In Baghdad, a Vietnam Flashback

Members of the Kurdish security forces take part in an intensive security deployment on the outskirts of Kirkuk June 12, 2014. Ako Rasheed/Reuters

This is exactly what was feared. The dramatic capture of large swaths of Iraq's territory by Islamists bent on violent jihad and advancing fast on the nation's capital, Baghdad, threatens an all-out sectarian war across the Middle East and exposes major weaknesses in America's strategy there.

As the crisis escalated, at first President Barack Obama later vowed to consider "all options," including "some short-term immediate things that need to be done militarily." But then made it clear that redeploying U.S. troops in Iraq is not an option.

Diplomats, Iraq watchers and America's adversaries in the region remain skeptical that after staying above the fray for three years in Syria, America's military would invest enough firepower in Iraq to turn the Islamist tide. After declaring for years that he believed the "core" of al-Qaeda fighters to be in retreat, Obama has yet to prove such doubters wrong.

Nouri al-Maliki, Iraq's Shiite prime minister since 2006, has long marginalized the country's large populations of Sunnis and Kurds. He is now calling on the "international community" to help him fend off a brazen assault by foreign fighters who dream of using Iraq as the centerpiece for their Salafist caliphate. But help may come from Iran instead of America.

Iranian Revolutionary Guards are already in Iraq, and Ayatollah Ali Sistani, once a voice for Shiite moderation, calls on believers to defend their holy sites. Unlike Obama, who conditions American military aid on more inclusive government, the Iranian aim is to maintain Shiite domination of Iraq.

Last week the Sunni group known as ISIS—the Islamic State of Iraq and al-Sham (the Arabic name of the Levant, or Greater Syria)—chased away the Maliki-controlled Iraqi army from Mosul, Iraq's second largest city. The collapse exposed Iraq's military force, which was created and trained by America, as a paper tiger.

Swarming ISIS fighters then marched on to Tikrit, Saddam Hussein's hometown, and closed in on Baghdad's environs. Estimated at 4,000 or more, the mostly-foreign fighters confiscated caches of American-supplied arms, including, reportedly, up to six Black Hawk helicopters, and looted hundreds of millions of dollars in cash from local banks. More than 500,000 Iraqis fled their homes, mostly northward, to an area controlled by Iraq's Kurds.

Unlike past attacks by ISIS (sometime also called ISIL), the current campaign seemed well organized and preplanned, said a diplomat who has closely followed events in Iraq. In advance of the assault on Mosul, the foreign jihadists seemed to be allying with local Sunni militias, as well as with former generals in Hussein's army.

The ISIS fighters, some in their early teens, quickly dismantled any semblance of governance, in some cases executing thousands of policemen and soldiers. "That's what they do," said Michael Knights, a fellow at the Washington Institute for Near East Policy who has long studied ISIS. "They want the absence of government, so in time they become the government."

Where successful, ISIS imposes a strict version of Islamic law. Women are forced to cover up. All forms of music and games are banned. Piles of cigarette cartons are publicly burned, as ISIS considers tobacco to be sinful.

Originally active only in Iraq during the Sunni uprising in the years after the 2003 American invasion, the group now headed by Abu Bakr al-Baghdadi became involved in the Syrian civil war, where it battles President Bashar Assad and his Iranian and Hezbollah allies, as well as rival Sunni groups such as Jabhat al-Nusra and the secular opposition.

Al-Qaeda's chief, Ayman al-Zawahiri, broke off with ISIS, denouncing its cruel activities, like posting beheadings of rival leaders on the Web. But ISIS made major territorial gains, capturing key areas from the outskirts of Syria's second largest city, Aleppo, and most of Iraq's Sunni territory.

As its name suggests, ISIS managed, for all practical purposes, to erase the Syrian-Iraq border, which was created in the aftermath of World War I as part of the Sykes-Picot Agreement of 1916 that established the current borders of the Middle Eastern states.

ISIS's "ambitions seem to lie in Iraq," says Knights. The country is far more populous than Syria and more central to the Arab world, as it borders Turkey, Iran, the Gulf states and Jordan. Iraq's huge oil reserves also make it a source of wealth, and, Knights says, "in Iraq ISIS seems to have much more success."

One reason for that, according to a diplomat familiar with Iraq's sectarian politics, is that Maliki's Shiite-centered government has long marginalized the Sunnis, forcing them to seek allies outside of Baghdad.

During the American troop surge of 2008, the diplomat said, the U.S. military became adept at communicating with rival tribal Sunni leaders, uniting them against the foreign jihadists, who were greatly disliked. As a result, the group, known at the time as the Islamic State of Iraq, was defeated. It then reorganized in Syria.

But after the U.S. withdrawal in December 2011, no one was left in Iraq to perform such tasks of mediation and assistance. Although both Obama and Maliki claimed they wanted to leave a small number of American troops behind, they failed to agree on how to facilitate it.

Speaking at the Council of Foreign Relations last week, former secretary of state Hillary Clinton blamed Maliki for the failure to sign a Status of Forces Agreement. Administration critics counter that Obama and Clinton could have negotiated harder but did not, as they were eager to declare victory and end the war.

The presence in Iraq of a small number of American "Jedi knights" might have been of great help to the Maliki government, by arriving at hot spots to assist tribal chiefs and, when needed, directing U.S. drone and other air assaults to fend off the jihadists. They could once more turn the tide against the jihadis, said Knights. But he does not believe the U.S. will return to Iraq in force.

The popular mood in the U.S. regarding intervention in Iraq supports the deployment of minimum forces. "I think the American people do not have an appetite to be engaged in conflict there," said Nancy Pelosi, the top Democrat in the House of Representatives, echoing an opinion often expressed by administration officials.

Obama's nominee to become ambassador in Iraq, Stuart Jones, told the Senate this week that "one positive aspect" of the current crisis is that Iraqi factions are "coming together to address this challenge," rather than re-engaging in battle.

And indeed, ISIS was stopped in the oil-rich Kirkuk region by the well-organized Kurdish peshmerga military force that quickly took over posts that had previously been held by the Iraqi army, which fled as ISIS approached.

But this may not indicate a future alliance between Baghdad and the Kurds, who have run a semi-independent state in the north of Iraq since the downfall of Saddam Hussein. The Kurds have long been at odds with Maliki over Kirkuk and have used the current crisis to occupy an area they long considered their own. "It's hard to imagine the Kurds sticking their necks out for a government that has been trying to starve them," said Knights.

At odds with Sunnis and Kurds, and with the prospect of significant American aid looking unlikely, Maliki has little choice but to turn elsewhere—to Tehran—for help against the Salafist foreign fighters. There are already signs of cooperation between Baghdad and the Shiite militias that have ties to Tehran. Barrel bombs, a staple of Assad's war in Syria, are now being used in Iraq, indicating that Iranian-inspired tactics are being imported by Maliki's forces.

The long-running war between the religion-based forces of the Shia and Sunni factions in the Middle East is fast escalating and is now centered in Iraq, one of the region's most strategically important countries. If the current battle for Baghdad turns into an all-out sectarian war engulfing the entire region, America seems poised to do little, beyond observing the collapse of the world's most volatile trouble spot from a safe distance.

Follow Benny Avni on Twitter: @bennyavni