The central government of Iraq appears on the verge of collapse as the Islamic State of Iraq and the Levant  (ISIS) fighters head for Baghdad after taking over Mosul and Tikrit. In the north, Kurds have seized Kirkuk after national forces fled and appear poised to defend the territory as their own. The Iraqi national army has proven to be next to worthless so far, fleeing rather than fighting ISIS with Iraqi Prime Minister Nouri al-Maliki reaching out to the US for military assistance.

In the areas ISIS controls they are instituting sharia law which includes severe consequences for those judged guilty of certain religious offenses, this led hundreds of thousands of Iraqis to flee their homes rather than face ISIS. The stated goal of ISIS is to build a caliphate which they now appear to be preparing to do in parts of Iraq and Syria representing the biggest threat to Iraq’s stability since the US invasion.

ISIS’ rapid success is attributable in part to the spectacular failure of the US-trained and equipped Iraqi national army which evaporated in the face of an ISIS challenge in some of Iraq’s largest and most important cities.

The million-strong Iraqi army, trained by the United States at a cost of nearly $25 billion, is hobbled by low morale and corruption. Its effectiveness is hurt by the perception in Sunni areas that it pursues the hostile interests of Maliki’s Shi’ite-led government.

During the U.S. occupation, Washington encouraged Maliki to reach out to the Sunni minority that lost power after Saddam’s fall. But since the U.S. withdrawal, Maliki pushed Sunnis out of his ruling coalition, creating resentment insurgents exploit.

ISIS is a Sunni Islam group, Maliki represents Shiite power in Iraq with a close alliance to Shiite Iran. Iran is currently said to be “weighing options” as to what to do to help its allies in Iraq.

Meanwhile in the north, Kurdish forces have taken oil-rich Kirkuk which is just outside their legally yielded territory under Iraq law but a historically important city to the Kurdish people. The Kurds already received a piece of the wealth that accrues from Iraq’s oil production, but with control of Kirkuk they could gain even more, provided Maliki’s forces can not dislodge them. In the event the Kurds resist, there could be a two-front war facing the central government.

Needless to say, things are looking chaotic as world oil markets buckle at the prospect of slowdowns in Iraq or a possible violent overthrow of the Maliki government with a new regime unwilling to honor old oil deals. Which brings in President Barack Obama who has now says he is also weighing options and “will not rule out anything” to help Maliki stay in power and regain control.

A third Iraq War? What could go wrong?