The Fall of Ramadi is becoming a game-changer. Not for the defeat itself, but for the response. In particular, the military offensive to retake Ramadi.
The most obvious element of how things have changed is the composition of the Baghdad army.

The 7,000 Iraqi army troops who have recently completed American-led training programs are not involved in the massive counteroffensive that Iraq launched this week against Islamic State militants in Anbar province, U.S. and coalition officials said.

None. Zero. Nada. Baghdad has in effect declared that they have completely lost faith in our ability to train their army.
The implications of this cannot be understated. It effectively limits our participation in this war to just bombing runs. However, the implications don't stop there.

But the yellow-and-green flags that line the sides of the newly secured roads and flutter from rooftops leave no doubt as to who is leading the fighting here: Kitaeb Hezbollah, a Shiite militia designated a terrorist organization by the United States.

We are fighting a terrorist group with another terrorist group. Think about that for a bit. Eventually the absurdity will sink in.
The group leading the charge against Daesh is responsible for the deaths of countless American soldiers.

“We chose America, we chose a strong country, but we were wrong.”
- Falih al-Essawi, deputy head of Anbar’s provincial council

Until the Fall of Ramadi the Pentagon has kept the Iranian-backed Shia mlitias at arm's length and pretended not to be working with them. Those days are over.

Air Force Col. Patrick Ryder, the CENTCOM spokesperson, recently told reporters the US will provide air support "to all forces that are under the command and control of the government of Iraq," which now include the Shia militias.
This is despite CENTCOM head Gen. Lloyd Austin telling US lawmakers in March that he would not "coordinate or cooperate" with Shia militias...
The apparent shift in US policy toward Shia militias signals the acceptance of a dark reality in Iraq — that without the Shia militias, ISIS might be able to further consolidate their gains in Iraq.

Backing the Shia militias comes at an enormous price. Every significant victory during the past nine months that the Shia militias have managed against the Daesh militants has been accompanied with ethnic cleansing and targeted assassinations.

Amerli in September of 2014
Jurf al-Sakhar in October of 2014 (with update)
Villages north of Baghdad in December of 2014
Tikrit in April of this year

It's no longer possible to say who is more responsible for Iraq's enormous refugee crisis - Daesh or the Shia militias.
It's easy to see how more than a million internal refugees is destabilizing. This is not the road to victory or peace.

The make matters worse, Baghdad's counter-offensive at Ramadi appears destined to fail.

As former US Army intelligence officer Michael Pregent explained to Business Insider, taking back Ramadi is beyond the capabilities of a diminished Iraqi army and its partners, which include Iranian-backed Shia militia groups like Kataib Hezbollah and the Badr Group.
And "Ramadi's different," says Pregent. "It has a civilian population and it's far harder to bomb there. The targets are harder to find and ISIS is embedded in the Sunni population ... It took 30,000 fighters to take Tikrit, and they couldn't take the city from 1,000 ISIS fighters in an area with no civilian population until the US started bombing everything."

The offensive was originally named "Labaik ya Hussein", a slogan in honor of a grandson of the Prophet Mohammed killed in the 7th Century battle that led to the schism between Shi'ite and Sunni Muslims.
The vanguard of this attack force is just 3,000 Shia militiamen, and the total force is around a quarter of the size of what was necessary for victory at Tikrit.

The primary problem with Iraq has always been political. The defeat at Ramadi has weakened Prime Minister Haider al-Abadi against his hard-line Shia rivals.
The White House has recently voiced concerns about Adabi's ability to create political reconciliation between the Sunnis and Shias. But then who else is there?

Last week the Iraqi PM al-Abadi promised to retake Ramadi 'in days'. However, seven days later the reality is that the offensive hasn't done much of anything.
Given the inadequate force involved, it's unlikely that it wil ever achieve its goal. Which brings us to an uncomfortable reality.

Ramadi could become the semipermanent dividing line between Iranian-supported Shia militant groups and ISIS. That's actually good news for Iran, whose power increases as the Iraqi state dwindles and the country fractures into sectarian cantons.

The fact is that Baghdad is increasingly sidelining our war effort and embracing Tehran instead. However, Tehran isn't interested in a strong Iraq. It's more interested in a dependent client state in Baghdad.

Which means that without a dramatic change in political alliances, this war is simply unwinnable. We can't save Iraq because Iraq no longer exists.

That dark reality is still being denied in Washington. Instead we are given meaningless happy talk.
With 17 months still to go until the 2016 election, it is going to become impossible to paper over the failure of our existing military strategy. It's going to become an important campaign issue.

Barring a dramatic change in fortunes, what we are looking at is a long-term stalemate in Iraq. Which leaves Iran and Daesh the only winners.
Even more importantly, Bashar al-Assad's government is appearing increasingly shaky in Syria. Even Moscow is distancing itself from his government.
The fall of Assad would leave only jihadists in control of Syria, and absolutely no hope of defeating Daesh.
And that doesn't even address the increasingly powerful ISIS affiliate in Libya.

This dark reality means that ISIS would be far more powerful and secure in 2016 than in 2014.
I don't know what the political ramifications from this outcome will be, but I do know that denial is not working.