The al Qaeda-inspired militant group known as the Islamic State of Iraq and Syria, or ISIS, now controls a key border crossing.
Militants seized the site Friday in a daylong battle that left at least 30 Iraqi troops dead.
Control of the border crossing comes as thousands of fighters rallied in Baghdad Saturday morning.
CBS News correspondent Clarissa Ward reports from the Iraqi capital that the seizure of the border crossing is a huge strategic advance for ISIS, also known as the Islamic State of Iraq and the Levant, or ISIL, because it means that it can now easily move heavy weapons back and forth across from Syria to Iraq.
In the Shiite stronghold of Sadr City in Baghdad, there was a massive display of military might, but the men aren't soldiers in the Iraqi army. They are members of a Shiite militia, and their leader is radical, anti-American cleric Muqtada al-Sadr.
Many fear the parade will only heighten sectarian tensions at a time when the security situation in Iraq is spiraling out of control.
CBS News traveled across town to visit a Sunni neighborhood in Baghdad.
Getting into the neighborhood, like many Sunni neighborhoods, was incredibly difficult because the entire area is surrounded by large blast walls, and there's just one way in and out, and that is guarded by a major checkpoint.
That's where Ward met taxi driver Ali and his wife and daughter. They told her that Shiite militias have recently begun a campaign of intimidation.
"I swear, the situation in Sunni neighborhoods in general is not good," he said. "My brother was arrested a month ago, and we can't find him. The day before yesterday they dropped a dead body on the highway near our neighborhood."
Ali said he and his family are trapped. If he had enough money, they would leave the country.
"I swear," he said, "there is no future in Iraq."
There is a huge amount of pressure on Iraqi Prime Minister Nouri al-Maliki to try to win back the trust of people like Ali and his family and build an inclusive, unity government. There is also a great deal of skepticism that he can achieve that.