With its neighbouring rivals eliminated, Hezbollah undefeated in Lebanon and world powers grappling with its refusal to halt uranium enrichment, Iran is well on its way to becoming the dominant force in the Middle East.

As world powers yesterday began studying the wordy 23-page rejection of an international package aimed at persuading Iran to stop enrichment, a leading thinktank said the US-led "war on terror" has bolstered the nation's growing influence.

The Chatham House report points out the invasions of Iraq and Afghanistan have removed Iran's main rival regimes.

Shi'ite Iran, it said, has been swift to fill the power vacuum created by the removal of the hardline Sunni Taliban in Afghanistan and Saddam Hussein's Sunni-led secular Iraq.

Israel's conflict with the Palestinians and its invasion of Lebanon, widely seen as a failed attempt to destroy the Iranian-backed Hezbollah militia, have also put the Islamic state "in a position of considerable strength," said the thinktank.

Meanwhile experts predict that if Iran is able to continue enrichment work unchecked, it may be able to construct nuclear warheads by 2010.

Fears of a resurgent Iran led an Israeli minister on Tuesday to warn that Israel should build more bomb shelters.

"The Iranians have said very clearly that if they come under attack, their primary target would be Israel." Pensioner Affairs Minister Rafi Eitan told Israel Radio.

The Chatham House report says that the increasing instability across the Middle East is fuelling Iran's power, particularly at the expense of the United States.

Since the end of the Lebanon war, refugees have returned to their villages to find the unexploded remnants of US-made cluster bombs scattering their homes, further fuelling the negative image of the US in the region.

But it is in Iraq in particular that Iran has now superseded the US as the most influential power, says Chatham House, now regarding the rival it fought a bitter war with throughout the 1980s as its "own backyard".

It is also a "prominent presence" in its other war-torn neighbour, Afghanistan, according to Chatham House.

The report says: "There is little doubt that Iran has been the chief beneficiary of the war on terror in the Middle East.

"The United States, with coalition support, has eliminated two of Iran's regional rival governments but has failed to replace either with coherent and stable political structures."

The thinktank said the US needs to understand better Iran's links with its neighbours to see why the country felt able "to resist Western pressure."

"The US-driven agenda for confronting Iran is severely compromised by the confident ease with which Iran sits in its region," said the report.

Source: China Daily