By Sami Aboudi
DUBAI (Reuters) - Iraq's al Qaeda wing has united with a kindred Syrian group in the frontline of a struggle to oust President Bashar al-Assad, sharpening a dilemma for nations that back the revolt, but fear rising Islamist militancy.
The leader of the Islamic State of Iraq, Abu Bakr al-Baghdadi, said his group had trained and funded fighters from Syria's al-Nusra Front - which is blacklisted by the United States - since the early days of the two-year-old uprising.
He said in a statement posted on Islamist websites and seen by Reuters on Tuesday that the two groups would operate under the joint title of the Islamic State of Iraq and the Levant.
"It's now time to declare in front of the people of the Levant and the world that al-Nusra Front is but an extension of the Islamic State of Iraq and part of it," Baghdadi said.
"We thus declare ... the cancellation of the name of the Islamic State of Iraq and the name of al-Nusra Front and grouping them together under one name, the Islamic State of Iraq and the Levant," he added.
The militant Islamist element of the Syrian conflict poses a quandary for Western powers and their Arab allies, which favour Assad's overthrow but are alarmed at the growing power of Sunni Muslim jihadi fighters whose fiercely anti-Shi'ite ideology has fuelled sectarian tensions in the Middle East.
A U.S. analyst said the announcement was no game-changer, but reflected al Qaeda's confidence in its position in Syria.
"I don't think it necessarily changes anybody's calculus since ... the United States already knew about this connection last year and there hasn't been any change in policy per se by the United State or its allies in Syria in the last six months," said Aaron Zelin, of the Washington Institute for Near East policy.
Baghdadi's statement, first reported by the U.S.-based SITE monitoring service, could not immediately be authenticated, and there was no immediate comment from al-Nusra on the merger.
Baghdadi said his group had deployed battle-hardened fighters and sent funds to local al-Nusra cells set up in Syria to lay the groundwork for the armed uprising - which grew out of anti-Assad protests that erupted in March 2011 - but that it had refrained from announcing the link for security reasons.
The Front burst into prominence early last year, when it claimed responsibility for several powerful bombings in the Syrian capital Damascus and the northern city of Aleppo.
Since then it has expanded operations nationwide, winning recruits among rebels who see it as the most effective fighting force against Assad's troops, and taking a leading role in capturing territory in the north, south and east of Syria.
In one day in November, SITE said al-Nusra had claimed responsibility for 45 attacks in Damascus, Deraa, Hama and Homs provinces that reportedly killed dozens of people, including 60 in a single suicide bombing.
At least 70,000 people have been killed since protests led by Syria's Sunni majority broke out against Assad, whose minority Alawite sect is an offshoot of Shi'ite Islam.
Al-Nusra has gained support as the violence and misery in Syria radicalises a population used to living under Assad's secular rule. Experts have long said al-Nusra was receiving support from al Qaeda-linked insurgents in neighbouring Iraq.
In Iraq's remote western desert region next to Syria, where cross-border Sunni tribal ties are strong, Iraqi security officials have said since last year that Islamic State of Iraq was regrouping and recruiting.
Al Qaeda's Iraqi wing and Syria's Islamist insurgents share a hatred for Assad's Alawite-based power and for Iraqi Prime Minister Nuri al-Maliki's Shi'ite-led government, which they see as oppressors of Sunnis in both countries.
Baghdadi rejected demands by secular groups for a democratic Syria, saying the goal was an Islamic state. "By God, it is a bad price and a bad possession to have," he said of democracy.
Insurgent recruitment has been spurred by growing protests against Maliki among Sunnis who feel sidelined since the fall of Saddam Hussein and the rise of the Shi'ite majority.
Al Qaeda in Iraq, which suffered serious setbacks before U.S. troops left at the end of 2011, has bounced back with suicide bombings and well-coordinated attacks across Iraq this year, including an ambush which killed 48 Syrian soldiers who had fled across the border.
Security officials say Anbar province, once the heartland of al Qaeda's war on American troops, is again becoming a haven for the group as Iraqi forces struggle to cover a vast territory without the air support that U.S. forces troops once supplied.
A porous border where the Euphrates river snakes though both countries, and the remote caves and hills of the desert make ideal territory for insurgents to evade Iraqi security forces and smuggle arms and fighters between Iraq and Syria.
In December, the U.S. State Department designated al-Nusra Front as a foreign terrorist organisation, essentially classifying it as an affiliate of al Qaeda in Iraq.
Last week, al Qaeda leader Ayman al-Zawahri called in an Internet statement for the establishment of an Islamic state in Syria after Assad's ouster, as a step towards the Islamist goal of re-establishing an Islamic caliphate over Muslim lands.
That prospect alarms many in Syria, from minority Druze, Christians, Alawites and Shi'ites to conservative but tolerant Sunnis who fear al-Nusra would try to impose Taliban-style rule.
"Do all you can to ensure that the fruit of your struggle, God willing, is an Islamic state ... a state that would be a building stone in the return of the rightly-guided caliphate," he said.
(Additional reporting by Ahmed Tolba in Cairo and Patrick Markey in Baghdad; Editing by Dominic Evans and Alistair Lyon)