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WOLF BLITZER: Let's get back to the other top story we're following. President Bush saying Vietnam offers grave warnings about pulling out of Iraq too quickly. But might the U.S. plan for democracy in Iraq actually fail? The price of that grand plan can be measured in huge sums of money and most importantly, of course, lives.

And yet the payoff for this tremendous sacrifice may not be what the United States had hoped for. CNN's Michael Ware is in Baghdad -- Michael.

MICHAEL WARE, CNN CORRESPONDENT: Wolf, for President Bush, victory in Iraq means a successful democracy and nothing less. But with the government in Baghdad ailing, the realities on the ground are forcing his diplomats and commanders to soften expectations of just what that democracy might look like, with some generals suggesting it may not be the solution at all.

(BEGIN VIDEOTAPE)

WARE (voice-over): Two years after the euphoria of historic elections, America's plan to bring democracy to Iraq is in crisis. For the first time, exasperated frontline U.S. generals talk openly of non-democratic alternatives.

BRIG. GEN JOHN BEDNAREK, U.S. ARMY: The democratic institutions are not necessarily the way ahead in the long-term future.

WARE: Iraq's institutions are simply not working. It's hard to dispute that Iraq is a failing state. Seventeen of the 37 Iraqi cabinet ministers either boycott the government or don't attend cabinet meetings. The government is unable to supply regular electricity and at times not even providing running water in the capital.

The health care system is run by one Iranian-backed militia. The police, dominated by another. Death squads terrorize Sunni neighborhoods. Sectarian cleansing pushes people into segregated enclaves, protected by Shia or U.S.-backed Sunni militias.

And thousands of innocents are dying every month. The government failures are forcing the Bush administration to curb its vision for a democratic model for the region, the cornerstone of its rationale for the war.

U.S. Ambassador Ryan Crocker and commanding General David Petraeus declined to be interviewed but issued a joint statement to CNN. In it, they reiterate "Iraq's fundamental democratic framework is in place" and "development of democratic institutions" is being encouraged.

But Crocker and Petraeus concede they are "now engaged in pursuing less lofty and ambitious goals than was the case at the outset." And now in the war's fifth year, democracy no longer features in some U.S. commanders' definitions of American victory.

GENERAL BENJAMIN MIXON, U.S. REGION COMMANDER IN IRAQ: I would describe it as leaving an effective government behind that can provide services to its people and security. There needs to be a functioning and effective government that is really a partner with the United States of America and the rest of the world in this fight against these terrorists.

WARE: This two-star general is not perturbed if those goals are reached without democracy.

MIXON: We see that all over the Middle East.

WARE: Democracy he says, is an option. The Iraqis free to choose it or reject it.

MIXON: But that is the $50,000 question is what will this government look like? Will it be a democracy? Will it not?

WARE: Security, he says, is what the U.S. soldiers are fighting for.

MIXON: Core to my mission is security for Iraq's people to establish a functioning government and to enhance their security forces and to defeat this enemy.

WARE: A functioning government, not necessarily a democratic one. But Iraqi government officials say the democratic government could work better if it was actually allowed to run things.

"We don't have sovereignty over our troops. We don't have sovereignty over our provinces, we admit it," says the head of the Iraqi parliament's military oversight committee. "We don't say we have full sovereignty."

For example, while the Iraqi government commands these army troops, it cannot even send them into battle without U.S. agreement.

And these Iraqi special forces troops do not answer to the Iraqi government at all, only to U.S. officers. And because of the very real prospect of Iranian infiltration, the Iraqi government doesn't fund or control its own intelligence service. Instead, it's paid for and run by the CIA.

"So is it reasonable for a country given sovereignty by the international community to have a chief of intelligence appointed by another country?" asks the head of Iraq's parliamentary watchdog committee. "We think sovereignty means the ability of a government to be elected and make its own decisions."

He may not be wrong, but a senior U.S. official in Baghdad told CNN any country with 160,000 foreigners fighting for it sacrifices some sovereignty. The U.S. has long cautioned a fully functioning democracy would be slow to emerge, but with U.S. senators calling for Prime Minister Nouri al-Maliki's ouster, some senior U.S. officers suggest the entire Iraqi government must be removed by constitutional or non-constitutional means, and they're not sure a democracy need replace it.

(END VIDEOTAPE)

WARE: Either way, if a successful democracy does manage to emerge in Iraq, it's not going to be the one that President Bush originally had in mind -- Wolf.

BLITZER: Michael Ware, doing some excellent reporting for us from the scene. Michael, thank you very much.