For the first time since 2003, Iran has stumbled in Iraq. Prime Minister Nouri al-Maliki's decision to confront Moqtada al-Sadr's Mahdi Army in Basra and Sadr City last month caught Tehran off guard. The Mahdi Army lost more than face: It surrendered large caches of arms, and many of its leaders fled or were killed or captured. Crucially, the militias lost strategic terrain -- Basra and its chokehold on the causeway between Kuwait and Baghdad and Iraq's oil exports; Sadr City and the threat it posed to Baghdad security.
The Iranians never provided the level of support necessary for any one militia to contend with a national army, let alone the vastly superior US military. You can see it in the types of weapons utilized by the Mehdi Army. Lacking are effective ATGMs (anti-tank guided missiles), MANPADS (man-portable air-defense systems) and larger calibre rocket types. Now that the focus of Coalition forces are on the Shia militias, these deficiencies are made more apparent.
Iran still has considerable influence in Iraq. It may reconstitute the Mahdi Army and pick up the fight against America, using special groups of the type suspected in the Baghdad car bombing Tuesday. It may also try to use nationalist opposition to the U.S.-Iraq "status of forces" agreement to its advantage. But Tehran will find it difficult to regain lost turf in Baghdad or Basra, or to go back to happily supporting Shiites both at the center and in the militias. It will have to choose whether it is with the state or the sub-state actors.
It will be interesting to see any tactical adaptations taking place. It is assumed that part of the reason the more powerful Iranian weapon types are being held back from Iraq is for a form of escalation, in case of a hot war breaking out between the US and Iran.
I disagree with part of what Nasr has to say. Iran hasn't necessarily suffered major setbacks, nor is it on its heels. It has so far managed an effective, multi-pronged campaign utilizing an economy of resources, especially compared to the enormous cost of occupying Iraq by the United States. The Iraqi theater of conflict remains a diversionary front for Iran, in its cold war with the US. The fact that the struggle has been multi-pronged now vindicates the approach taken. This particular prong, which is under attack, remains a necessity for Iran's ability to strike back after a US attack. For the Iranians, it will require the focus of renewed attention in being made more efficient for the challenges ahead.