The damning analysis, unveiled in a presentation at a two-day conference on US-Arab relations here, sees violence in Iraq getting worse and alleges large-scale Iranian "interference" there is set to grow.
"It is already a lost battle," said Nawaf Obaid, Managing Director of the Saudi National Security Assessment project, at the annual policymakers conference of the National Council on US-Arab Relations.
The question in Iraq is not "if the US succeeds -- it has failed by every single measure that you can think of," said Obaid, private security and energy advisor to the Saudi ambassador to Washington, Prince Turki al-Faisal.
"The failure is only compounded by the fact that we just don't know what the endgame is." said Obaid, head of the Riyadh-based independent consultancy which advises the Saudi government.
The presentation was released as debate on Iraq reached fever pitch on the US campaign trail ahead of crucial mid-term elections next week, and as foreign policy analysts here predict a possible change of US direction.
President George W. Bush last week asserted that America is winning in Iraq, where more than 100 US troops died in October, and that political and security progress is being made.
The study concluded that a Kurdish drive for quasi-independence within Iraq would gather speed, as would the insurgency, and Iranian influence in the country could be expected to increase as American influence waned.
Vice President Dick Cheney said in an interview Tuesday violence would go on "for some considerable period of time in Iraq," but argued progress had been made.
Obaid said in his presentation that the Sunni-led insurgency in Iraq showed no sign of abating, that conditions were being exacerbated by Iranian interference and questioned whether the Iraqi government could bring stability.
"All indications point to a current state of civil war and the disintegration of the Iraqi state," Obaid said, adding that Saudi leaders had been trying to counter what he said were US misconceptions about Iraq.
"Unfortunately the assessment is very dire, and we don't think there is a possibility now to avoid a potential disintegration of Iraq."
The presentation claimed that there had been large-scale "infiltration, funding and arming" of Shia militias by the Iranian Revolutionary Guard.
Shia officers with ties to the guard and Iran's Ministry of Intelligence had also infiltrated newly created Iraqi army and police forces, the report said.
US Secretary of State Condoleezza Rice meanwhile Tuesday warned in an interview with CNBC against Iranian interference in Iraq.
Iran "does need to understand that it is not going to improve its own situation by stirring instability in Iraq," she said.
"It's going to simply create a neighbour with which it will have problems well into the future. The Iraqis themselves are telling the Iranians that they expect Iran to behave in a neighbourly fashion."
Prince Turki warned at the conference on Monday against a hasty US retreat from Iraq, and warned a formal decision to split the country on ethnic lines would unleash massive ethnic cleansing.
"Since America came into Iraq uninvited, it should not leave Iraq uninvited," he said.
"To envision that you can divide Iraq into three parts is to envision ethnic cleansing on a massive scale, sectarian killing on a massive scale and the uprooting of families," he said.

Copyright AFP (Agence France-Presse), 2006