The front-page New York Times story today on the role that Iraqi financial instituions are playing in helping Iran to evade sanctions may well be taken by opponents of the decision to invade Iraq as vindication of one of their core arguments: namely, that Saddam Hussein was a vital bulwark against Iranian power and that toppling him would only increase Iranian influence in Iraq.

How much of a bulwark Saddam actually was is debatable: The Iranian Revolution spread its influence for decades to Lebanon and Syria, among other places, all the while Saddam was still in power. That Iran has managed to increase its influence in Iraq since 2003 is incontestable, however. To some extent, Iranian influence in a neighboring state is inevitable. The situation has gotten worse, however, because of a series of bad policy choices made in Washington.

First and foremost was President George W. Bush’s failure to establish a modicum of stability in Iraq after 2003; the Iranian Revolutionary Guard Corps’ Quds Force was able to fill some of the resulting vacuum by funding a host of Shiite politicians and militias (and even some Sunnis). But Bush, to his credit, made up, at least to a large extent, for his initial blunders with the success of the surge in 2007-2008–which not only curbed the power of sectarian terrorist groups such as Muqtada al Sadr’s Mahdist Army but also of Sadr’s Iranian backers. Indeed, under the leadership of General David Petraeus and Ambassador Ryan Crocker, the U.S. mounted a sophisticated campaign to expose and curb the influence of the Quds Force.

A great deal of that success has been undone, alas, by two bad decisions made by President Obama: First the decision to back a coalition headed by Nouri al Maliki in forming a government even after Maliki finished second in the 2010 election. If the U.S. had gone all out to support the winning slate, led by Ayad Allawi, the result might well have been a government in Baghdad far less amenable to Iranian influence than the current one.

This initial mistake was made much worse by Obama’s failure to negotiate an accord to allow U.S. troops to remain in Iraq past 2011. With the U.S. military presence gone, and our intelligence and diplomatic presence much reduced, our ability to track and counter Iranian machinations has declined alarmingly. Thus Iraq is now becoming aligned with Iran on a host of issues, helping the Iranians not only to defy sanctions but also to support the Assad regime in Damascus.

This is not to say that Iraq is a puppet of Iran; even Iraqi Shiites maintain a healthy distrust of their Persian neighbors. But it does mean that Iran will exercise substantial influence–more than it would if the U.S. were still maintaining a robust presence in Iraq that could serve as a hedge against Iranian meddling.