Cairo, Egypt ? The dwindling possibility of a U.S. attack on Iran is changing the dynamics of Middle East politics and raising Arab concern that Tehran now feels emboldened to strengthen its military, increase its support for Islamic radicals and exert more influence in the region’s troubled countries.

Saudi Arabia and other Arab nations opposed military action against Iran’s nuclear program. But they were privately relieved that Washington’s threats kept Tehran preoccupied, despite its manipulation of politics in Iraq and Lebanon and its support of the radical group Hamas in the Gaza Strip.

The U.S. intelligence report released Monday, which found Iran does not have an active nuclear weapons program, has eased international pressure for sanctions and invigorated the country’s hard-liners. This comes as the Arab world has been countering Iranian President Mahmoud Ahmadinejad’s rhetoric and his government’s influence over the presidential turmoil in Lebanon, the politics in Syria and the Israeli-Palestinian peace process.

The report did not allay Arab fears over Iran’s nuclear intentions and its secretive program to enrich uranium.

Days before the intelligence assessment was made public, Ahmadinejad was the first Iranian president to attend the Gulf Cooperation Council summit in Qatar. The meeting was hailed by many as a symbolic milestone to defuse decades of tensions between Shiite-dominated Iran and the region’s other oil-producing, mostly Sunni nations. The Iranian president, however, did little at the meeting to calm nerves about his country’s regional military ambitions.

Suspicion that Iran seeks to dominate the Persian Gulf has prompted some Middle East states – including Saudi Arabia, which Washington regards as the leading Arab voice – to increase their own military spending.

“There’s no trust on the Arab side about Iran’s intentions,” said Christian Koch, research director for international studies at the Gulf Research Center in Dubai. “There are concerns of Iran’s nuclear program for military purposes. There are concerns about Iran’s influence in Iraq, over the unsettled political situation in Lebanon and over the dispute regarding” Iran’s occupation of three islands claimed by the United Arab Emirates.