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* U.S. air strikes not enough to turn tide in Iraq
* Islamic State recruiting magnet for disenchanted Sunnis
* Limits to U.S. intervention in Syria emboldened militants
* Strategic stakes high for United States, regional allies
By Samia Nakhoul
BEIRUT, Aug 12 (Reuters) - Ridiculed at first, the new power which has seized a third of Iraq and triggered the first American air strikes since the U.S. troop withdrawal in 2011 - has carved itself a powerful and possibly lasting presence in the Middle East.
The bombing of fighters of the Sunni Islamic State is unlikely to turn around Iraq and its fragmented condition has given the self-proclaimed caliphate the opportunity to establish a hub of jihadism in the heart of the Arab world.
To confront the Islamic State storming through the villages of eastern Syria and western Iraq, an international coalition sanctioned by the United Nations would need to be set up, analysts in and outside the Gulf region said.
The jihadist army, whose ambition for a cross-border caliphate between the Euphrates and the Tigris rivers was not initially taken seriously by their opponents, is now brimming with confidence, emboldened by blood and treasure.
The warriors of the new caliphate are exploiting sectarian and tribal faultlines in Arab society, petrifying communities into submission and exploiting the reluctance of Washington and the West to intervene more robustly in the civil war in Syria.
Unlike Osama bin Laden's al Qaeda, which set its sights on destroying the West, the Islamic State has territorial goals, aims to set up social structures and rages against the Sykes-Picot agreement of 1916 between Britain and France that split the Ottoman empire and carved borders across the Arab lands.
President Barack Obama's decision to step back into the Iraq quagmire nearly three years after withdrawing U.S. troops, with limited air strikes in the past few days against the Islamic State, arises in part because of inertia over Syria.
A failure to arm the mainstream, mostly Sunni, rebellion against Bashar al-Assad's authoritarian rule opened space for the Islamic State, which has now surged back into a broken Iraq, raising its black flag in town after town, the analysts said.
Almost a year ago, in a last-minute change of mind, Obama decided against bombing Assad amid accusations of nerve gas attacks on rebel enclaves. That decision, many believe, has proved costly both in Syria and in neighbouring Iraq.
It reinvigorated Assad, helped in the quashing of Syria's moderate rebels and empowered the militant Islamists who became a recruiting magnet for disenchanted Sunnis in Syria and Iraq.
Well financed and armed, IS insurgents have captured large swathes of territory in a summer offensive, as the Iraqi army - and now Kurdish Peshmerga forces in the self-governing north - have crumbled in the face of its onslaught, massacring Shi'ites and minority Christians and Yazidis as they advance.
The military campaign has been accompanied by a social media blitz showing crucifixions, beheadings and other atrocities. To many, the business of the Islamic State is killing infidels, and it is better at it that any of its forerunners including al Qaeda, which has renounced its offshoot as too brutal.
Interspersed with footage of executions, and the marking out of local minorities for extermination, the message is that the Islamic State does not just preach; it acts mercilessly against its catalogue of enemies.
Using captured territory in north and eastern Syria, nearly 35 percent of the country, as its rear base, the IS is now attacking northeastward into Iraqi Kurdistan and even west across the border of Lebanon.
Its rapid advances are made possible by the disintegration of Syria and Iraq, alienation of Sunni communities willing to ally even with IS to resist governments they see as under the thumb of Shi'ite Muslims and their sponsor in Iran, and Sunni rage at U.S. and Western policy in the Middle East.
"If you have tens of thousands of people who are willing to fight under its banner, that by itself tells you that the state system itself is really almost in tatters," says Fawaz Gerges, head of the Middle East Centre at the London School of Economics.
Obama justified his air strikes as humanitarian, to protect tens of thousands of refugees from the Yazidi community threatened with genocide, and defensive - to thwart any IS advance on Arbil, capital of the Kurdistan Regional Government where U.S. diplomats and special forces might be at risk.
But as Washington starts provisioning poorly armed Peshmerga forces policing a 1,000-km (600-mile) border against the new caliphate, the strategic stakes are becoming clearer. The United States hopes to revitalise the Peshmerga, whose name means those who confront death but who were driven back by the IS onslaught.
The United States has also lined up behind Haidar al-Abadi, a new Iraqi premier to replace its former ally Nuri al-Maliki - spurned by his Iranian backers and most of his own party as a liability whose sectarian policies helped drive Iraq's Sunni minority into the jihadist camp. The political struggle exposed the treacherous political quicksand Obama now faces.
Dr Hisham al-Hashimi, a Baghdad-based researcher into Iraq's and the region's armed groups, said the Islamic State has found ways to compensate for its initial lack of manpower, estimated by most analysts at between 10,000 and 15,000 fighters before its rapid advance from Syria into Iraq.
It may be overstretched by its sudden conquest of vast territory but has learned to use fear as a strategic weapon. "The more it terrorises the people of those areas, the longer it can stay" in control, Hashimi said. "The caliphate exists and is growing now, in an environment where (Sunni opinion) rejects the central government, be that in Iraq or in Syria".
In Syria, more than three years of thwarted rebellion against Assad, built around the ruling family's minority Alawite sect, a heterodox offshoot of Shi'ite Islam, has given the militants a base in the east and north and a following among the brutalised Sunni majority.
In Iraq, the increasingly sectarian rule of Maliki caused anger in the Sunni minority, which held power until the U.S.-led invasion of 2003 deposed Saddam Hussein.
The IS is well-resourced, with young volunteers, cash to buy weapons and pay wages, plus an arsenal of U.S.-supplied heavy weapons it captured from the Iraqi army in June, when it overran the mainly Sunni cities of Mosul and Tikrit.
Aside from funding from sympathisers in the Gulf and tens of millions raised from theft, extortion and kidnapping, the Islamic State has oil. "In eastern Syria IS controls 50 of the 52 oil wells, while in the north and northwest of Iraq there are now 20 oil wells under the control of IS," Hashimi said.
Many experts cautioned against comparing IS with its predecessor, the al Qaeda-affiliated Islamic State of Iraq run by Abu Mussab al-Zarqawi, which was at the heart of the anti-American insurgency and the Sunni-Shi'ite sectarian blood-letting of 2005-08. Sunni tribes finally rebelled against it.
"These are not just barbarians who came here to steal what they could and then leave," Hashimi says. "They are now fighting to establish a state, while Zarqawi fought to topple the central government - there is a big difference."
The new caliphate declared by its Iraqi leader Abu Bakr al-Baghdadi is filling the vacuum of imploding states and, unlike al Qaeda, are establishing a real social base, says Gerges.
"The al Qaeda of Osama bin Laden was a borderless, transnational movement which has never been able to find a social base. The reason to take the IS ... seriously is because they are like a social epidemic, feeding on sectarian tensions and the social and ideological faultlines in Arab societies," Gerges said, adding that Syria's Nusra Front other militant Islamists were following a similar pattern.
"The phenomenon of the Islamic State is a manifestation of the weakening and dismantling of the Arab state as we know it."
Gerges also called the militants' spectacular brutality - the crucifixions, stoning of women and now, according to Iraqi ministers, the burying alive of women and children from the Yazidi minority - all publicised over the Internet, as "a strategic choice".
IS has an extraordinary ability to multiply its numbers by recruiting and indoctrinating volunteers, feeding them their radical brand of Islam and training them militarily.
Mohsen Sazegara, one of the founders of Iran's Revolutionary Guards who is now a U.S.-based dissident, said the emergence of the Islamic State was a reaction by Sunni factions to Maliki and his anti-Sunni policies, which were defended by the Guards.
Maliki, Sazegara said, squandered the inheritance of the Sahwa, the U.S.-funded militia drawn from among the country's Sunni Muslim tribes who were a driving force in fighting al Qaeda predecessors to IS in Iraq after 2006.
The U.S. decision to hand over responsibility for the Sahwa to the Shi'ite-dominated Iraqi government in 2009 was a mistake, which alienated them and drove many to join IS ranks.
"U.S. General (David) Petraeus used the tribes in Iraq to fight the al Qaeda predecessors to IS. But Maliki upset the tribes. The hardline pro-Shi'ite policy of Iran and Maliki and those around him led to this Sunni extremism. Islamic State is one manifestation of that," Sazegara said.
The success of the Islamic State has created a dilemma for all the Muslim neighbours and beyond from Saudi Arabia to Libya.
Riyadh, which until now has seen non-Arab, Shi'ite Iran as ultimately posing the greater threat, is worried that the Islamic State's territorial gains will radicalise Saudis who may eventually target their own government.
The conservative Sunni kingdom was so concerned by the Islamic State's advance in June and July that it moved tens of thousands of troops to the border with Iraq. Yet, Saudi officials say they do not believe the Islamic State is capable of posing any military threat to the mighty Saudi armed forces.
By contrast, they regard Iran and its Shi'ite allies across the region as posing a far more sustained and dangerous threat to the kingdom's position in the Arab and Islamic world.
Since the invasion of Iraq and the overthrow of Saddam's Sunni-dominated rule, Saudi Arabia and its Gulf allies have not accepted the rise to power of the Shi'ite majority in Iraq.
Saudi Arabia has a strategic rivalry with Iran over the control of the Gulf but its Wahhabi version of Sunni Orthodoxy has always depicted Shi'ites as heretics and this has a huge resonance inside the kingdom and across the Gulf.
Beyond any strategic rivalry the royal family is careful about contradicting the Wahhabi clerical establishment that underpins the monarchy.
The Islamic State's victories against an Iraqi army run by a Shi'ite government, and against ethnic Kurdish forces seen as having encroached on Arab territory, have engendered a degree of sympathy and admiration among some Saudis, the analysts said.
"The Islamic State's propaganda is that they are fighting the Shi'ites. This is the reason why sometimes some people have sympathy with them. But this sympathy is not substantial. It is only among those who are very extremist," said Mohsen al-Awaji, a reformist Saudi Islamist scholar. "We are very much afraid for our young people, who may believe in this propaganda."
However, most analysts agree that token U.S. air strikes are unlikely to turn the tide. It will be very hard for Washington to succeed unless the new Iraqi government radically addresses Sunni grievances by granting them a real share in power and persuading Sunni tribes to set up a new Sahwa to fight the IS.
Otherwise, the Islamic State will further expand and grow in numbers as it seizes more territory. For the moment, it is the militants who are pulling in the recruits. Video footage of long lines of young men waiting outside IS recruiting offices in Syrian and Iraqi towns shows their popularity.
A Syrian living in an area of Islamic State control near Raqqa, the movement's power base in Syria, said the group has carried out beheadings, levied the "jizya" tax on non-Muslims and settled foreign fighters in homes confiscated from minorities, former government officers and other people.
But despite that, it has still won a degree of respect among locals by, for example, curbing crime using its own version of law of and order. For youths without work, salaries offered by the Islamic State are one of the few sources of income.
The movement seems keen to sow its ideals among the young; one video distributed by the Islamic State features a preacher called Abdallah al-Belgiki - "The Belgian" - who says he travelled from Belgium to the caliphate with his young son.
Against a background of black jihadist flags, he asks the child, aged about 8, whether he would like to go home: "No," he replies. "I want to stay in the Islamic State ... I want to be a jihadi to fight the infidels and the infidels of Europe."
At an IS training camp for boys, one fighter tells the camera: "This generation of children is the generation of the caliphate, this is the generation that will fight the Americans and their allies, the apostates and the infidels."
"The true ideology has been planted in these children." (Additional reporting by Tom Perry in Beirut, Salman Raheem, Isra Abdulhadi and Michael Georgy in Baghdad, Babak Dehghanpisheh in Beirut, Angus McDowall in Riyadh, Editing by Peter Millership)
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