DURHAM - It's bad enough that the economic bubble has burst. Is that other ostensible Bush success, the Iraqi surge, also a bubble starting to burst?

President Bush says no. He's even alluding to signing a long-term security agreement that would bind his successor. John McCain, the presumptive Republican presidential nominee, is basing his candidacy on building on the success of the surge.

To be sure, there's been some success. Last year ended with security being up and violence down. Common cause is being made with Sunnis and their Awakening Councils against Al-Qaida in Iraq (AQI). The Iraqi legislature has finally been making some political progress on Sunni-Shiite-Kurdish collaboration.

Yet violence had been re-intensifying over the past few months and last week became outright warfare. Baghdad is again being ripped by suicide bombings and even rocket attacks on the Green Zone. Awakening Council leaders are being targeted and killed. Fighting has been especially fierce in Basrah. And more ...

Are these just inevitable fluctuations in the "security market" that will subside? Or is the surge, like the Bush economic policy, another short-term success with the seeds of its own failure?

RECALL THAT FOR QUITE A FEW YEARS U.S. ECONOMIC GROWTH RATES WERE IMPRESSIVE. But they were driven by short-term calculations. Homeowners and other consumers took on too much and too risky debt. Bankers and investors went after quick hit profits. Neither was sustainable. Warning signs were there that the fundamentals weren't right. But they were ignored. And now we're paying the price.

Warning signs are also there in Iraq in three fundamental flaws that point to the surge's unsustainability.

* The enemy of my enemy .... may still be my enemy, too: With AQI as a shared threat, the logic for U.S. forces and Sunni tribes coming together has been classic "enemy of my enemy is my friend." But this is an alliance of convenience whose unstable underpinnings are beginning to show. Awakening leaders being increasingly targeted by AQI may recalculate whether the price of this friendship is greater than the payoff from it.

For the United States, sustainability depends on whether interests are sufficiently shared beyond defeating or degrading AQI, or whether once that goal is achieved they will turn against us again. We may not be enemies with the Sunni tribes now, but we were before and could be again: The enemy of my enemy ... may still be my enemy, too.

* Militias: The Shiite Mahdi and Badr militias laid low for a while but, as we've been seeing in Basrah, have not gone away. And not just Shiite militias: Do we really think the Awakening Councils are going to give their guns back when the AQI mission is achieved? The most fundamental characteristic of any viable state is, as stated by the 19th century political philosopher Max Weber, the authoritative control of the means of violence. A society pockmarked by armed militias cannot produce a stable state. It hasn't anywhere, and it won't in Iraq.

* Laying solid political foundations or papering over the cracks? The Bush administration has been making much of the spate of bills recently passed by the Iraqi legislature. But the ink was barely dry on de-Baathification reform when serious questions were raised as to whether it is more ruse than reform, opening up a few areas for Sunnis but continuing and now ensconcing restrictions in such key ministries as interior, defense and finance. The March 17-18 "reconciliation" conference was anything but, with major Shiite and Sunni blocs boycotting. No less than a quarter of the Iraqi Cabinet has withdrawn.

There's been even more papering over the cracks and less laying of solid political foundations on establishing the rule of law and building the core capacity to deliver basic services that any state needs not to be a failed one. And the time frame here is not just the year since the surge started but the almost four years of post-Saddam "national unity" Iraqi governments.

FOR THESE AND OTHER REASONS THE SURGE IS AT BEST AT ITS POINT OF DIMINISHING RETURNS. Little more can be achieved and much is at risk by continued massive American military presence in Iraq. We need to shift from a military to a diplomatic surge. This means drawing down our troops -- carefully, responsibly, strategically -- while building up our diplomatic initiatives -- globally, regionally and within Iraq. The goals remain the same: as much internal stabilization as possible, and regional containment of the conflict from drawing in and spreading to other states. But the strategy needs to change.

As with the American economy, short-term successes in Iraq have come without building the foundations for sustainable gains, indeed in some respects weakening these foundations even further. As bad as the economic crisis is, the bursting of the Iraq bubble would be much worse.