"Iraq as a political project is finished...moved to Plan B"

BAGHDAD, July 21 (Reuters) - Bombs killed two worshippers at mosques in Iraq during Friday prayers and the authorities extended a daytime curfew on Baghdad after one of the bloodiest weeks this year.

On the eve of a high-profile meeting intended to demonstrate reconciliation among sectarian and ethnic factions ahead of a White House visit by the prime minister, senior leaders admitted to despair about the chances of averting all-out civil war.

"Iraq as a political project is finished," a top government official told Reuters -- anonymously because the coalition of Shi'ite Prime Minister Nuri al-Maliki remains committed in public to a U.S.-sponsored constitution preserving Iraq's unity.

"The parties have moved to Plan B," the official said, saying Sunni, ethnic Kurdish and majority Shi'ite blocs were looking at ways to divide power and resources and to solve the conundrum of Baghdad's mixed population of seven million.

"There is serious talk of Baghdad being divided into east and west," said the official, who has long been a proponent of the present government's objectives. "We are extremely worried."