Divided Iraq has two 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.