Since summer 2014, when IS was at its peak just ahead of the US-led war on the group, the jihadists have lost 65 percent of the land they'd seized across much of northern Syria and large parts of Iraq, the US defense official said.
IS now is looking beyond the seemingly inevitable loss of their strongholds of Mosul in Iraq and Raqa in Syria.
"I don't think they have given up on their vision of their caliphate yet," the official said, noting IS hopes to hold on to parts of eastern Syria and western Iraq.
In Mosul, Iraqi security forces backed by Western air power have recaptured the eastern side of the city and are making gradual progress into the western side in a bloody fight.
Hundreds of thousands of civilians are believed to still be trapped under jihadist rule in the Old City, where Abu Bakr al-Baghdadi proclaimed a "caliphate" in his only public appearance in July 2014.
The official said Baghdadi is no longer in Mosul, and the hunt for the enigmatic figure is being led by groups outside the US-led anti-IS coalition, including US special operations forces.
"Logically, any of those leaders would look at that situation and say from a military perspective this may be not be tenable for us to hold," the official said.
"Raqa would probably not be the final battle against ISIS... There is still ISIS in the rest of the Euphrates river valley downstream that will have to be dealt with."
About 15,000 IS fighters remain in Iraq and Syria, including some 2,500 in Mosul and the neighboring town of Tal Afar and as many as 4,000 still in Raqa, the official said.
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