Panel: Bushs Iraq policies have failed

"Because none of the operations conducted by US and Iraqi military forces are fundamentally changing the conditions encouraging the sectarian violence, US forces seem to be caught in a mission that has no foreseeable end," the report said.

That was a withering evaluation of a central tenet of the Bush military strategy in Iraq. In Baghdad and elsewhere, US forces are supposed to help Iraqi units "clear, hold and build," shorthand for routing insurgents or other fighters from problem areas, securing those areas from further violence and setting a positive future course.

On the highly emotional issue of troop withdrawals, the commission warned against either a precipitous pullback or an open-ended commitment to a large deployment.

"Military priorities must change," the report said, toward a goal of training, equipping and advising Iraqi forces.

The report said Bush should put aside misgivings and engage Syria, Iran and the leaders of insurgent forces in negotiations on Iraq's future, to begin by year's end. It urged him to revive efforts at a broader Middle East peace.

The report laid out consequences from bad to worse, including the threat of wider war in the Middle East and reduced oil production that would hurt the global economy.

In a slap at the Pentagon, the commission said there is significant underreporting of the actual level of violence in Iraq. It also faulted the US intelligence effort, saying the government "still does not understand very well either the insurgency in Iraq or the role of the militias."

The commission recommended the number of US troops embedded to train Iraqis should increase dramatically, from 3,000 to 4,000 currently to 10,000 to 20,000. Commission member William Perry, defense secretary in the Clinton administration, said those could be drawn from combat brigades already in Iraq.

The report noted that Iraq costs run about $8 billion a month and that the bills will keep coming. "Caring for veterans and replacing lost equipment will run into the hundreds of billions of dollars," the commission said. "Estimates run as high as $2 trillion for the final cost of the US involvement in Iraq."