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July 4 issue - I don't see how Iraq's insurgency can win. It lacks the support of at least 80 percent of the country (Shiites and Kurds), and by all accounts lacks the support of the majority of the Sunni population as well. It has no positive agenda, no charismatic leader, virtually no territory of its own, and no great power suppliers. That's why parallels to Vietnam and Algeria don't make sense. But despite all these obstacles, the insurgents launched 700 attacks against U.S. forces last month, the highest number since the invasion.

They are getting more sophisticated, now using shaped charges, which concentrate the blast of a bomb, and infrared lasers, which cannot be easily jammed. They kill enough civilians every week that Iraq remains insecure, and electricity, water and oil are still supplied in starts and stops. That's where things stand in Iraq—it's a conflict the United States cannot easily lose but also cannot easily win.

The positive picture is worth painting. Iraq has had successful elections, a new (and more legitimate) government, Sunnis included into the political process, and is working on a new constitution. The insurgents' attacks on ordinary Iraqis are having the predictable effect of making them lose popular support. When I was in Iraq recently, several Iraqis (all Sunnis) told me that they were losing respect for and patience with the insurgents. "These guys are thugs who are killing Iraqis, not resistance fighters battling the occupation," one of them said. And finally, Iraqi politicians have been more mature and steadfast than one could have ever hoped for—making compromises, arriving at consensus and moving forward under tremendous personal danger.

What I worry about is not a defeat along the lines of Vietnam. It is something different. If the insurgents keep up their attacks, prevent reconstruction and renewed economic activity and, most important, continue to attract jihadists to Iraq from all over the region and the world. Last month's leaked CIA report, which described Iraq as the new on-the-ground training center for Islamic extremists, points to the real danger. If thousands of jihadists hone their skills in the streets and back alleys of Iraq and then return to their countries, it could mark the beginning of a new wave of sophisticated terror. Just as Al Qaeda was born in the killing fields of Afghanistan, new groups could grow in the back alleys of Iraq. And many of these foreigners are kids with no previous track record of terror. Some even have European passports, which means that they will be very difficult to screen out of the United States or any other country.

Additionally, by the fall of 2006, it will be virtually impossible to maintain current troop levels in Iraq because the use of reserve forces will have been stretched to the limit. That's when pressure to bring the boys home will become irresistible. And that would be bad news for the Iraqi government, which is still extremely weak and in many areas dysfunctional.

The good news is that America has stopped blundering in Iraq. After two and a half years of errors, since late 2004, Washington has been urging political inclusion, speeding up economic reconstruction and building up local forces. But U.S. policy still lacks central direction—and the energy, vision, increased resources and push that such direction would bring. Who is running Iraq policy in Washington?

The intense and bitter interagency squabbles of the past three years—and the disastrous mistakes made by the Defense Department and the Coalition Provisional Authority—have left Iraq something of an orphan. Day to day, Iraq policy is now run by the State Department and the U.S. Army, but those two chains of command never meet.

On the civilian side, for example, the American effort is massively understaffed. Several Army officers in Iraq told me that their jobs would be greatly improved if they had more people from the State Department, USAID and other civilian agencies helping. One said to me last year, "I've had 25-year-old sergeants adjudicating claims between Turkomans and Kurds, when they don't really know how they are different. We could use political officers who could brief them."

The vacuum is being filled by the U.S. Army, which has been building bridges and schools, securing neighborhoods and power plants and, yes, adjudicating claims between Turkomans and Kurds. It is doing these things because someone has to. Secretary Rumsfeld has long argued that American troops should never engage in nation building, leaving that to locals. But while we waited for Iraqis to do it, chaos broke out and terror reigned. So the Army on the ground has ignored Rumsfeld's ideology and has simply made things work. (It's a good rule of thumb for the future.)

But if we want to move beyond coping, we need a full-scale revitalization of Iraq policy, with resources to match it. Muddling along will ensure we don't lose in Iraq, but we won't win either.

Write the author at comments@fareedzakaria.com.