When Moqtada al-Sadr left Iraq in 2007, many US officials hoped that his Sadrist movement – which had waged a bitter insurgency against American forces there since 2004 – would fade from prominence once the Iraqi government retook control of much of the country from the insurgency. His hurried departure from Iraq was prompted by a joint US-Iraq effort to confront his militia, the Jaish al-Mahdi (JAM), and to restore parts of Baghdad that they ran to Iraqi government control. Without even a formal announcement, Sadr fled to Iran to escape the crackdown, infuriating those among his supporters who wanted him to continue the resistance against U.S. forces and the Iraqi government.

His return to Iraqi politics last week has proved that his decision to go to Iran at the height of the US offensive was a tactical retreat but a strategic victory. Sadr used his time to bolster his religious credentials by studying in Iran, while his political movement gradually rejoined Iraqi politics and won 39 seats in the elections last March. The result is that Sadr and his allies look as powerful as ever. Once considered an irredeemable enemy of the Iraqi government, Sadr recently found himself playing the role of kingmaker in ensuring its survival. In October, he helped to forge the political compromise that restored Nouri al-Maliki to power by throwing his support by the Maliki's State of Law party to form a governing coalition.

The rapturous crowds that greeted Sadr upon his return indicate that this calculation paid off: his backing of the government is crucial; yet, as an outsider to the government, he can use the bully pulpit to pressure the prime minister and, if needed, change the trajectory of Iraqi politics. In a bitter irony, given his role in forcing the departure of Sadr, Maliki is now dependent on the cleric for his political survival, while Sadr's supporters have made it clear that their support is conditional on whether Maliki continues to do things that they approve of.

The return of Sadr to prominence in Iraqi politics is not a result that the US or UK should welcome, despite the measured support that Sadr offered for the government in his major address. To start with, there is a standing arrest warrant out for Sadr for his involvement in the murder of the respected Shia cleric Abdul Majid al-Khoei. That the current Iraqi government appears to be willing to permit his return without pursuing this matter does not increase one's faith in their respect for the rule of law. His continuing political influence in Iraq, despite these charges, is a visible symbol of the government's weakness and its dependence on those who nearly pushed Iraq into civil war not so long ago.

Then, while he has cautiously embraced the Iraqi government, Sadr remains deeply hostile to the US and UK, reminding his followers yesterday that the US, Britain and Israel are the "common enemies" of the Iraqi people. He has called on his followers to continue the "resistance" against the US, though, of course, he has remained vague about what exactly that means. That is precisely the point: "resistance" is whatever he wants it mean at that moment, which will almost by definition be opposite to what the US would like to see happen in Iraq. His return as the vanguard of the resistance may destroy American hopes to remain in Iraq in a support capacity, after their withdrawal at the end of the year.

Sadr may sometimes play the part of a pragmatic politician, but he is not a natural democrat and would be willing to play any card – including violence – to maintain his influence. Despite his careful tone in recent statements, it is unlikely that he has suddenly become a voice for tolerance and reasonable government. His prominence is likely to alarm moderate Sunnis and Kurds, and if he continues to agitate for sectarian causes, it is possible that he may undermine the fragile compromise that permitted the formation of an Iraqi government. Even worse, his instinct is for Hezbollah-style quasi-religious rule, and his movement's control over a number of key ministries (including housing and labour) means that little stands in his way of achieving this. The real losers in his return will be those Iraqis who wish to see their government work on a non-sectarian basis, because his movement is likely to seek to transform their religious preferences into government policy.

Finally, Sadr has only managed to achieve such level of influence because he is backed by Iran. Only under pressure from Iran did he compromise so far as to throw his weight behind Maliki, who once tried to destroy his movement, as the leader of the Iraqi government. The return of Sadr to Iraqi politics may have actually strengthened the hand of Iran, for now Tehran has a powerful ally who can ensure that events in Iraq occur to their liking.

One of the bitter ironies of the US decision to invade Iraq is that its attempt to create a liberal democracy in the region wound up leaving its longtime enemy as a key power broker in the region.

Despite all of these reasons to be worried about Sadr, it is not clear what the US can do to influence events in Iraq, now that he has returned. Prime Minister Maliki is determined that the US follow through on the Status of Forces Agreement, which would see all US forces depart the country by December 2011. Even now, the US has withdrawn most of its active combat forces from Iraq and is playing a much less central role in Iraqi politics. Now that they have been shown the door by the Maliki government, the US will lose much of its remaining leverage in Iraq, and local political actors like Sadr will find it less costly to grandstand against whatever the US recommends, no matter how sensible.

That Sadr's return holds out the prospect of a return to violence or increasingly illiberal government in Iraq is clear. But it is also now clear that events in Iraq have slipped out of the hands of the US, turning America into a bystander in the aftermath of a war of its own making. Whether Iraq will continue to consolidate its fragile gains, or slip back into violence or authoritarian government, is a matter that the Obama administration may find very hard to influence.