The bloody finale of the Serbian assault will deal a crippling blow to the US administration, as well as to all the international organisations involved - the UN, the EU and Nato. It has ramifications for the whole post-Cold War strategy of rebuilding the security order in Europe.
The fall of Gorazde would represent a lethal blow to the policy of United Nations 'safe havens' in Bosnia backed by Nato's military force, long derided, but now looking bankrupt. It was always uncertain whether this represented a commitment to defending UN soldiers or civilians or territory. Indeed, there were signs last night that the presence of the United Nations in Bosnia was being completely reconsidered.
There will now be an uncomfortable examination of how the situation deteriorated. It is still uncertain why air strikes requested by General Rose last week were not carried out, apparently after permission was refused by the UN special representative. And US Defence Secretary William Perry will have to answer some tough questioning as to why he said that the West would not stop the Serbs taking Gorazde, apparently giving them the green light for their onslaught.
At the same time Mr Perry is also under attack over the fiasco that left 26 dead in Iraq when US fighters shot down US helicopters. This is unlikely to be a happy week at the Pentagon.
The Gorazde debacle shows the bankruptcy of Nato's use of air power without any commitment to a broader strategy in the former Yugoslavia. Nato diplomats and officials were warning two months ago that a situation like Gorazde could happen. They were concerned that the West would do something with limited and incoherent objectives and referred to this as 'ill conceived and probably dangerous'.
Now the pieces must be picked up. There are likely to be rancorous arguments over the next steps. The looming failure of a policy leaves the West with a dreadful decision: to escalate the fighting still further, raising the possibility of a Vietnam-style quagmire, or to pull out, abandoning the Bosnian Muslims.
With the US refusing to commit ground troops, it is hard to see how escalation could achieve anything. But with civilian casualties mounting, politicians will be loathe to admit failure and retreat. Last year the US and Europe clashed over Washington's suggestion that the embargo on selling arms to the Bosnian Muslims should be lifted. Similiar fights are likely to break out, hampering any decisive response. If the UN does indeed withdraw, then 'lift and strike' may be the only option left on the table.
Beyond the immediate decisions, the debacle at Gorazde has once more exposed the strategic vaccuum in Europe. The longer-term diplomatic cost of Western activism in Bosnia may be high, and not just because Nato's credibility has been holed. The effort has increasingly alienated Russia, the West's not-so-silent partner in the Yugoslav endeavour. Moscow had been intending to sign a deal with Nato under its Partnership for Peace deal this week. Now that seems unlikely: and no new date has been set.
Throughout the crisis US and Europe have vacillated between working with Russia and taking unilateral initiatives - avoiding air strikes when it seemed Moscow objected last week, then launching them again. At the same time, Russia has seemed to outflank the West, through its links with the Serbs. There are ominous parallels to the events which destroyed detente in the 1970s.
The problems with Russia may well be overcome, if the West shows more readiness to consult with Moscow, and if it makes concessions to Russian pride by providing the elements of a 'new strategic relationship'. But the appearance of building a new security 'condominium' with Russia was precisely what the West had sought to avoid, through both Partnership for Peace and a more assertive policy in Bosnia.