President Bush earlier this week blamed much of the violence in Iraq on al-Qaida, the terrorist group backed by Osama bin Laden. While this may serve the president’s need to tie the war in Iraq into the larger war on terror, al-Qaida’s growing involvement in Iraq is a symptom of American failure there, not the cause of it.

A classified Marine Corps intelligence report paints a distressing picture of the growing power of al-Qaida and other insurgent groups in Iraq. The report, a copy of which was given to The Washington Post, concluded that “the U.S. military is no longer able to defeat a bloody insurgency in western Iraq or counter al-Qaida’s growing popularity there.” Dependence on al-Qaida, the Marine report says, offers the Sunni minority’s only hope against growing Iranian dominance in Iraq.

It is hard to understand how the United States can be victorious when its actions have increased the importance and influence of both a terrorist organization and Iran, which is thought to be pursuing nuclear weaponry.

If, more than three years after U.S. and other coalition forces invaded Baghdad, al-Qaida operatives can work relatively freely in Iraq, how much has the United States accomplished? If Hezbollah, the Lebanese militant group, is training soldiers for Iraq’s Shia militias, as a senior intelligence official told The New York Times, how can U.S. and Iraqi forces claim progress in securing the country?

There are political problems as well. President Bush postponed and shortened a meeting with Iraqi Prime Minister Nouri al-Maliki after disclosure of a memo by national security adviser Stephen Hadley, which questioned the leader’s capability. “His intentions seem good when he talks with Americans, and sensitive reporting suggests he is trying to stand up to the Shia hierarchy and force positive change,” the memo said of the prime minister.

“But,” it continued, “the reality on the streets of Baghdad suggests Maliki is either ignorant of what is going on, misrepresenting his intentions or that his capabilities are not yet sufficient to turn his good intentions into action.”

None of these options are positive, although President Bush said Thursday that he fully supported the prime minister and that they agreed to speed up the training of Iraqi security forces to combat the growing violence.

It may be too late. Another government report, obtained by The New York Times, says that Iraq’s insurgency is financially self-sustaining. It estimates that armed groups are raising between $70 million and $200 million a year through illegal activities. Up to $100 million comes from oil smuggling and other criminal activity involving the state-owned oil industry, activity that is aided by corrupt or complicit Iraqi government officials, the Times reported.

As much as $36 million a year comes from ransoms paid to rescue foreign kidnap victims.

It has become increasingly clear that this is not a situation the United States can solve alone. As the Iraq Study Group is expected to suggest in its report next week, involving Iraq’s neighbors, including Iran, Syria and Saudia Arabia, must be part of the solution. The sooner, the better.