BAGHDAD — Suspicious of Iraq's CIA-funded national intelligence agency, members of the Iraqi government have erected a "shadow" secret service that critics say is driven by a Shiite Muslim agenda and has left the country with dueling spy agencies.
The minister of state for national security, a Shiite named Sherwan Waili, has built a spy service boasting an estimated 1,200 intelligence agents out of a second-tier ministry with a minimal staff and meager budget, Western officials say.
"He has representatives in every province," a Western diplomat said, speaking on condition of anonymity. "At the moment, it's a slightly shady parallel organization."
Shiite officials say the minister is providing information on Al Qaeda and former members of Saddam Hussein's Baath Party that isn't being supplied by the Iraqi National Intelligence Service, or INIS, Iraq's primary spy service.
The INIS was established in the spring of 2004 by the U.S.-led provisional authority and has been under the command of Gen. Mohammed Shahwani, a Sunni Arab involved in a CIA-backed coup plot against Hussein a decade ago. For the last three years, the agency has been funded by the CIA, U.S. military and Iraqi officials say.
The service reports directly to Prime Minister Nouri Maliki, a Shiite Muslim, but coreligionists in his government distrust the agency, which has agents from the Hussein era. For most of 2005 and the first part of 2006, Shahwani said, he was banned from Cabinet meetings.
"The general feeling is that the intelligence service is not functioning or conducting its work in the proper way," said deputy parliament speaker Khalid Attiya, a Shiite.
The two spy agencies risk becoming open partisans in Iraq's civil war if vying political parties do not reach an agreement on how to rule the country, one analyst warned.
"If no critical compromise is reached, the security services are going to fall apart on ethnic, sectarian and party lines," said Joost Hiltermann, Middle East director of the International Crisis Group. "It will be a failed state situation like Somalia."
From its conception, Shahwani's agency has antagonized Iraq's new Shiite elite. In September 2004, his men arrested at least 50 members of a Shiite party in southern Iraq called Hezbollah -- which is not linked to the Lebanese group of that name -- and detained them for several months. In the same period, Shahwani accused one of the country's main Shiite political parties, the Supreme Council for Islamic Revolution in Iraq, of being on Iran's payroll and blamed its militia for the deaths of 10 of his agents.
The Shiite drive to create the parallel secret service can be traced to the spring of 2005, when the United States, mindful of Shiite politicians' close ties to Iran, fended off then-Prime Minister Ibrahim Jafari's effort to take charge of the INIS.
The U.S. had invested heavily in creating a strong spy service and trusted Shahwani, who has been a crucial asset to the Americans since the fall of Hussein's regime. Shahwani, who owns a home in the U.S., provided them access to old army officers, and formed an Iraqi special forces unit, called the "Shahwanis," that fought in the November 2004 battle to retake Fallouja from Sunni Arab insurgents.
Shahwani's service "is funded completely by the U.S. Central Intelligence Agency, not by the Iraqi government," a U.S. military official said on condition of anonymity. "U.S. funding for the INIS amounts to $3 billion over a three-year period that started in 2004."
Asked about the funding, CIA spokesman Paul Gimigliano said, "The CIA does not as a rule discuss publicly the details of its relationships with the intelligence services of other countries."
After failing to remove Shahwani in 2005, Shiite officials sought to fill the gap. Then the minister of state for national security, Abdul Karim Anizi, lobbied Jafari to turn his post into a full-fledged ministry.
"He pushed to provide a service. He was very proactive. He exerted a lot of pressure and requested to make his post a full ministry, but the proposal didn't move an inch," a former government official said on condition of anonymity. "He started to recruit informers and sympathizers. He couldn't give them full salaries, but he could give them government privileges and he built up a network of informers."
When Anizi stepped down, he was replaced by Waili. The service has expanded dramatically in the last year, Waili said, getting around its limited state budget by hiring agents on contracts.
The agency provides a hard-line Shiite view in national security meetings, observers say.
"It's slightly reactionary in a Shiite sense," the Western diplomat said. "If you talk about [Sunni Muslim] Anbar province, you know he is going to take a view largely uncharitable toward the Anbar tribes."