Coalition forces are watching Iranian agents who have moved inside Iraq to influence the formation of the post-Saddam Hussein government but aren't being threatened by them, the U.S. commander of the invading land forces said Wednesday.

And it has come as "no surprise" that searches so far have failed to turn up weapons of mass destruction, Lt. Gen. David McKiernan said amid a shift in tactics by troops hunting weapons sites.

McKiernan portrayed the issue of Iranians operating inside Iraq as part of democracy at work.

"Right now, the Shiite and any Iranian-influenced Shiite actions are not an overt threat to coalition forces," he said.

"But we're watching all these competing interests," McKiernan said, naming a number of groups seeking a voice in the new government. "And if truth be known, this is probably a little bit of democracy in progress right now in Iraq."

White House spokesman Ari Fleischer said the administration is concerned about the presence of the Iranian agents and has told Iran not to interfere in Iraq.

"We have concerns about Iranian agents in Iraq," he said. "We have made clear to Iran we oppose any outside interference in Iraq's road to democracy."

At this point, Iran's chief interest appears to be gathering information and positioning itself for influence in whatever new Iraq emerges, said a U.S. intelligence official, speaking on condition of anonymity.

To a lesser extent, all of Iraq's neighbors are taking similar steps, gathering information on the situation inside a country that had been largely closed to them, the official said.

There's no evidence at this point linking the Iranian government to anti-U.S. demonstrations, but officials say they are watching closely for such activity.

Iran has many supporters in Iraq, particularly Shiite Muslims who see themselves philosophically aligned with Iran, the official said. While some Iranians have moved into southern Iraq, most Iranian information comes through these Iraqis.

Speaking in a video-conference from Baghdad to reporters at the Pentagon, McKiernan also said officials believe the best source for tips on Saddam's unconventional weapons — which were the rationale for the war — will be from human intelligence, that is, that gained from Iraqis now willing and able to speak out.

Officials say they have found no chemical or biological weapons despite searches of more than half of some 150 top-priority sites intelligence said before the war might be related to weapons programs.

For the moment, military searchers are setting aside the list — which actually names some 1,000 sites — in favor of giving more weight to what they are being told by Iraqis, either those captured, those who surrendered, or others, one defense official said on condition of anonymity.

He said the full 1,000 will eventually be searched. The list did not reflect an intelligence failure, but rather an evolution of the process in which hunters will turn to possibly more recent information from people inside the country and so more knowledgeable.

McKiernan also said that on day 35 of the campaign, coalition forces are rapidly moving toward the next phase of operations in Iraq.

"Today ... where we sit is in a blurred transition between combat operations and post-hostility operations," he said. "We're still fighting pockets of resistance throughout Iraq and still dealing with paramilitary forces.

"But rapidly we are transitioning to a focus on civil military operations and an effort to restore basic services to the Iraqi people that are either at, or better than, their prewar standards."

McKiernan said his commanders have authority to "work with local Iraqi workers, clerics, political figures, bureaucrats, to get Iraqis back into the workplace and back in control of their destiny."