan.

Sana said Herat's Chamber of Commerce this month rejected a request from the Iranian Chamber of Commerce for expanded ties. One reason was Iran's attempt two years ago to undermine a Herat distribution facility for Super Cola, a soft drink. Iran flooded the region with a cheaper beverage until Afghanistan taxed the import heavily.

``They'll keep trying, though,'' Sana said. ``Iran is here to stay.''

To contact the reporter on this story: Bill Varner in Herat, Afghanistan, at wvarner@bloomberg.net