April 4 (Bloomberg) -- U.S. Vice President Dick Cheney, on an unannounced trip to Iraq last month, said the 30,000 extra U.S. soldiers sent there last year had brought about ``dramatic improvements in the security situation.''

Actually, says Gilles Kepel, Iran is behind the easing of violence. Kepel, head of Middle East studies at Sciences Po in Paris, writes in the just published ``Terreur et Martyre'' that the U.S. and al-Qaeda have both lost the war on terror, and that Iran pulls the strings -- in Iraq anyway.

I met Kepel, 52, at a Paris delicatessen's upper-floor restaurant, and asked him what difference a new U.S. president would make. Dressed in a dark suit and pale-red spotted tie, he spoke in between bites of ravioli.

Kepel: Whoever wins will have to cope with the fact that this great Bush narrative of the war on terror has failed miserably. He or she will have to deal with a new U.S. foreign policy toward the Middle East.

As of today, the real winner in Iraq seems to be Iran. The kingmaker in Baghdad now is (Iranian President) Mahmoud Ahmadinejad, which is definitely a paradox.

One may wonder whether the new American president will want to remain in Iraq, or, on the contrary, deal with damage limitation. I imagine that there might be a tendency toward damage limitation.

Europe's Role

Nayeri: What does that mean?

Kepel: That the U.S. will be much less present in the Middle East, and that the conflicts will remain. That's why I believe that it's high time for Europe to play a more proactive role in the region. We have a niche with the French presidency (of the European Union) coming up in July.

Nayeri: You argue that Iran, much more than the U.S. troop surge, has curbed Iraqi violence. How so?

Kepel: The reason Iraq disappeared from the front page of the New York Times was that the Iranians exercised restraint, or controlled the Shiite militias. Everybody knows that they can fan the embers again if they want.

Nayeri: What about the recent eruption of violence in Basra, led by the Shiite cleric Muqtada al-Sadr? How does that fit in?

Kepel: Muqtada is in Iran. He is not entirely free. He and his sponsors wanted to show the U.S. and their local allies that they can't be reduced to nothing -- that they still have a capacity for resistance, and that everything has to be bargained over with them.

Oil Money

Nayeri: What's the fighting about?

Kepel: It's about who's going to get the oil money in Basra. They were being deprived by the government people of what they thought was their legitimate resource.

They couldn't have moved without Iran at least turning a blind eye. The Iranians are the ones who can give the green light, who can supply the Iraqi Shiite militias with weapons and ammunition and train them.

Ahmadinejad is a voter in the American election. His mentor Ayatollah (Ruhollah) Khomeiny voted for Ronald Reagan in the days of the hostage crisis, and against Jimmy Carter.

For the time being, the Iranians are doing well. But they are racing against the clock, because they have a booming population. There is no money, there is no investment, and there is popular resentment over all the money spent in Lebanon and now Iraq.

New Generation

Nayeri: You say in your book that al-Qaeda is weakened. They still seem active in Iraq.

Kepel: (Al-Qaeda ideologue Ayman) al-Zawahiri tells you every day that the victory of Islam is near, and so on and so forth. But this is, to a large extent, wishful thinking. There is a new generation within al-Qaeda that contends that this is not at all what you should do.

Spectacular terrorism is dead. Young terrorists must work by groups of two or three.

If you don't have a wide organization, you won't be able to launch a major attack. You'll launch a multitude of minor attacks, but they won't have the same devastating effect.

Nayeri: So you think al-Qaeda is finished?

Kepel: It has been tremendously weakened in Iraq, because they weren't able to mobilize the masses.

Nayeri: It has peaked?

Kepel: I guess so, yes. You have peak oil, and peak al-Qaeda.

``Terreur et Martyre: Relever le defi de civilisation'' is from Flammarion (366 pages, 22.50 euros). The book will be published in November by Harvard University Press under the title ``Beyond Terror and Martyrdom: The Future of the Middle East.''

To contact the reporter on this story: Farah Nayeri in London at Farahn@bloomberg.net.

Last Updated: April 4, 2008 02:10 EDT