Saudis see Shia/Iranian state within a state in Iraq

Washington Times:

Iran has effectively created a Shi'ite "state within a state" in neighboring Iraq, defying both Iraqi Sunnis and neighboring Sunni nations, according to a Saudi security report.
Iranian military forces are providing Shi'ite militias with weapons and training, Iranian charities are pouring funds into schools and hospitals, and Tehran is actively supporting pro-Iranian Iraqi politicians, the report said.
"Where the Americans have failed, the Iranians have stepped in," said the report by the Saudi National Security Assessment Project, a Riyadh-based consultancy commissioned by the Saudi government to provide security and intelligence assessments.
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According to the report, Iran also is infiltrating Iraq through its al Quds forces -- the special command division of the Iranian Revolutionary Guard Corps (IRGC) -- which specialize in intelligence operations in unconventional warfare.
RAND Corp. senior defense analyst Ed O'Connell said the Iranian intelligence was trying to counter Saddam Hussein's former formidable spy network, Iraqi Intelligence Service (IIS), or the Mukhabarat. Under Saddam's regime, he said, roughly one of every six Iraqi adults was a paid or unpaid informant -- a network that did not disappear with the arrival of the U.S.-led coalition.
"The real story in Iraq is this below-the-surface 'unconventional war' between the old IIS, which could become a more overt Saudi proxy -- and the al Quds special directorate intelligence-counterintelligence," Mr. O'Connell said.
The Saudi security report was directed by Nawaf Obaid -- who recently was fired for writing an article in The Washington Post warning that Saudi Arabia would not stand idly by and allow Iraq's Shi'ites to destroy its Sunni population.
Washington diplomats and analysts say Mr. Obaid's dismissal was more window-dressing than a real punitive action.
The report states that the Iranian levers of influence in Iraq include a broad network of informants, military and logistical support of armed groups, and social welfare campaigns.
It adds that Tehran has "sought to influence Iraq's political process by giving support to new various parties, in particular, to the SCIRI," or Supreme Council for Islamic Revolution in Iraq, the leading Shi'ite party.
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There is much more. Regardless of whether the Saudi analysis is correct, it is what they believe are likely to act on. So far their actions have been to permit support for the Sunni insurgency which has only increased the strength of the Shia resistance to the Sunni terror campaign. My guess is that Obaid was the source for this story.