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Length: 6:15

JOHN ROBERTS: Call it holy writ in the Middle East: the enemy of my enemy is my friend. It explains why American forces in Iraq are now working with Sunni sheikhs who once tried to kill them. It also speaks to another relationship, with people that America doesn't exactly like, but certainly believes it needs.

CNN's Michael Ware has this fascinating inside look.

(BEGIN VIDEOTAPE)

MICHAEL WARE, CNN CORRESPONDENT, (voice-over): To the U.S. State Department, these are terrorists, based in this sprawling military camp inside Iraq. Yet, in an American contradiction, they are also protected by the U.S. military. An Iranian dissident group, they are the Mujahedeen-e-khalq, or MEK.

MOJGAN PARSAII, MEK V.P., CAMP ASHRAF, IRAQ: The U.S. military police protects us as protected persons under the fourth Geneva Convention against terrorist attacks by the Iranian regime and its agents.

WARE: While U.S. intelligence hunts and arrests Iranian special forces said to be training and supplying weapons like these to Shia militia in Iraq, the MEK are American allies opposed to the Iranian regime. Their politics: pro-democracy with a dash of Marxism and Islamic ideology.

To the U.S., they are valued as sources of much needed intelligence on Iran's armed forces and nuclear program.

But under U.S. law, they are listed as a foreign terrorist organization. Meaning no American can deal with them. U.S. banks must freeze their assets and any American giving them any support -- even transport -- commits a crime. Yet their regular supply runs to Baghdad are given U.S. military escorts.

PARSAII: The trips for procurement of logistical needs also take place under the control and protection of the MPs.

WARE: Military police escorts because as these U.S. documents show, coalition forces regard them as protected persons under the Geneva Conventions.

An American two-star general writes that "the coalition remains deeply committed to the security and rights of the protected people of Ashraf."

The MEK denies it is a terrorist group. After the U.S. invaded Iraq in 2003, all 3,800 camp residents, including a female tank battalion, were questioned by the FBI or other American agencies. Not a single arrest was made.

The Red Cross monitors the MEK as a protected group, insisting they must not be deported, expelled or repatriated.

So, the U.S. designates the MEK officially protected terrorists. Despite repeated requests, neither Iran's ambassador in Baghdad nor the U.S. military would comment for this story. But Zalmay Khalilzad, former U.S. ambassador, did.

ZALMAY KHALILZAD, FORMER U.S. AMBASSADOR TO IRAQ: We have a policy that as described, the people were here from the Mujahedeen-e-khalq as a protected group. One of our coalition and partner country is actually protecting the camp where they mostly are, but there is no change in our policy that the Mujahedeen-e-khalq, that we still regard them as a terrorist organization.

WARE: Having fled Iran and operating from Iraqi camps, the MEK spied on Iran for decades. Their movement, credited with exposing Tehran's secret nuclear program. In the 2003 invasion, Green Berets arrived at their camp to find gardens and monuments, plus more than 2,000 well-maintained tanks, armored personnel carriers, artillery, anti-aircraft guns and vehicles, all quickly surrendered under a cease-fire agreement, an agreement that also guaranteed their safety.

PARSAII: Everyone's entry to the camp and his departure are controlled by the U.S. MP force.

WARE: The MPs haven't approved journalists' entry to the base, Camp Ashraf, north of Baghdad. Two years ago, "TIME" magazine photographer Yuri Kozyrev and I snuck past U.S. sentries to see the camp for ourselves.

This video recently shot by the MEK shows not much has changed. And Camp Ashraf remains one of the best-kept Army facilities in Iraq.

Meanwhile, both Iran and Iraq accuse the MEK of ongoing terrorist attacks. And the Shia-dominated Iraqi government wants them out.

"We gave this organization a six-month deadline to leave Iraq and we informed the Red Cross," says Iraq's national security minister. "And presumably our friends, the Americans, respect our decision and they will not stay on Iraqi land."

The MEK denies launching any attacks and for now, America is helping them stay.

KHALILZAD: There are counter-pressures, too. There are people who say, no, they should be allowed to stay here. And, as you know, around the world, there are people who have got different views towards them.

WARE: Different views that allow the U.S. to regard the MEK as both a terrorist group and a potential source of intelligence on Iran.

(END VIDEOTAPE)

ROBERTS: Sun's coming up now in Baghdad. And Michael Ware joins us live from there.

Michael, what are the chances that the United States might eventually end up actually arming the Mujahedeen-e-khalq?

WARE (on camera): Well, that's something to be seen, John. I mean, in many ways, the Mujahedeen-e-khalq are a useful barometer of American intention with regard to Iran. So sensitive is Tehran about their presence here in Iraq, so sensitive are they about the American protection being given to being given to this group, which they see -- which Tehran sees, as its greatest internal threat, that to even put one rifle back in the hands of the Mujahedeen-e-khalq would be so inflammatory, it would be like an American declaration of war.

ROBERTS: Well, it will be interesting to see how things go between the United States and Iran. Maybe that becomes a part of the program.

Michael Ware in Baghdad, thanks very much.