Yesterday, fighting continued in the small town of al-Bubali, in the western province of Anbar, half way between the embattled cities of Fallujah and Ramadi where government forces have been involved in a sustained battle with Sunni insurgents.
The divide between the Sunni and Shia factions is as wide as ever it was and the presence of jihadi fighters espousing the al-Qaeda concept has simply poured fuel on to an already flammable situation.
According to the Al Jazeera news agency at least 14,000 Iraqis have been displaced by the fighting and have taken refuge in Kurdish areas to the north, forced to flee for their lives from the shooting and shelling that has disrupted their home cities.
The chief culprits are the jihadi fighters who have responded to government crackdowns on the Sunni population by turning Fallujah and Ramadi into battlegrounds. Known as the Islamic State of Iraq and the Levant (ISIL) these men have been involved in some of the fiercest fighting in the region since 2004-05 when they fomented a rebellion against US forces which led to the tactics of "surge" and eventual crackdown of Sunni extremists.
The most recent reports from the region indicate that the jihadists and their tribal allies hold virtually all of Fallujah, which was al-Qaeda's capital during much of the Iraq war, and most of Ramadi, Anbar's provincial capital. At the same time local tribal militias opposed to the ISIL's strict interpretation of Islam have thrown in their lot with the Iraqi army and were seen to be co-operating with them in the bombardment of the two cities.
Most seriously of all the fighting has spilled over into neighbouring Syria where the long-running civil war has become a stalemate with a casualty list of 150,000 dead.
The jihadists, most of them Sunnis, have infiltrated the Free Syria Army (FSA) and are bitterly opposed to the regime run by president Bashar al-Assad, who is backed by Shia and Alawite interests.
This has re-awakened fears that the long-term aims of jihadists in the Middle East are to forge the creation of a new caliphate based in Baghdad and stretching as far as Beirut which will include Syria and Lebanon in its remit. Known to Arabs as the "Fertile Crescent", this territory embraces some of the richest land in the region, much of it along the River Euphrates, but it is no respecter of the current boundaries which were drawn up in the aftermath of the First World War.
If this happens it will have a deep religious and cultural significance for Muslims as the Iraqi capital was the centre of the Abbasid Caliphate, the third of the Muslim caliphates to succeed the Prophet Muhammad, who died in AD632.
In their eyes a caliphate is regarded as a successor state to the rule of the Prophet and represents the political and social unity of the Sunni majority. Although this might be a straw in the wind, last week saw photographs appearing on Middle Eastern websites showing the first car in Syria carrying a number plate representing the as yet unofficial Islamic Caliphate state.
The titular head of ISIL is Abu Bakr al-Baghdadi, formerly head of al-Qaeda in Iraq, who has a bounty on his head of $10 million to be paid by the US State Department if he is captured dead or alive. Having elected himself Emir of ISIL he has demanded that his followers give him total allegiance in his quest to create a new caliphate which will not recognise current national borders and which will become in time a new and powerful entity in the region.
According to several Middle East specialists al-Baghdadi has also "imposed rather draconian sharia punishments and forbidden smoking, music and other simple pleasures that many find intolerable".
Not much is known about ISIL's operational activities or indeed its command structure but Western intelligence agencies believe that the organisation gets most of its backing from wealthy Arab donors in the Gulf states. In common with many other internationalist terrorist groups, it also does its own fundraising by engaging in criminal activities such as smuggling and drug trafficking, both of which are very lucrative.
While it gains most of its recruits from disaffected Sunnis in Iraq and Syria who feel marginalised by their respective governments or who are tied in by tribal loyalties along the Iraqi-Syrian border, ISIL also benefits from the support of foreign fighters drawn from al-Qaeda networks in Pakistan and Afghanistan as well as from "fellow travellers" drawn from the UK.
While the Sunni-Shia antagonism has been central to Iraqi politics for many years and was only kept under control during the dictatorship of Saddam Hussein, the emergence of the caliphate concept has encouraged fears that a new supra-border entity could come into being which will emerge as a magnet for Islamic extremism especially among idealistic young people. This is especially true in Syria where the struggle to unseat Assad has degenerated into a bitter civil war with religious overtones. While the arrival of jihadist fighters was originally welcomed by the FSA, not everyone warms to their ideologies and this has fanned fears that the conflict will simply continue without bringing any resolution and that the main victims will be thousands of ordinary people.
"The war in Syria has poured gasoline on a raging fire in Iraq, and conflicts in both countries are feeding upon one another and complicating an already complex struggle," claims Fawaz A Gergez, director of the Middle East Centre at the London School of Economics. "Now the reverberations of the Syria war are being felt on Arab streets, particularly Iraq and Lebanon, and are aggravating Sunni-Shiite tensions across the Arab Middle East."
At present the fighting in Iraq is inchoate and unlikely to end in victory for the ISIL but it is the biggest threat facing prime minister Nouri al-Maliki, who has to face elections in April.
But as the fighting in Fallujah and Ramadi showed last week, it does have considerable nuisance value. It is also true that ISIL and its jihadist supporters see this as an opportunity to regain ground that was lost in the dying days of the US presence in Iraq which ended in 2011. In that vacuum the extremist groups see the possibility of turning northern Iraq and wartorn Syria into a new combat zone and that the fighting will further their hopes for the creation of a new Islamic state based on conservative principles.
According to Professor Ahmad Moussalli, head of political studies at the American University of Beirut, this is an outcome which seems to have a grim inevitability: "This is why we are seeing today the congregation of all sorts of al-Qaeda-type groups as well as other radical groups coming to Syria and Iraq as well as Lebanon today, and the danger is that these groups have been getting a lot of success."
Against that background of hopes of a return to a traditional caliphate, ISIL has also managed to project itself as the protector of the Sunni cause and has emerged as a credible alternative to the national government led by al-Maliki, who has been accused by Sunni groups of favouring the Shias and failing to create a unified state.
It does not help that most of Iraq's oil is mostly to be found in Kurdish and Shia provinces, with the three provinces in the so-called "Sunni Triangle" having very little of this strategic commodity. As ever in the Middle East the presence or absence of oil is a factor that cannot be ignored.
For that reason the sudden downturn in Iraq has had ramifications in the US, not least because it is in many ways the architect of what is currently happening across the country. Predictably, perhaps, there have been calls from the Republicans that President Barack Obama could no longer pay lip service to his pre-election pledge - which he honoured - to withdraw US forces from Iraq and that the time had come to look again at the Iraq problem with a view to taking sides. There have even been calls for US forces to return to the country, "boots on the ground" being a preferred option.
At the height of the fighting in Fallujah last week, House Speaker John A Boehner (Republican, Ohio) demanded that the president "get engaged" in Iraq. He also pointed out that al-Qaeda elements seemed to be in the ascendancy and that this state of affairs was an embarrassment to Washington's best strategic interests. "The administration has chosen to spend much of its time and energy trying to explain why having terrorists holding key terrain in the Middle East is not the president's problem," Boehner said at his weekly news conference on Friday, the inference being that a bitter enemy had stolen a march on the US.
In reply, Secretary of State John Kerry made it clear that the administration is not minded to return to Iraq to take on al-Qaeda. That was now the responsibility of Maliki's government, although requests for additional weapons such as attack helicopters and heavy weapons would be considered provided that there were guarantees that they would not be used against civilians. "This is a fight that belongs to the Iraqis," he told reporters at a press conference in Washington. "We are not contemplating returning. We will help them in their fight, but this fight, in the end, they will have to win and I am confident they can."
While these were sensible and comforting words, they cannot disguise the fact that Iraq still casts a long shadow over American life and that its re-emergence as a problem that has caused considerable disquiet. The "I" word has not been heard for a long time in Washington and its reappearance has awakened memories that many people thought had been long forgotten or condemned to the past.
On the one hand, no-one wants to see US service personnel returning to fight in a battle that is not of their making and paying the price in lives lost; on the other, there is a feeling that if the current fighting leads to a resurgence of al-Qaeda influence in Iraq and the wider Middle East the sacrifices of hundreds of troops will have been in vain.
The conundrum was best expressed by Representative Adam Kinzinger (Republican, Illinois) who served as a bomber pilot in Iraq. "If I start talking about Iraq, people's eyes glaze over," he admitted in an interview last week.
"I think Americans are weary. But we are in a moment now where if we fail to do the right thing, we could make it far worse."