Quote:The Bush administration is significantly lowering expectations of what can be achieved in Iraq, recognizing that the United States will have to settle for far less progress than originally envisioned during the transition due to end in four months, according to U.S. officials in Washington and Baghdad.

The United States no longer expects to see a model new democracy, a self-supporting oil industry or a society where the majority of people are free from serious security or economic challenges, U.S. officials say.

"What we expected to achieve was never realistic given the timetable or what unfolded on the ground," said a senior official involved in policy since the 2003 invasion. "We are in a process of absorbing the factors of the situation we're in and shedding the unreality that dominated at the beginning."

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"We set out to establish a democracy, but we're slowly realizing we will have some form of Islamic republic," said another U.S. official familiar with policymaking from the beginning, who like some others interviewed would speak candidly only on the condition of anonymity. "That process is being repeated all over."

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"The most thoroughly dashed expectation was the ability to build a robust self-sustaining economy. We're nowhere near that. State industries, electricity are all below what they were before we got there," said Wayne White, former head of the State Department's Iraq intelligence team who is now at the Middle East Institute. "The administration says Saddam ran down the country. But most damage was from looting [after the invasion], which took down state industries, large private manufacturing, the national electric" system.

Quote:"We set out to establish a democracy, but we're slowly realizing we will have some form of Islamic republic,"