Dangerous Liaison: Mahmoud Ahmadinejad courts Iraq.

Iranian president Mahmoud Ahmadinejad's triumphant state visit to Iraq earlier this month offered particularly grim evidence of the epic failure of U.S. policy and ambitions.

Iran's controversial leader, the Bush administration's public enemy number two after Osama bin Laden, received a warm official reception in downtown Baghdad, well outside the Fort Apache Green Zone beyond which Americans dare not venture. Most galling to Washington, while President Bush and Vice President Cheney have to slip unannounced into Iraq and remain in the safety of U.S. military bases before hastily decamping, Iran's leader made a very public and splashy overnight visit that looked at times as if he were running for office in Iraq.

Ahmadinejad's visit was billed as historic, and so it was. Many bitter legacies of the bloody 1980s Iran-Iraq War, in which one million soldiers died, were laid to rest. Iran's president became the first Mideast leader to visit post-Saddam Iraq. Iran was also the first Mideast nation to recognize the provisional Iraqi regime installed by the U.S. after the 2003 invasion, but at the time few Americans understood why Tehran was so delighted to see the new regime in Baghdad.

The message conveyed by Ahmadinejad's state visit was that "liberated" Iraq is increasingly influenced by Iran and appears to be slipping inexorably into Tehran's orbit. That is bad news for Washington, which has so far invested $700 billion and 5,000 lives in an abortive effort to turn Iraq into a U.S. oil protectorate, a sort of second Saudi Arabia minus the uncooperative royal family.

Iraq's largest, most powerful Shia Party, the Supreme Islamic Iraqi Council (SIIC, formerly SCIRI), which dominates the Baghdad government and its militias, rolled out the red carpet. Small wonder: most of its leadership, starting with its head, Abdul Aziz al-Hakim, took refuge in Iran in the 1980s, from which they waged a struggle to overthrow Saddam Hussein's Sunni-dominated regime. SIIC's militia, aka the Iraqi army, was trained and armed by Iran. Some Sunni observers claim it is virtually an arm of Iran's secret service and is close to Iran's powerful Revolutionary Guards Corps.

Both Iraq's U.S.-installed prime minister, Nouri al-Maliki, and president, Jalal Talabani, went out of their way to welcome Ahmadinejad in spite of Washington's protestations that Iran was "stirring up terrorism" in Iraq. From behind the concrete crenellations of the Green Zone, Americans watched glumly as their enemy was given the opportunity to launch more tirades against the Great Satan in Washington and call for the pullout of U.S. troops.

But the sudden warmth of Iraq's leadership for Iran was due less to brotherly affection than to Realpolitik. Most Iraqis have concluded the writing is on the wall for the U.S. occupation, notwithstanding Sen. John McCain's bizarre vow to keep U.S. troops there "for 100 years, if necessary." Once the Americans leave, Iraq's new big brother will inevitably be Iran, the spiritual lodestar of its Shia majority.

For the past four years, Iran's economic and political influence has been relentlessly oozing into Iraq. The border has become porous and is regularly crossed by large numbers of Shia pilgrims, numerous Iranian military and intelligence agents among them. Iraq has also become Iran's leading export market. It is building power plants there and will soon supply electricity across the border. Tehran is offering loans on easy terms and has initiated a wide variety of joint cultural, educational, medical, and religious programs. Security cooperation is next. In short, a form of soft, slow Anschluss that is drawing eastern Iraq closer to Iran and farther away from its unhappy Sunni neighbors Jordan and Saudi Arabia, who, with Egypt, warn of Iran's stealthy takeover.

Turkey is just as edgy as it watches Iranian influence grow in Iraq. Sources in Ankara's military establishment say that Turkey, which has no oil of its own, will not allow Iran to gobble up Iraq's oil riches. At some point, under the guise of "fighting terrorism," Turkey may seize Iraq's northern oil fields around Kirkuk and Mosul. Recent incursions into Iraq's Kurdish territory were as much about staking a claim to oil as about punishing irksome Kurdish PKK guerrillas. And the effusive greeting for Ahmadinejad by Iraq's Kurdish president, Jalal Talabani, was clearly intended to enlist Iranian support against Turkish designs.

Iran was also making nice to Baghdad because it fears growing covert Israeli influence in Iraqi Kurdistan, where numbers of Mossad agents are active. Israel has again raised the possibility of a new pipeline from Kurdish territory to Haifa. Tehran also worries that Iraqi Kurdistan could go fully independent and become a forward base for Israeli military operations against Iran.

So while the Bush administration continues to promote the fiction that its surge has stabilized Iraq, its Iranian foes are steadily undermining the rickety foundations upon which the U.S. occupation stands. The White House's sole success in Iraq has been to mislead Americans, with help of a docile media, into believing that American forces in Iraq face only Osama bin Laden's al-Qaeda rather than a score of other Iraqi resistance groups.

Tehran has reined in Iraqi Shia ally Muqtada al-Sadr in an apparent deal with Washington that may have forestalled a U.S. air campaign against Iran. While fulminating against one another in public, Washington and Iran also quietly cooperate in Iraq as both share common interests in battling al-Qaeda, Sunni nationalism, lingering Ba'athists, and the resurgent Taliban in Afghanistan. But neither, of course, can admit to playing footsie with the other.

By contrast, most of Iraq's Sunnis were furious over Ahmadinejad's visit, fearing they will be either marginalized or caught in a crossfire between U.S. forces and pro-Iranian Shia militias. By now, most Sunnis have been ethnically cleansed from Shia majority areas. Sunni tribals, known as Awakening Councils, who have gone over to the U.S. side in exchange for large cash payments, are under assault by other Iraqi resistance groups and fear attack by Shia militias.

Another notable aspect of Ahmadinejad's excellent two days in Iraq was that most of the U.S. media downplayed the visit. Fox News dismissed it as a "failure."

It was a failure all right, but the failure belonged to Washington, not Iran. In one of the more comical misadventures in modern strategic history, the Bush administration had virtually delivered the prize of Iraq to Iran while paying the bill for overthrowing Tehran's greatest foes, Saddam Hussein and the Taliban. No wonder Ahmadinejad looked so cheerful in Baghdad.

Eric S. Margolis is a columnist, commentator, and war correspondent.