Troops gone, US increasingly sidelined in Iraq

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* Iran's clout seen increasing, arms flown to Syria

* Maliki seen playing Washington, Tehran off

By Barry Malone and Peter Apps

BAGHDAD/WASHINGTON, Dec 20 (Reuters) - When a group of Americans and their heavily armed guards arrived at the Turkish embassy for a party in September, Iraqi police outside blocked their path.

Unless they surrendered the weapons held by their security detail in accordance with embassy policy, the Iraqis said, the delegation of U.S. diplomats would not be allowed in.

What exactly happened next, two sources who were guests at the event say, is not entirely clear. At least one shot was fired, likely a warning shot by the Iraqi police. The Americans got back into their vehicles and disappeared into the night.

After all of the violence and bombing of the last decade, the confrontation went barely noticed. But it points to the way the United States has watched its influence in Iraq dwindle.

A year after U.S. troops withdrew from Iraq, American officials and their vehicles have all but disappeared from the streets of Baghdad. When U.S. officials emerge from their fortresslike embassy compound, they are clearly no longer the de facto rulers of the country they once were.

Many keep themselves to themselves, preferring to fly over Baghdad rather than drive through it and increasingly avoiding contact with the government of Nouri-al Maliki. One US official told Reuters he had not left the compound in almost 3 years except to return to the United States for leave.

"Americans?" said one Iraqi official asked about U.S.-Iraqi cooperation. "I'd like to see some."

In Washington and other Western capitals, there are mounting worries a failure to negotiate a permanent U.S. military presence may leave them sidelined for good. To make matters worse, they worry Maliki's majority Shi'ite government is quietly moving ever closer to Washington's premier regional foe Tehran.

Reports Tehran was using Iraqi airspace - and perhaps even airports and trucking routes - to supply weapons to ally Bashar al-Assad in his battle to retain control of Syria have only deepened that perception. For some, it is yet another sign that ousting the minority Sunni regime of Saddam Hussein and attempting to increase greater democracy was never truly in the U.S. interest.

Washington says the relationship remains close. On December 6, U.S. and Iraqi officials met in Baghdad for their latest meeting on security cooperation, discussing military sales and regional crises such as Syria. Strains, however, remain clear.

"Does Iran have influence? Absolutely. Do we have influence? Absolutely," one U.S. official told Reuters.

"But the Iraqis are the first to say they are pursuing their own interests."

The sprawling U.S. embassy - the largest in the world, almost the size of Vatican City and which cost some $750 million to build - was supposed to be a sign of an enduring presence. Instead, it has become a sign of how greatly Washington overestimated its post-war clout.

TROOP AGREEMENT FAILURE

Current and former U.S. officials say it is not all bad news. Increasing Iraqi oil output has provided enough additional supply to the global oil market to allow the United States and Europe to ratchet up sanctions on Iran. The conflict in Syria, some argue, shows how bad Iraq's ultimate collapse might have been had Saddam Hussein not been removed in 2003.

That Washington would find its influence waning was, they say, always inevitable.

"I don't know why we have been surprised," says Douglas Ollivant, a former U.S. Army officer then National Security Council director for Iraq under both George W. Bush and Barack Obama, now a senior fellow at the New America Institute. "Now Iraq is less dependent on us, it is going its own way."

Even as late as last year, those with knowledge of events say U.S. officials simply never envisaged Washington would be left with no troops at all left in Iraq. Having initiated a "status of forces" agreement in 2008 at the height of the "surge" launched to smother rampant insurrection, they always believed Maliki's government would acquiesce.

"We'll get a deal, We'll get a deal," was always their response," said one non-U.S. diplomat.

Most U.S. and Iraqi sources believe the Iraqi leader would have liked just that. But, they say, both sides ended up talking themselves into a corner and the ultimate sticking point - Washington's desire its troops retain immunity from local prosecution - was too much.

DOOR OPENING AGAIN?

"A status of forces agreement would have been good," says Jim Jeffrey, U.S. ambassador to Baghdad until last year and now a fellow at the Washington Institute for Near East Policy. "And we should have got one. But getting any Arab parliament to agree to (immunity for U.S. troops) was always going to be difficult. The only example would have been the 2008 agreement, and that was only because they needed us so badly."

Private U.S.-hired security contractors were now providing many of the functions - such as military training - that would have been provided by U.S. forces, he said.

After hitting a low point last year, U.S. officials say they believe the relationship is now once again improving.

"The door was almost closed on us, they kept it open a crack because they had to; now it is halfway open, maybe more, and they are throwing it open further," said the U.S. official. "They are asking for cooperation across the board."

But there seems little doubt other countries in the region saw the U.S. departure as something of a defeat.

"The Western governments have certainly lost weight," said one Arab diplomat based in Baghdad. "There are no troops. Their war here is gone. The only reason they remain here is because they want to do business and they want oil contracts. But, even there, the special treatment is gone."

For all the talk of U.S. oil firms benefiting from the Iraq invasion, the Americans have been almost completely frozen out. Instead, concessions have gone to Chinese and other firms - although Exxon in particular continues to step up its operations in the Kurdish dominated north.

"NEVER OURS TO LOSE"

In general, U.S. officials and their Iraqi counterparts have tried to manage their differences in private. But the fact the Obama administration was willing to brief U.S. reporters on suspected Iranian weapons shipments to Syria suggests some may have simply decided they have little goodwill left to lose.

"It's clear that Maliki has higher priorities than his relationship with the United States," says Stephen Biddle, professor of political relations and international affairs at George Washington University and a former adviser to U.S. generals in Iraq. "We clearly pressured Maliki to prevent the overflights and he refused."

Simply painting Maliki's Iraq as an Iranian proxy, however, was hugely over-simplistic, he said. On Syria, both Maliki and leaders in Tehran had a vested interest in supporting fellow Shi'ite Assad against a largely Sunni uprising. On other matters, however, he is seen increasingly playing Washington and Tehran off against each other.

Some in Washington fear Maliki might go too far, alienating his own Sunni and Kurdish minorities, particularly with President Jalal Talabani, an Iraqi Kurd, now ill and leaving the country for medical treatment.

What the U.S. may have to accept, however, is that there may now be little it can now do to shape events.

"We never had as much influence in Iraq as either our friends believed or our adversaries charged," said David Mack, another veteran former State Department official with did two stints as a diplomat in Iraq. "Some Americans were guilty of imperial hubris... In reality, Iraq was never ours to lose."

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