I'm not so fast to claim all is lost, but I'll go back to a little something I've been harping on for a while: there's no way for any nation to win a conflict only using military force. One must successfully use all the elements of national power.
Shall we review?
I will go out on a limb, you can't successfully influence other nations -- in the long term -- without using the full complement of national power. And, further, I'll suggest that, indeed, all will be lost if we are not able to successfully implement the D, I, and E in Iraq.
As I've noted before: We seem to have forgotten that we succeeded in the initial military efforts; only when we want it to "stick" have we come to realize that one leg doesn't do the trick.