WASHINGTON, Feb 12: A joint report by 16 US intelligence agencies warns that America no longer has the option of winning the war in Iraq.

The National Intelligence Estimate (NIE) on Iraq says that President George W. Bush’s dream of creating a stable liberal democracy in Baghdad which is also pro-American is unattainable.

Several major American newspapers have interpreted this consensus judgment of all US intelligence agencies as a declaration of defeat.

The NIE warns of three scenarios that could occur as a result of a complete security breakdown.

This includes the chaotic breaking up of Iraq into an Indian-Pakistan-style partition with Kurds, Shia and Sunnis each claiming a slice of the nation.

The second scenario is the emergence of a strong Shia leader which would prevent partition, but could possibly lead to an undemocratic setup.

The third scenario is the complete breaking down of law and order leading to anarchy and fragmentation of power, a situation where Iraq’s neighbours, particularly Turkey and Iran, may be tempted to intervene in the country’s political system.