Iraq is breaking up, with Shia and ethnic minorities fleeing massacres as a general Sunni revolt, led by the Islamic State in Iraq and the Levant (Isis) sweeps through northern Iraq. The Isis assault is still gaining victories, capturing the Shia Turkoman town of Tal Afar west of Mosul after heavy fighting against one of the Iraqi army’s more effective units.

Iraq could soon see sectarian slaughter similar to that which took place at the time of the partition of India in 1947. Pictures and evidence from eye witnesses confirm that Isis massacred some 1,700 Shia captives, many of them air force cadets, at the air force academy outside Tikrit, which proves that Isis intends to cleanse its new conquests of Shia. Sunni cadets were told to go home. If the battle moves to Baghdad, then the Shia majority in the capital might see the Sunni enclaves, particularly those in west Baghdad, such as Amiriya and Khadra, as weak points in their defences, and drive out the inhabitants.

In a misguided effort to sustain the morale of people in the capital, the government closed down the internet at 9am. It had already closed YouTube, Facebook and Twitter. The excuse is that Isis uses them to communicate, but this is extremely unlikely since Isis has a more professional communications system of its own. Since there is little confidence in the news on government-run television stations, or provided by official spokesmen, the internet shutdown is creating a vacuum of information filled by frightening rumours that are difficult to check.

The result is an atmosphere of growing panic in Baghdad with volunteers from the Shia militias being trucked to Samarra, north of the capital, to stop the Isis advance. The cost of a bullet for an AK47 assault rifle has tripled to 3,000 Iraqi dinars, or about $2. Kalashnikovs are almost impossible to buy from arms dealers though pistols can still be obtained at three times the price of a week ago. In the Shia holy city of Kerbala, south-east of Baghdad, the governor has asked volunteers to bring their own weapons to recruitment centres.

Many civilians are leaving Baghdad and the better-off have already gone abroad. The head of an Iraqi security company told me: “I am off to Dubai on an unscheduled holiday to see my daughters because all the foreigners I was protecting have already left.” The price of a cylinder of propane gas, used by Iraqis for cooking, has doubled to 6,000 Iraqi dinars, because it normally comes from Kirkuk, the road to which is now cut off by Isis fighters.

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Rumours swirl through Baghdad. There was a report this morning that the whole of Anbar, the giant Sunni province, which normally has a population of 1.5 million, had fallen. But a call to a friend in its capital Ramadi revealed that fighting is still going on. A former minister last night told me that Isis, unable to take Samarra, had switched its assault to Baquba in Diyala province, one of the gateways to Baghdad, but a resident denied there was fighting.

It was a different story in Tal Afar, supposedly defended by 1,000 Kurdish peshmerga but they were either overwhelmed or forced to retreat. There are reports the commander of the Iraqi army division fighting there had been captured. The Turkoman Shia inhabitants have fled to Kurdish-held zones and the town is largely deserted. A source in Mosul said yesterday that the Iraqi air force had carried out bombing raids there, and electricity supplies had been cut.

What is not in doubt is that the Sunni revolt, in which Isis fighters act as shock troops, is still gathering strength though there has been no serious attack on the capital. If it does begin, Isis will be faced by hundreds of thousands of Shia militia and, if it makes progress, by Iranian military forces probably in the shape of the Islamic Revolutionary Guard Corps (IRGC). Iraqi media has been reporting that two Iranian divisions are already in Iraq, but as of Monday afternoon I had not met anybody who had seen them.

With regular Iraqi army commanders discredited or distrusted, Qassem Soleimani, commander of the Quds force of the IRGC is in Baghdad and is reported to have taken over planning and strategy. Iraqi officials say the Iranians plan to secure the road north to Samarra, a mostly Sunni city, but with a revered Shia shrine, and then use that as a rallying point for forces to re-take Tikrit and Mosul.

An important factor is how far President Masoud Barzani, head of the autonomous Kurdistan Regional Government, who has just made historic gains for his people by taking over Kirkuk and other territories in dispute with Baghdad, will want to join a government counter-attack. The extent to which the entire 350,000 strong Iraqi army forces are demoralised is also unclear. Officers returning from Mosul say that their senior commanders fled or told them not to resist.

Asked about the cause of defeat, one recently retired Iraqi general said: “Corruption! Corruption! Corruption!” He said it started when the Americans told the Iraqi army to outsource food and other supplies in about 2005. A battalion commander was paid for a unit of 600 soldiers, but had only 200 men under arms and pocketed the difference which meant enormous profits. The army became a money-making machine for senior officers and often an extortion racket for ordinary soldiers who manned the checkpoints. On top of this, well-trained Sunni officers were side-lined. “Iraq did not really have a national army,” the general concluded.