This report offers a critical examination of Iran's influence in Afghanistan and Pakistan. Two points are made: that Iran's top priority is its own regime's survival and its regional policies are directed by its national security concerns. Secondly, that Iran's engagements in Afghanistan are clearly guided by the presence of the US. Iran's predominant interest is in stabilizing Afghanistan, but as long as Afghanistan is neither safe nor stable, Iran will play a double game and engage with its regional neighbours according to the US-Iran equation. Deterrence, counter-containment and competition are the keywords in these complex relations. The report outlines Iran's reconstruction efforts in Afghanistan, its political platform and "soft power", and the bonds of mutual dependency in terms of water rights, refugees and drug trafficking. It examines Iran's alleged military interventions and the reasons for playing this double game. Lastly, the report discusses Iran's tense relationship with Pakistan with regard to both Afghanistan and the troubled region of Baluchistan.