As U.S. President Barack Obama seeks to reinvigorate his administration’s policy in the Middle East, he will have to contend with several issues where U.S. influence is less than overwhelming.

Chief among them, according to Middle East analysts, is the growing assertiveness of Saudi Arabia as it confronts Iranian influence in the region and tilts away from its historic bargain with the U.S.: oil for security.

In recent months, the Saudis have essentially taken the gloves off — sending troops into Bahrain to prop up the island’s Sunni monarchy against a rebellious Shiite majority; consolidating their relationship with Pakistan as a regional counterweight to Iran; and expanding the Gulf Cooperation Council (GCC) to reinforce the club of Sunni monarchies.

Through the GCC Saudi Arabia has also moved to resolve the crisis in Yemen, its neighbor to the south, where al Qaeda is establishing a foothold and where the Saudis suspect Iranian meddling.

Their core mission, says Ian Bremmer, president of the Eurasia Group, “is to ensure stability in their neighborhood.” Bremmer believes “the single most important long-term implication of the Arab Spring may be a consolidated GCC that is tacking away from the West.”

At the same time, the Saudi kingdom’s relations with the United States have deteriorated — in part over the Obama administration’s support for pro-democracy movements in the Arab world. On two occasions in recent months, according to well-placed sources in the Gulf, King Abdullah of Saudi Arabia even refused to meet senior U.S. officials.

Earlier this week, Saudi grievances were laid out in a Washington Post op-ed by Nawaf Obaid, a consummate insider and a senior fellow at the King Faisal Center for Research and Islamic Studies. Describing a “tectonic shift” in the Saudi-U.S. relationship, he complained of an “ill-conceived response to the Arab protest movements and an unconscionable refusal to hold Israel accountable” for its settlement-building in Palestinian territories. On the latter issue, he said the U.S. “had lost all credibility.”

Obaid also echoed some of the criticisms made last year by Prince Turki al Faisal, a former ambassador to the United States who said that “negligence, ignorance and arrogance” had cost America the “moral high ground” it held after 9/11.

Saudi alienation from Washington predates the Obama administration. Riyadh saw the invasion of Iraq as a disaster because it unleashed Shiite influence in a country traditionally dominated by its Sunni minority. Several Saudi officials have described Iraqi Prime Minister Nuri al Maliki — who leads a Shia-dominated government — as an “Iranian agent.”

The Saudis also complained that the Bush administration had “dropped the ball” on the Israel-Palestinian peace process by not endorsing King Abdullah’s plan for a two-state solution, with east Jerusalem as the Palestinian capital. That, they argued, had only strengthened more radical forces in the region, such as Hamas and Hezbollah.

Above all, the Saudi establishment has long been anxious that the threat it perceives from Iran is not adequately acknowledged in Washington.

U.S. diplomatic cables obtained by WikiLeaks and published last year showed growing Saudi impatience with U.S. caution toward Iran’s nuclear program, with King Abdullah quoted as urging Gen. David Petraeus to “cut off the head of the snake” during a meeting in April 2008. A year later, the King is quoted as telling President Obama’s counterterrorism adviser, John Brennan, that he hoped the U.S. would review its Iran policy and “come to the right conclusion.”

So now, Obaid writes, “Riyadh intends to pursue a much more assertive foreign policy, at times conflicting with American interests.”

One long-time observer of Saudi policy says the kingdom is preparing to use its wealth and economic growth (forecast at nearly 6% this year, thanks to the rising price of crude oil) to lead an expanded bloc as old certainties wither away.

The Saudis plan to spend $100 billion to modernize their armed forces, buy a new generation of combat aircraft and add 60,000 Interior Ministry troops. Like other Gulf states, Saudi Arabia also plans to expand its special forces.

Beyond its borders the kingdom wants to expand the six-member Gulf Cooperation Council, until now a club of wealthy monarchies, by inviting Jordan and Morocco to join. They might not have much money, but they, too, are ruled by Sunni monarchs and have — by regional standards — cohesive and well-trained armies.

In return, Gulf largesse would help support their weak economies. Amid recriminations and confusion in the Arab League — whose planned Baghdad summit has just been postponed for a whole year — the Saudis see the GCC as the institutional antidote to the upheavals of the Arab Spring.

Saudi Arabia has already created a $20 billion fund to assist Bahrain and Oman. And the dispatch of some 1,000 troops to Bahrain in March served notice to Tehran that Saudi Arabia would not tolerate a Shiite-dominated state a few miles off its coast.

“Sending a force to Bahrain was a necessary evil for the GCC in order to protect the monarchy in Bahrain,” says Theodore Karasik of the Institute of Near East and Gulf Military Analysis. “If a monarchy falls in the region, this might create a domino effect.”

It was also a slap in the face to U.S. policy in the region, which was focused on coaxing dialogue in Bahrain. Just days before the Saudi intervention, U.S. Defense Secretary Robert Gates was in Bahrain urging King Hamad to take more than “baby steps” towards reform.

That followed alarm in Riyadh over the Obama administration’s desertion of long-time ally Hosni Mubarak, who had cultivated close ties with the Gulf states and who was regarded by the Saudis as another Arab bulwark against “Iranian expansionism.” The U.S. eventually told Mubarak it was time to go, but the Saudi royal family supported him to the end, even offering to make up for any cut in U.S. aid.

Bremmer of the Eurasia Group says the United States does hold important cards — through multi-billion-dollar arms contracts and long-established relationships in the oil industry. And regional analysts say that ultimately Saudi Arabia would likely appeal for and get U.S. help in any showdown with Iran.

Bremmer says that much in the Gulf revolves around personal relationships and loyalties, and he says the Obama administration needs to invest more in that, starting at the top. By contrast, senior executives in U.S. oil companies — by and large no fans of the president’s energy policy — do talk with the Saudis.

In the longer-term, a Saudi tilt to the East may simply reflect new economic realities. Some 55% of Saudi oil now flows to Asia, compared with about 10% that flows to the United States. The Saudi state oil firm has built refineries in China, and trade between the two countries was worth $40 billion in 2010.

As relations with the West fray, Bremmer concludes that “a far-reaching Saudi-China strategic partnership could well result alongside expanded Chinese contracts to buy long-term access to Saudi oil and Chinese investment in developing Saudi infrastructure.”

‘Melodrama” and ”Middle East” are words that sit comfortably in the same sentence. But who would have thought, as the world thrilled to the peaceful revolt by millions of ordinary Tunisians in January, that just three months later two of the region’s bad-cop regimes - Riyadh and Tehran - might be seen to be verging towards war?

They are on snarling terms already. Amid the clamour for rights and reform across the Middle East and North Africa, the irony of these heavyweights coming to blows is that each is as repressive as the other - but none of that will stop the rest of the region, and the world, lining up to take sides.

For now it’s a cold war, fought by proxies elsewhere. In Lebanon, the Saudi-backed Sunnis have lost significant ground to the Iranian- and Syrian-backed Hezbollah, which now controls the levers of power in Beirut.

In the current crises, Riyadh and Tehran face-off in Bahrain - Tehran is backing the majority Shiites; Riyadh had thrown its lot in with the minority Sunni monarchy, as it attempts to smash the protest movement. And Yemen, on the Saudis’ southern border, is the most likely next point of friction between the two.

Historically, they have pulled in opposite directions. Saudi Arabia is Arab and Sunni; Iran is Persian and Shiite. Both invest hugely in spreading their beliefs to the farthest corners of the Muslim world. Iran lines up with the so-called Arab rejectionists - Syria, Hezbollah and Hamas. The Saudis line up with Egypt, Morocco, the Gulf statelets and the Palestinian Fatah faction. Riyadh pulls with Washington; Tehran against.

”The cold war is a reality,” a senior Saudi official told The Wall Street Journal. ”Iran is looking to expand its influence. The instability over the last few months means that we don’t have the luxury of sitting back and watching events unfold.”

How that plays out will be intriguing in what has become a ”yes, but …” geopolitical, global crossroads. The permutations tantalise. If the Damascus regime of Bashar al-Assad collapses, what are the implications if the Syrian alliance with Tehran fractures? What becomes of Syria’s joint sponsorship, with Iran, of Hezbollah in neighbouring Lebanon and of Hamas in the Palestinian Occupied Territories?

All these are ”yes, but …” issues, as much for Damascus as for Tehran. Given that Syria remains, technically at least, at war with Israel, can we assume that any new order in Syria would rush to throw over Hezbollah and Hamas? Even Israel, as much as it loathes the Tehran-Damascus-Hezbollah-Hamas quartet, is wary of who and what might replace Assad in the Syrian capital, because just as the interim regime in Cairo is shifting away from the ousted regime’s alliance with Israel, there is no guarantee that a new Syrian leadership will be any friendlier to Tel Aviv.

What if Syria dumped Iran as an ally - but was to pick up expansionist Turkey as a new best friend in the region? Likewise, how might the regional balance be altered if Tehran was to lose Damascus as an ally, but in turn was to pick up Shiite-controlled Iraq and liberated Egypt, which this week revealed that it was resuming diplomatic relations with Tehran?

The official spokesman for the Egyptian Foreign Ministry told reporters: ”We are prepared to take a different view of Iran; the former regime used to see Iran as an enemy, but we don’t.” Similarly, the ministry confirmed that new Foreign Minister, Nabil Elaraby, was considering a visit to the Hamas-controlled Gaza Strip. As a return on the Americans’ huge blood-and-treasure investment in deposing Saddam Hussein and thereby delivering Iraq from minority Sunni control to a majority Shiite government that is becoming increasingly relaxed and comfortable in its dealings with Tehran, the US has handed the Iranian regime a rare gift. Yes, the ayatollahs might lose Syria as their Arab champion, but here is Arab Baghdad and Washington’s lock-step ally Cairo beckoning Tehran with open arms.

The Saudis are furious with Washington over the loss of Sunni control of Iraq and over Barack Obama selling out the Egyptian leader, Hosni Mubarak. Such is the chill between the two countries that Riyadh recently refused official visits by the US Secretary of State, Hillary Clinton, and by the Defence Secretary, Robert Gates. A measure of Saudi determination - maybe that should be ”desperation” - is that when Riyadh saw a need to quell the unrest in Bahrain, it ignored pleas from Washington and sent its own troops over the causeway that links Bahrain to the kingdom.

This is a regime that ordinarily pays others to fight its battles - see its funding of Iraq in its 1980s war with Iran; or has relied on allies - see American wars against Saddam Hussein in 1991 and in 2003.
Ramping it all into a religious conflict, a senior Saudi official was quoted: ”King Abdullah has been clear that Saudi Arabia will never allow Shia rule in Bahrain - never.” In turn, Iran’s President, Mahmoud Ahmadinejad, has warned the House of Saud that it ”should learn from Saddam’s fate”.

The stakes for the US are huge - a third of its imported oil comes from Saudi Arabia, and Bahrain hosts the US Navy’s Fifth Fleet, which patrols vital sea lanes through which a fifth of the world’s oil supplies are shipped. Equally, Riyadh and other capitals in the region have openly speculated on pursuing their own nuclear programs, if Tehran is allowed to persist with its program.

The story of the Washington response to all of this is circuitous.

The Western military intervention in Libya is dressed up as a humanitarian act, but don’t be fooled, writes Robert Kaplan of the Centre for a New American Security in The Wall Street Journal. Arguing that in foreign policy all moral questions are really questions of power, Kaplan observes: ”We intervened twice in the Balkans in the 1990s, only because Yugoslav dictator Slobodan Milosevic had no nuclear weapons and could not retaliate against us; unlike the Russians, whose destruction of Chechnya prompted no thought of intervention on our part.”

Was that then the rationale for Washington’s decision to throw its superpower weight behind the Libyan intervention? Not entirely - orchestrated leaks from the Obama White House reveal that a critical element in the decision to join the attacks on Libya’s leader, Muammar Gaddafi, was the message such an action would send to Tehran.

As reported by The New York Times, failure to act against Libya would be seen by Tehran as a failure by Obama to follow through on his claim that Gaddafi had ”lost the legitimacy to lead”, as a confirming sign of weakness that Obama also would not follow through on his vow that he would never allow Iran to build a nuclear weapon.

Benjamin Rhodes, a senior aide present for the talks, was quoted: ”The ability to apply this kind of force in the region this quickly - even as we deal with other military deployments in Iraq and Afghanistan - combined with the nature of this broad coalition, sends a very strong message to Iran about our capabilities, militarily and diplomatically.”

In a broadcast translated into Persian and beamed into Iran to mark last month’s Persian new year, Obama told Iranians: ”So far, the Iranian government has responded by demonstrating that it cares more about preserving its own power than respecting the rights of the Iranian people. These choices do not demonstrate strength, they show fear.”

In this context Libya is presented as a sideshow. The real contest is with Tehran, which the Americans want to see stopped in its nuclear tracks - and whose tilt for the balance of power in the entire region they have blocked.

But the Arab uprisings were something of a get-out-of-jail-free card for Iran. In January, Washington was happy in the belief that it was boxing Tehran in with economic sanctions; a deal with Russia to halt weapons deliveries to Tehran; and a computer virus called Stuxnet, which was eating its way through the centrifuge machines in the Iranian uranium enrichment program.

Fast-forward to the present, and Washington’s Arab allies are more preoccupied with their own longevity and - ka-ching, ka-ching - Iran is doing better than the sanctions might have allowed, thanks to the crises in the region driving oil to $US100-plus a barrel.

In all of this, Washington’s key ally in the region was to be Riyadh. But the contempt for the US coming out of the Saudi capital is visceral - in the view of the princes, the Bush administration botched by toppling Saddam, thereby delivering Iraq to Tehran; and the Obama administration is condemned equally for selling out Mubarak, and allowing the grubby rank-and-file Egyptians to have a meaningful vote.

In these twin efforts, Washington is seen to have dislodged two great stones in what was a Sunni wall that effectively thwarted Iranian ambition. Likewise, in refusing to go along with Saudi efforts to resolve the Palestinian crisis, Riyadh saw Washington prolonging the issue that Iran used to great effect in stirring the Arab street.

Washington, it must be noted, does not have a mortgage on hypocrisy in the region. The Americans look morally bankrupt - leading the charge against Gaddafi and dumping long-standing allies Mubarak in Cairo and Zine El Abidine Ben Ali in Tunis, while at the same time allowing the leaders of Bahrain, Yemen and Syria to get away with murder in confronting protesters.

But, like the US, the Iranian ayatollahs are into picking winners and losers. Initially they simply ignored the growing unrest in allied Syria, but when that became unsustainable, they took to casting the demonstrations against Assad as the work of Israeli-trained provocateurs.

The revolts in Tunisia and Egypt, according to the Tehran spin, were belatedly inspired by Iran’s 1979 revolution. And while it champions the ”Islamic awakening” rights of the demonstrators who are being brutalised by the regime in neighbouring Bahrain, it whitewashes out of the equation its own brutal suppression of Iranians who have attempted to revive the mass protests that erupted in the wake of Iran’s disputed presidential election in 2009.

For the mullahs, the region’s uprisings are a day-by-day proposition. They might posture endlessly about the holy Shiite suffering in Bahrain, but they know - and they know that their people know - the revolts in Tunisia and in Egypt were a secular lunge for a kind of democracy which, if successful, will make their theocracy a sad venture by comparison.

But for now, Iranian security forces have arrested opposition leaders and tightened media censorship and control of the internet and social media. In the region, the Iranian leadership observes a greater level of difficulty for Washington in achieving the three elements of its regional policy - a region from which the oil flows freely; in which Israel is protected; and in which citizens enjoy basic human rights, or at least to the extent that they do not attack US interests, as expressed by Thanassis Cambanis, of Columbia University. Or, to quote the Hillary Clinton lexicon - ”stability”.

As they happily crack the heads of the few who dare to take to the streets in Iranian cities, the mullahs cannot believe the Sunni Saudis were mug enough to send forces into Bahrain to put down an uprising by Shiites.

Despite endless complaints from Riyadh, there has been little to substantiate its claims that Iran is deliberately manipulating events in Bahrain - even US diplomats have reported no signs of Iranian intervention in the Bahraini protests.

It was only after the Bahraini regime unleashed its brutal attacks on demonstrators that posters of the Hezbollah leader, Hassan Nasrallah, appeared in the crowds and that calls were made for the ousting of the royal family. Iran did beam broadcasts of Nasrallah’s speeches into Bahrain, but foreign diplomats back the protest leaders’ denial of claims by the regime that they have received money and weapons from Tehran.

For the Saudis, the uprisings are a horrific moment. Abutted by all of Jordan, Yemen, Iraq and Bahrain, Riyadh views the varying degrees of unrest in all four as a threat to its own stability. Others agree.
Kaplan grinds all this into a single, core question for Washington: ”Which regime [will last] longer: Saudi Arabia’s or Iran’s? If the Saudi monarchy turns out to have more staying power, we will wrest a great strategic victory from this process of unrest; if Iran’s theocracy prevails, it will signal a fundamental eclipse of American influence in the Middle East.”

Answers to that question thrown up by some analysts, make the call in Tehran’s favour.

In a joint-paper, Ruth Hanau Santini, of the Brookings Centre on the US and Europe, and Emiliano Alessandri, of the German Marshal Fund, see the balance of power in the Persian Gulf shifting in Iran’s favour, ”just as it did in 2003, with the US-led war in Iraq”.

They write: ”Regional power shifts, rising oil prices and progress in its nuclear program all seem to have combined to boost Iran’s external ambitions.

”The authority of Saudi Arabia, which has long served as a counterbalance to Iran, the bastion of regional stability, and the guarantor of Israel’s survival, has been severely weakened by the ongoing turmoil.”

Reviewing Washington’s options, the paper concludes: ”Iran’s calculus that the current level of unrest will turn to Tehran’s advantage, without it having to lift a finger, makes it an especially difficult interlocutor.”

By Paul McGeogh

What’s more important than Libya? At least four other countries.

The outcome of the unfinished revolution in Egypt will affect the prospects for democracy across the region. The outcome in Yemen, where Al Qaeda’s most dangerous branch is headquartered, is important to the struggle against terrorism. A change in Syria, Iran’s closest ally in the Arab world, would upend the balance of power on Israel’s northern borders.

And then there’s the Persian Gulf kingdom of Bahrain, where troops from Saudi Arabia and other Sunni Muslim countries have intervened to quell a Shiite Muslim uprising. It might seem odd to include a power struggle in a quasi-country of half a million citizens on a list of major strategic issues, but the crisis in Bahrain qualifies.

About two-thirds of Bahrainis are Shiite, but Sunni Muslims hold almost all the power. After Shiite groups staged increasingly violent demonstrations to demand more democracy, the government cracked down — and when the Bahraini police faltered, Saudi Arabia and other neighboring countries stepped in with troops.

Opposition groups say more than 400 activists have been arrested; the Bahraini government has refused to disclose the number of arrests. Human Rights Watch has charged that at least seven detainees have died in custody and that some may have been tortured.

Last week, the government announced that it was outlawing the largest — and most moderate — Shiite political party, but then backpedaled after an international outcry.

Why does all this matter? Because Bahrain isn’t the only Arab state on the gulf with a sizable Shiite population. Iraq has a Shiite majority and a Shiite-dominated government. Saudi Arabia is ruled by Sunnis, but it has a significant Shiite minority in its oil-rich eastern province. In all three countries, Shiite Muslims have historically been treated as an oppressed underclass — but now, watching other Arabs win more rights, they’re demanding equality too.

Bahrain matters, as well, because Saudi Arabia treats it as a virtual protectorate. The Saudi royal family doesn’t like to see Shiite Muslim demonstrators demand the head of any monarch; it’s too close to home.

Besides, in the view of many Sunnis, Bahrain’s Shiite protesters look like puppets in the hands of Iran, the Shiite Muslim behemoth across the gulf that has long tried to assert itself as the region’s dominant power.

The fear among many U.S. officials, though, is that the Sunni-Shiite unrest in Bahrain could turn into a self-fulfilling prophecy. If the Bahraini government stops negotiating with the moderate Shiite opposition, it risks radicalizing its own population — and driving some of them into the arms of Iran. Another outcome could be a conflict between Sunni and Shiite that would cross several borders.

In a worst-case scenario, warned Charles Freeman, a former U.S. ambassador to Saudi Arabia, a Sunni-Shiite split could prompt the pro-U.S. government in Iraq to ally itself with Iran, scrambling the basic foundation of U.S. security policy in the area, which aims to make Iraq a bulwark against Iran.

“The strategic stakes in Bahrain are higher than many outside the region appreciate,” Freeman said.

The Obama administration has been urging the Bahraini government to negotiate. Last week, the State Department’s top Middle East hand, Jeffrey Feltman, rushed to Bahrain to try to reopen talks between the government and the opposition.

But the administration has been notably gentle, because it wants the Bahraini royal family to stay in power and it doesn’t want to offend Saudi Arabia.

In a speech last week, Secretary of State Hillary Rodham Clinton said the U.S. “strongly condemned the abhorrent violence committed against peaceful protesters by the Syrian government.” But on Bahrain, she merely warned that “security alone cannot resolve the challenges.” (“We know that a one-size-fits-all approach doesn’t make sense,” she explained.)

Another official said the administration is promoting reform throughout the Arab world, but it’s also reassuring rulers in places such as Saudi Arabia and Bahrain that it won’t insist on immediate change. “It doesn’t have to come fast,” he said.

Defense Secretary Robert M. Gates and national security advisor Tom Donilon visited Saudi Arabia this month to try to patch up the U.S. relationship with King Abdullah, who was furious when Obama backed the overthrow of Egyptian President Hosni Mubarak. Both U.S. and Saudi officials said the meetings helped repair the U.S.-Saudi alliance on issues such as Iran. But they said there was no sign of any Saudi moderation on the issue of Bahrain, which the Saudis consider their backyard.

The gulf has long been a central focus of U.S. foreign policy, both because it’s the source of much of the world’s oil and because it’s the frontier between the pro-American Arab monarchies and anti-American Iran.

That’s why the U.S. has a naval fleet there — headquartered, as it happens, in Bahrain.

Now Bahrain is at risk. Hard-liners have opted to use an iron fist, to see whether repression can restore stability; reform, they say, can come later. If they turn out to be wrong, the consequences could be dire.

By Doyle McManus

For three months, the Arab world has been awash in protests and demonstrations. It’s being called an Arab Spring, harking back to the Prague Spring of 1968.

But comparison to the short-lived flowering of protests 40 years ago in Czechoslovakia is turning out to be apt in another way. For all the attention the Mideast protests have received, their most notable impact on the region thus far hasn’t been an upswell of democracy. It has been a dramatic spike in tensions between two geopolitical titans, Iran and Saudi Arabia.

This new Middle East cold war comes complete with its own spy-versus-spy intrigues, disinformation campaigns, shadowy proxy forces, supercharged state rhetoric—and very high stakes.

“The cold war is a reality,” says one senior Saudi official. “Iran is looking to expand its influence. This instability over the last few months means that we don’t have the luxury of sitting back and watching events unfold.”

On March 14, the Saudis rolled tanks and troops across a causeway into the island kingdom of Bahrain. The ruling family there, long a close Saudi ally, appealed for assistance in dealing with increasingly large protests.

Iran soon rattled its own sabers. Iranian parliamentarian Ruhollah Hosseinian urged the Islamic Republic to put its military forces on high alert, reported the website for Press TV, the state-run English-language news agency. “I believe that the Iranian government should not be reluctant to prepare the country’s military forces at a time that Saudi Arabia has dispatched its troops to Bahrain,” he was quoted as saying.

The intensified wrangling across the Persian—or, as the Saudis insist, the Arabian—Gulf has strained relations between the U.S. and important Arab allies, helped to push oil prices into triple digits and tempered U.S. support for some of the popular democracy movements in the Arab world. Indeed, the first casualty of the Gulf showdown has been two of the liveliest democracy movements in countries right on the fault line, Bahrain and the turbulent frontier state of Yemen.

But many worry that the toll could wind up much worse if tensions continue to ratchet upward. They see a heightened possibility of actual military conflict in the Gulf, where one-fifth of the world’s oil supplies traverse the shipping lanes between Saudi Arabia and Iran. Growing hostility between the two countries could make it more difficult for the U.S. to exit smoothly from Iraq this year, as planned. And, perhaps most dire, it could exacerbate what many fear is a looming nuclear arms race in the region.

Iran has long pursued a nuclear program that it insists is solely for the peaceful purpose of generating power, but which the U.S. and Saudi Arabia believe is really aimed at producing a nuclear weapon. At a recent security conference, Prince Turki al Faisal, a former head of the Saudi intelligence service and ambassador to the U.K. and the U.S., pointedly suggested that if Iran were to develop a weapon, Saudi Arabia might well feel pressure to develop one of its own.

The Saudis currently rely on the U.S. nuclear umbrella and on antimissile defense systems deployed throughout the Persian Gulf region. The defense systems are intended to intercept Iranian ballistic missiles that could be used to deliver nuclear warheads. Yet even Saudis who virulently hate Iran have a hard time believing that the Islamic Republic would launch a nuclear attack against the birthplace of their prophet and their religion. The Iranian leadership says it has renounced the use of nuclear weapons.

How a string of hopeful popular protests has brought about a showdown of regional superpowers is a tale as convoluted as the alliances and history of the region. It shows how easily the old Middle East, marked by sectarian divides and ingrained rivalries, can re-emerge and stop change in its tracks.

There has long been bad blood between the Saudis and Iran. Saudi Arabia is a Sunni Muslim kingdom of ethnic Arabs, Iran a Shiite Islamic republic populated by ethnic Persians. Shiites first broke with Sunnis over the line of succession after the death of the Prophet Mohammed in the year 632; Sunnis have regarded them as a heretical sect ever since. Arabs and Persians, along with many others, have vied for the land and resources of the Middle East for almost as long.

These days, geopolitics also plays a role. The two sides have assembled loosely allied camps. Iran holds in its sway Syria and the militant Arab groups Hezbollah in Lebanon and Hamas in the Palestinian territories; in the Saudi sphere are the Sunni Muslim-led Gulf monarchies, Egypt, Morocco and the other main Palestinian faction, Fatah. The Saudi camp is pro-Western and leans toward tolerating the state of Israel. The Iranian grouping thrives on its reputation in the region as a scrappy “resistance” camp, defiantly opposed to the West and Israel.

For decades, the two sides have carried out a complicated game of moves and countermoves. With few exceptions, both prefer to work through proxy politicians and covertly funded militias, as they famously did during the long Lebanese civil war in the late 1970s and 1980s, when Iran helped to hatch Hezbollah among the Shiites while the Saudis backed Sunni militias.

But the maneuvering extends far beyond the well-worn battleground of Lebanon. Two years ago, the Saudis discovered Iranian efforts to spread Shiite doctrine in Morocco and to use some mosques in the country as a base for similar efforts in sub-Saharan Africa. After Saudi emissaries delivered this information to King Mohammed VI, Morocco angrily severed diplomatic relations with Iran, according to Saudi officials and cables obtained by the organization WikiLeaks.

As far away as Indonesia, the world’s most populous Muslim country, the Saudis have watched warily as Iranian clerics have expanded their activities—and they have responded with large-scale religious programs of their own there.

The 1979 Iranian revolution was a major eruption that still looms large in the psyches of both nations. It explicitly married Shiite religious zeal with historic Persian ambitions and also played on sharply anti-Western sentiments in the region.

Iran’s clerical regime worked to spread the revolution across the Middle East; Saudi Arabia and its allies worried that it would succeed. For a time it looked like it might. There were large demonstrations and purported antigovernment plots in Saudi Arabia’s Eastern Province, which has a large population of Shiite Muslim Arabs, and in Bahrain, where Shiites are a distinct majority and Iran had claimed sovereignty as recently as 1970.

The protests that began this past January in Tunisia had nothing to do with any of this. They started when a struggling street vendor in that country’s desolate heartland publicly set himself on fire after a local officer cited his cart for a municipal violation. His frustration, multiplied hundreds of thousands times, boiled over in a month of demonstrations against Tunisian President Zine al-Abidine Ben Ali. To the amazement of the Arab world, Mr. Ben Ali fled the country when the military declined to back him by brutally putting down the demonstrations.

Spurred on by televised images and YouTube videos from Tunisia, protests broke out across much of the rest of the Arab world. Within weeks, millions were on the streets in Egypt and Hosni Mubarak was gone, shown the door in part by his longtime backer, the U.S. government. The Obama administration was captivated by this spontaneous outbreak of democratic demands and at first welcomed it with few reservations.

In Riyadh, Saudi officials watched with alarm. They became furious when the Obama administration betrayed, to Saudi thinking, a longtime ally in Mr. Mubarak and urged him to step down in the face of the street demonstrations.

The Egyptian leader represented a key bulwark in what Riyadh perceives as a great Sunni wall standing against an expansionist Iran. One part of that barrier had already crumbled in 2003 when the U.S. invasion of Iraq toppled Saddam Hussein. Losing Mr. Mubarak means that the Saudis now see themselves as the last Sunni giant left in the region.

The Saudis were further agitated when the protests crept closer to their own borders. In Yemen, on their southern flank, young protesters were suddenly rallying thousands, and then tens of thousands, of their fellow citizens to demand the ouster of the regime, led by President Ali Abdullah Saleh and his family for 43 years.

Meanwhile, across a narrow expanse of water on Saudi Arabia’s northeast border, protesters in Bahrain rallied in the hundreds of thousands around a central roundabout in Manama. Most Bahraini demonstrators were Shiites with a long list of grievances over widespread economic and political discrimination. But some Sunnis also participated, demanding more say in a government dominated by the Al-Khalifa family since the 18th century.

Protesters deny that their goals had anything to do with gaining sectarian advantage. Independent observers, including the U.S. government, saw no sign that the protests were anything but homegrown movements arising from local problems. During a visit to Bahrain, Secretary of Defense Robert Gates urged the government to adopt genuine political and social reform.

But to the Saudis, the rising disorder on their borders fit a pattern of Iranian meddling. A year earlier, they were convinced that Iran was stoking a rebellion in Yemen’s north among a Shiite-dominated rebel group known as the Houthis. Few outside observers saw extensive ties between Iran and the Houthis. But the Saudis nonetheless viewed the nationwide Yemeni protests in that context.

In Bahrain, where many Shiites openly nurture cultural and religious ties to Iran, the Saudis saw the case as even more open-and-shut. To their ears, these suspicions were confirmed when many Bahraini protesters moved beyond demands for greater political and economic participation and began demanding a constitutional monarchy or even the outright ouster of the Al-Khalifa family. Many protesters saw these as reasonable responses to years of empty promises to give the majority Shiites a real share of power—and to the vicious government crackdown that had killed seven demonstrators to that point.

But to the Saudis, not to mention Bahrain’s ruling family, even the occasional appearance of posters of Lebanese Hezbollah leader Hassan Nasrallah amid crowds of Shiite protesters pumping their fists and chanting demands for regime change was too much. They saw how Iran’s influence has grown in Shiite-majority Iraq, along their northern border, and they were not prepared to let that happen again.

As for the U.S., the Saudis saw calls for reform as another in a string of disappointments and outright betrayals. Back in 2002, the U.S. had declined to get behind an offer from King Abdullah (then Crown Prince) to rally widespread Arab recognition for Israel in exchange for Israel’s acceptance of borders that existed before the 1967 Six Day War—a potentially historic deal, as far as the Saudis were concerned. And earlier this year, President Obama declined a personal appeal from the king to withhold the U.S. veto at the United Nations from a resolution condemning continued Israeli settlement building in Jerusalem and the West Bank.

The Saudis believe that solving the issue of Palestinian statehood will deny Iran a key pillar in its regional expansionist strategy—and thus bring a win for the forces of Sunni moderation that Riyadh wants to lead.

Iran, too, was starting to see a compelling case for action as one Western-backed regime after another appeared to be on the ropes. It ramped up its rhetoric and began using state media and the regional Arab-language satellite channels it supports to depict the pro-democracy uprisings as latter-day manifestations of its own revolution in 1979. “Today the events in the North of Africa, Egypt, Tunisia and certain other countries have another sense for the Iranian nation.… This is the same as ‘Islamic Awakening,’ which is the result of the victory of the big revolution of the Iranian nation,” said Ayatollah Ali Khamenei.

Iran also broadcast speeches by Hezbollah’s leader into Bahrain, cheering the protesters on. Bahraini officials say that Iran went further, providing money and even some weapons to some of the more extreme opposition members. Protest leaders vehemently deny any operational or political links to Iran, and foreign diplomats in Bahrain say that they have seen little evidence of it.

March 14 was the critical turning point. At the invitation of Bahrain, Saudi armed vehicles and tanks poured across the causeway that separates the two countries. They came representing a special contingent under the aegis of the Gulf Cooperation Council, a league of Sunni-led Gulf states, but the Saudis were the major driver. The Saudis publicly announced that 1,000 troops had entered Bahrain, but privately they concede that the actual number is considerably higher.

If both Iran and Saudi Arabia see themselves responding to external threats and opportunities, some analysts, diplomats and democracy advocates see a more complicated picture. They say that the ramping up of regional tensions has another source: fear of democracy itself.

Long before protests ousted rulers in the Arab world, Iran battled massive street protests of its own for more than two years. It managed to control them, and their calls for more representative government or outright regime change, with massive, often deadly, force. Yet even as the government spun the Arab protests as Iranian inspired, Iran’s Green Revolution opposition movement managed to use them to boost their own fortunes, staging several of their best-attended rallies in more than a year.

Saudi Arabia has kept a wary eye on its own population of Shiites, who live in the oil-rich Eastern Province directly across the water from Bahrain. Despite a small but energetic activist community, Saudi Arabia has largely avoided protests during the Arab Spring, something that the leadership credits to the popularity and conciliatory efforts of King Abdullah. But there were a smattering of small protests and a few clashes with security services in the Eastern Province.

The regional troubles have come at a tricky moment domestically for Saudi Arabia. King Abdullah, thought to be 86 years old, was hospitalized in New York, receiving treatment for a back injury, when the Arab protests began. The Crown Prince, Sultan bin Abdul Aziz, is only slightly younger and is already thought to be too infirm to become king. Third in line, Prince Nayaf bin Abdul Aziz, is around 76 years old.

Viewing any move toward more democracy at home—at least on anyone’s terms but their own—as a threat to their regimes, the regional superpowers have changed the discussion, observers say. The same goes, they say, for the Bahraini government. “The problem is a political one, but sectarianism is a winning card for them,” says Jasim Husain, a senior member of the Wefaq Shiite opposition party in Bahrain.

Since March 14, the regional cold war has escalated. Kuwait expelled several Iranian diplomats after it discovered and dismantled, it says, an Iranian spy cell that was casing critical infrastructure and U.S. military installations. Iran and Saudi Arabia are, uncharacteristically and to some observers alarmingly, tossing direct threats at each other across the Gulf. The Saudis, who recently negotiated a $60 billion arms deal with the U.S. (the largest in American history), say that later this year they will increase the size of their armed forces and National Guard.

And recently the U.S. has joined in warning Iran after a trip to the region by Defense Secretary Gates to patch up strained relations with Arab monarchies, especially Saudi Arabia. Minutes after meeting with King Abdullah, Mr. Gates told reporters that he had seen “evidence” of Iranian interference in Bahrain. That was followed by reports from U.S. officials that Iranian leaders were exploring ways to support Bahraini and Yemeni opposition parties, based on communications intercepted by U.S. spy agencies.

Saudi officials say that despite the current friction in the U.S.-Saudi relationship, they won’t break out of the traditional security arrangement with Washington, which is based on the understanding that the kingdom works to stabilize global oil prices while the White House protects the ruling family’s dynasty. Washington has pulled back from blanket support for democracy efforts in the region. That has bruised America’s credibility on democracy and reform, but it has helped to shore up the relationship with Riyadh.

The deployment into Bahrain was also the beginning of what Saudi officials describe as their efforts to directly parry Iran. While Saudi troops guard critical oil and security facilities in their neighbor’s land, the Bahraini government has launched a sweeping and often brutal crackdown on demonstrators.

It forced out the editor of the country’s only independent newspaper. More than 400 demonstrators have been arrested without charges, many in violent night raids on Shiite villages. Four have died in custody, according to human-rights groups. Three members of the national soccer team, all Shiites, have also been arrested. As many as 1,000 demonstrators who missed work during the protests have been fired from state companies.

In Shiite villages such as Saar, where a 14-year-old boy was killed by police and a 56-year-old man disappeared overnight and showed up dead the next morning, protests have continued sporadically. But in the financial district and areas where Sunni Muslims predominate, the demonstrations have ended.

In Yemen, the Saudis, also working under a Gulf Cooperation Council umbrella, have taken control of the political negotiations to transfer power out of the hands of President Ali Abdullah Saleh, according to two Saudi officials.

“We stayed out of the process for a while, but now we have to intervene,” said one official. “It’s that, or watch our southern flank disintegrate into chaos.”

By BILL SPINDLE and MARGARET COKER

US President Barack Obama is sending a foreign policy aide to key Gulf allies Saudi Arabia and the United Arab Emirates this week amid concern over the turmoil sweeping the Middle East.

National Security Advisor Tom Donilon will leave on Monday on a three-day trip during which he will meet Saudi King Abdullah in Riyadh and Crown Prince Sheikh Mohammed bin Zayed al-Nahayan in Abu Dhabi, the White House said.

“The National Security Advisor’s visit underscores the importance of our relationship with these two key partners,” a written statement said.

Saudi Arabia’s intervention last month in Bahrain amid Shiite-led opposition violence has exposed festering political differences between Riyadh and the United States over the revolts rocking the Arab world.

US Secretary of Defense Robert Gates held talks in Riyadh on Wednesday with King Abdullah, with both sides concerned as well by Iranian intentions in the region and spiraling unrest in Yemen.

Boosted by the arrival of a Saudi-led Gulf forces contingent, Bahraini security forces smashed a month-old protest mid-March in central Manama by Shiites, leaving three protesters and two police dead.

The surprise Saudi decision to lead a regional mission into the strife-torn and strategic kingdom ruled by a Sunni minority also reflected the deep shadow cast by Iran in the instability testing US-allied leaders across the Gulf.

Washington appeared to have had little if any advance notice of what was a potentially embarrassing move for the United States, which has led a prolonged effort to prod Bahrain towards political reforms.

Saudi Arabia and other Gulf Arab states have traded accusations with Iran of meddling and interference, especially over Bahrain, which lies off the eastern Saudi coast and is home to the US Fifth Fleet.

“We already have evidence that the Iranians are trying to exploit the situation in Bahrain and we also have evidence that they’re talking about what they can do to create problems elsewhere,” Gates said after Wednesday’s meeting in Riyadh.

King Abdullah’s return home in February after months of treatment abroad for a back ailment came amid mounting international anger over bloodshed in the kingdom’s southern neighbor Yemen.

Yemeni President Ali Abdullah Saleh, a close US and Saudi ally, has faced months of protests calling for his departure, in which around 125 people have been killed.

Dozens of anti-regime demonstrators were shot Sunday in the latest clashes with security forces, sparking charges of “massacre,” as Yemen’s worried Gulf neighbors gathered in Riyadh to work out a transition plan.

The United States announced last year that it plans to offer Saudi Arabia $60 billion worth of hi-tech fighter jets and helicopters, in the largest US arms deal ever.