The first flight from Iran in three decades landed in Iraq's holy city of Najaf today, resurrecting a direct link between the world's two major Shia communities.

Passengers from Tehran arrived at a brand-new airport, a symbol of Iraq's rebirth and a gateway for 3 million Iranian Shia pilgrims planning to visit Najaf this year, hoping to overcome tensions going back to the Iran-Iraq War.

But old enmity dies hard. Iran is viewed with increasing suspicion by Iraqis and may now be as unpopular as America after years of sponsoring insurgent groups.

Politicians, clerics and ordinary residents in Najaf — traditionally a pro-Tehran city — expressed to The Times an almost visceral fear of Iranian influence. As violence ebbs, such fears are replacing divisions over American influence as a core political issue and signal the rise of Arab nationalism in Iraq.

Sheikh Hayder Al-Amiry, a prominent Shia cleric, said: "Iran has supported violent groups here and with every bomb that has gone off the hatred for Iran increased." The cleric foresaw a clash between an Iranian desire to export its system of Shia religious rule and the Iraqi reality of volatile coalition government. "Their system will not work here. Any attempt by Iran to create a political union would be seen with much worry," he said.

The worry was echoed by Liqaa Al-Yasin, a member of parliament for Najaf, who said: "It is unacceptable that neighbouring countries influence our politics. There have to be clear limits." Dr Al-Yasin, a first cousin of firebrand Shia cleric Moqtadr Al-Sadr, regularly organises anti-Iranian demonstrations near her home. In Iraq's Sunni-dominated cities that would be no surprise, but Najaf is the heart of the Iraqi Shia community.

In recent years the city regained its pre-Saddam position as a religious capital, a cross between Jerusalem and the Vatican for all Shia Muslims. Last year, the city attracted 1.5 million Iranian pilgrims, a figure that is expected to double with the opening of direct air links. Aircraft will connect Najaf to five cities in Iran twice a day, the first such link since the Iranian Revolution in 1979.

Today's inaugural flight carried senior executives from Mahan Air, a private Iranian airline, as well as Khan Lari, the Iranian deputy minister of transport. He said: "A total of six Iranian airlines will operate flights between Iran and Najaf."

Najaf's status is tied to the shrine of Imam Ali, revered by the Shia as the rightful successor to the prophet. Every day, pilgrims swarm around his shrine in the city centre, as nearby shopkeepers complain about cheating Iranian customers and locals say that they are elbowed aside by Iranian visitors.

"Iran is trying to split Iraq and rule the south of our country where there is a lot of oil," said a local accountant called Sadiq, a Shia. A public servant named Ali Al-Silawi, another Shia, said: "Iran has an interest in chaos here. If Iraqi democracy is successful then it could be exported to Iran and topple the rulers, so they are trying to defend themselves."

Yet apart from insurgent groups, Iranian influence in Iraq is hard to pin down. Some Iraqi political leaders lived in exile in Iran before the fall of Saddam and developed close links with Tehran. But for the most part Iran relies on low-key proxies. It operates a network of charities to generate goodwill and contacts. The Imam Khomeini Association in Najaf pays monthly stipends to 25,000 orphans and $1,000 wedding subsidies when they get married. A spokesman said that the charity has no direct political role, and few in Najaf disagree.

So why the growing hostility among Shia residents towards Iran, the world's only major Shia-ruled power? A western diplomat in Baghdad drew a comparison with McCathyist paranoia in 1950s America and said: "It's the re-emergence of Arab nationalism in Iraq."

After the fall of Saddam, sectarian identities dominated as violence increased and Iraqis sought the safety of kin groups. But with violence subsiding, at least for now, a competing Arab identity is becoming stronger and the Persians from Iran are seen as rivals once again.

This is especially evident in party politics. In the past few years, Najaf was dominated by SCIRI, a powerful Shia party and an alleged ally of Tehran. After popular pressure the party has now begun to publicly distance itself from Iran. Abdul Hussain al-Musawi, the chairman of the Najaf Provincial Council and a political independent close to SCIRI, said: "We reject outside influence. Iran did a lot to support the insurgents and so we've become a battleground for the fight between Iran and America. We don't want that."

Independent candidates are expected to do well in next month's provincial elections, and hence SCIRI has scrapped its own party list and merged with a slate of independents in Najaf. Hadi al-Salame, a leading independent member of the city council, said that campaigning on an anti-Iranian platform has become the norm. "In Iran they have rule by clerics while we don't have that. We don't want their system here," he said.

Fear of Iran goes hand in hand with nascent pride in oil wealth, newfound stability and religious status. Leaders of all parties in Najaf see the city as the capital of southern Mesopotamia, not an Iranian satellite. With evident satisfaction, they claim that only Mecca and Medina receive more pilgrims every year.