* Iraq war unlocks deep sectarian sentiments across the Middle East
* Iran's 1979 revolution provokes power contest with Saudi Arabia
* Videos posted on the Internet illustrate Shi'ite-Sunni savagery
* ISIL says anti-Shi'ite brutality is a policy as it builds Caliphate
* Religion is being deployed as a weapon to galvanise rival interests (Updates with ISIL declaring Islamic caliphate)
By Samia Nakhoul
BEIRUT, June 29 (Reuters) - As jihadists storm through the Sunni heartlands of Iraq towards Baghdad, where a Shi'ite government they regard as heretic clings on, they have lifted the veil on deep sectarianism which has also stoked the fires of Syria's civil war and is spilling over into vulnerable mosaic societies such as Lebanon.
The sectarian genie is now well out of the bottle, eclipsing traditional inter-state rivalries that plague the Middle East - even if these still play a part in the drama.
The 1979 Islamic Revolution brought a Shi'ite theocracy to power in non-Arab Iran, giving a sectarian edge to the long-standing, state-to-state contest for influence in the Gulf between Iran and Saudi Arabia, an absolute monarchy underpinned by the fundamentalist tenets of Sunni Wahhabi doctrine.
And the 2003 US invasion shattered Iraq into ethno-sectarian fragments, giving the majority Shi'ites the whip-hand over the Sunni minority and overturning a century-old balance of power.
Now the Syrian conflict pitting a government whose core is President Bashar al-Assad's Alawites, a minority sect descended from Shi'ism, in an all-out war against rebels made up mainly from the Sunni majority, has lured jihadi volunteers to create an almost seamless sectarian battlefield from Baghdad to Beirut.
"There is no sense of common identity and therefore wherever there is a division of power like in Lebanon, Syria, Iraq and Bahrain they end up fighting over who wins. It has become a winner take all situation," said Middle East academic and former State Department official Vali Nasr, also a Senior Fellow at Brookings Institution.
"This is being driven from both top down and bottom up."
Glimpses of the savagery of this sectarianism have multiplied as the Islamic State in Iraq and the Levant (ISIL), an al Qaeda splinter group which controls parts of war-torn Syria, captured a string of north and central Iraqi cities in June. On Sunday, it declared a state in areas under its control and its leader caliph of Muslims throughout the world.
One video posted by ISIL shows its fighters storming the house of an old man and accusing him and his two young sons of fighting in the Iraqi army under Nuri al-Maliki, the Shi'ite Islamist prime minister.
As the captives dig their own graves, a fighter taunts them, "You're tired, Yes? Dig, dig more, where is Maliki to come and save you? Why did you join Maliki's army?"
The old man implores comrades to repent and break ranks with the army, saying: "Look at me, I am digging my own grave, they came to my home and took me". The video ends abruptly with what looks like the swish of a blade falling upon the victim and a one-word caption: "slaughtered".
An ISIL leader reached by Reuters via Skype makes clear this brutality is a considered policy as his movement builds its cross-border Islamic State.
"We will deal with Maliki's followers and his filthy state according to righteous Islamic law", he says. "Whoever comes to us repentant before we have the upper hand upon him, will be one of us; but the one who insists in fighting us and on his infidelity and apostasy, he'll have to face the consequences".
Disowned even by al-Qaeda, ISIL has taken hate speech to a new level in Iraq, denouncing Shi'ites as "dogs of Maliki", or as "reviled and impure rejectionists (rafadah)".
They proclaim that "death is the only language the Shi'ite Marjaiyah (clerical leaders) and their rotten gangs understand".
The Shi'ite side has responded in kind, posting videos of Sunnis being executed. In one, groups of men shot randomly, some in the head, lie next to each other in what appears to be a room with blood splashed on the wall and bullet holes everywhere.
Religion, many analysts say, is being deployed as a weapon to galvanise rival interests, but is taking on a virulent sectarian life of its own, sometimes escaping the control of those wielding the weapon.
"National identities in these countries are eroding and sectarian identities are becoming more prominent," Nasr said.
In Iraq, says Professor Charles Tripp at London University's School of Oriental and African Studies, the process began in the 1990s when Saddam Hussein, the dictator toppled in 2003, started a "piety campaign" to solidify support for his otherwise secular regime in the face of crippling international sanctions.
This indiscriminate encouragement of Sunni Salafism and Shi'ism encouraged "sectarian entrepreneurs who found it very profitable to mobilise people around religion or sect".
In a process which continued under Maliki, the poison of sectarian prejudice hardened into bigotry, exploited by leaders who fell into "an awful bidding war" to claim religious legitimacy, Tripp says. Regional players also cloaked their pursuit of geopolitical advantage in religion, he adds.
"If you emphasise your Shi'ism as an Iranian it allows them to intervene in Lebanon (which has a big Shi'ite community). Equally, if you are a Saudi you can claim it is not about regional rivalry but some bigger cause", he says.
"On a regional level people get sucked into a power game which is not actually about religion but resources and prestige."
Yezid Sayigh, a senior associate at the Carnegie Middle East Center in Beirut, argues that "there is actually no theological debate in this religious war." "It's fundamentally, as always, a fight for political power".
While enmity between Islam's two competing sects has often been fierce and bloody, it now spreads over huge swathes of territory from the eastern Mediterranean to Iraq, the Gulf and Yemen.
"It is neither solely religious nor purely political; the two mix and feed upon each other, with personal interests and geopolitical confrontations pouring petrol on the flames," said Tarek Osman, author of the "Perilous Scenario in the Eastern Mediterranean."
Sectarian wars, Osman says, are also occurring at a time when Arab societies are undergoing a transformation from the old political order following the ousting of autocratic leaders, who have ruled for decades to a new, as yet undefined, order.
And for the first time in the last 150 years, the region is witnessing the emergence of highly assertive, well-armed, jihadist groups that are dominating the plains from eastern Syria to western Iraq, and gradually carving for themselves quasi-statelets that they aim to have as permanent entities.
"If that happens, it will not only be a peril to all sovereign states in this part of the world, not only to religious minorities, but to all of the societies," Osman said.
The future, experts argue, will be determined as much by local factors as regional forces.
"Local politics will shape this in one form or another. Sometimes local politics will mean it is horrible and really violent, you will see the kind of things you saw in Syria where one village is massacred by another. And of course localism can take the fuse out, take the bitterness out because it could actually lead to a local settlement," Tripp said.
While it is true that Iraqi Sunnis of the north, united in their hatred of Maliki's government which they say disempowered and marginalised them, helped ISIL in its dramatic takeover, the same differences may cause a break with ISIL's intolerant and brutal methods, as happened in Syria and Iraq seven years ago.
The Jihadist coalition under ISIL, experts say, will eventually fragment because of internal disputes over sharing money, territory and power.
They believe ISIL insurgents will overreach themselves by alienating tribes, more pragmatic Sunni groups, former officers from Saddam's era and ordinary Iraqis as they did in 2005-2008 under al Qaeda leader Abu Musab al-Zarqawi, when Iraqis revolted against its ultra-hardline Islamist agenda.
Some argue that these splits will open quickly because the Jihadists have to provide government in the huge swathes of territory they have seized.
"One of the great strengths of al Qaeda was that it has no social constituency", says Charles Tripp. "It could rally people round an idea but didn't have to provide electricity, water, social justice and so on. ISIL now does."
So far in Sunni cities captured by ISIL, the social power structures are those of existing tribal leaders and former Baathist officials, while the people with the guns and the ruthlessness and violence are the ISIL, Tripp says.
"They know they cannot rule that area without the cooperation of the tribes and when you look at the pattern of what happened before that's how the control of al Qaeda and Zarqawi fell apart because they alienated them," Tripp said.
On the ground, it is hard to imagine Maliki regaining Sunni provinces he lost to ISIL with Iraq's army, a force which exists more on paper than on the ground. But regaining it with Iranian-trained Shi'ite militias such as Asa'ib Ahl al-Haq is also a recipe for sectarian slaughter, experts say.
Many predict the fighting will go on until all sects - from Syria to Iraq - Shi'ites, Sunnis, Kurds and Alawites carve up their own fiefdoms even if they stay within the same international borders.
The clearest emerging enclave is the northern Kurdish autonomous region, which has been more than 20 years in the making and which experts say could be permanent.
(Editing by Dominic Evans and Philippa Fletcher)