When the new American Embassy in Baghdad entered the planning stage, more than three years ago, U.S. officials inside the Green Zone were still insisting that great progress was being made in the construction of a new Iraq. I remember a surreal press conference in which a U.S. spokesman named Dan Senor, full of governmental conceits, described the marvelous developments he personally had observed during a recent sortie (under heavy escort) into the city. His idea now was to set the press straight on realities outside the Green Zone gates. Senor was well groomed and precocious, fresh into the world, and he had acquired a taste for appearing on TV. The assembled reporters were by contrast a disheveled and unwashed lot, but they included serious people of deep experience, many of whom lived fully exposed to Iraq, and knew that society there was unraveling fast. Some realized already that the war had been lost, though such were the attitudes of the citizenry back home that they could not yet even imply this in print.

Now they listened to Senor as they increasingly did, setting aside their professional skepticism for attitudes closer to fascination and wonder. Senor's view of Baghdad was so disconnected from the streets that, at least in front of this audience, it would have made for impossibly poor propaganda. Rather, he seemed truly convinced of what he said, which in turn could be explained only as the product of extreme isolation. Progress in the construction of a new Iraq? Industry had stalled, electricity and water were failing, sewage was flooding the streets, the universities were shuttered, the insurgency was expanding, sectarianism was on the rise, and gunfire and explosions now marked the days as well as the nights. Month by month, Baghdad was crumbling back into the earth. Senor apparently had taken heart that shops remained open, selling vegetables, fruits, and household goods. Had he ventured out at night he would have seen that some sidewalk cafés remained crowded as well. But almost the only construction evident in the city was of the Green Zone defenses themselves—erected in a quest for safety at the cost of official interactions with Iraq. Senor went home, married a Washington insider, and became a commentator on Fox News. Eventually he set himself up in the business of "crisis communications," as if even he finally realized that Iraq had gone horribly wrong.

Inside the Green Zone the talk of progress slowed and then died. The first of the nominal Iraqi governments arrived and joined the Americans in their oasis. The rest of Baghdad became the fearsome "Red Zone," and completely off limits to American officials, although reporters and other unaffiliated Westerners continued to live and work there. Meanwhile, through institutional momentum and without regard to the fundamental mission—the reason for being there in the first place—the Green Zone defenses kept growing, surrounding the residents with ever more layers of checkpoints and blast walls, and forcing American officials to withdraw into their highly defended quarters at the Republican Palace, whereupon even the Green Zone became for them a forbidden land.

That was the process that has led, now, to this—the construction of an extravagant new fortress into which a thousand American officials and their many camp followers are fleeing. The compound, which will be completed by late fall, is the largest and most expensive embassy in the world, a walled expanse the size of Vatican City, containing 21 reinforced buildings on a 104-acre site along the Tigris River, enclosed within an extension of the Green Zone which stretches toward the airport road. The new embassy cost $600 million to build, and is expected to cost another $1.2 billion a year to run—a high price even by the profligate standards of the war in Iraq. The design is the work of an architectural firm in Kansas City named Berger Devine Yaeger, which angered the State Department last May by posting its plans and drawings on the Internet, and then responding to criticism with the suggestion that Google Earth offers better views. Google Earth offers precise distance measurements and geographic coordinates too.