Washington: Iran has created a Shiite ‘state within a state’ in Iraq, according to a US newspaper report on Monday.

Based on a security report commissioned by the Saudi government, the Washington Times reported that Iran provides both logistical support of armed groups as well as funds for social programmes.

The 40-page report says Iranian military forces are providing Shiite militias with weapons and training and that Tehran is actively supporting pro-Iranian Iraqi politicians, the newspaper said.

"Where the Americans have failed, the Iranians have stepped in," it said, quoting the report.

"Saudi Arabia has a special responsibility to ensure the continue welfare and security of Sunnis in Iraq," given its historical ties, the assessment concludes, according to the Times report.


It recommends that the Saudi government prepare a strategy to deal with the worst-case scenario of full-blown civil war and to share the report with the United States, the article said.