Paraguay 3, Iraq 1

-- A broken nation's bid to win an Olympic gold medal fell short Tuesday as the Iraq men's soccer team -- having already overcome the barriers of war, torture and sectarian chaos to reach the semifinals -- failed to extend its improbable run, losing 3-1 to Paraguay.

Iraq can win the bronze by beating favored Italy on Friday, which would still be a remarkable outcome for a country that has had only a single medal to brag about in 56 years of Olympic competition and whose athletic aspirations have been bottled up during decades of dictatorship and political isolation.

The unexpected success of the 22-member soccer team in the Olympics -- it beat three opponents to reach the medal round -- had given Iraqis a rare reason to celebrate.

"They make us forget our situation in Iraq, they make us forget our misery," said Sabah Nissar, a 29-year-old Iraqi native who emigrated from Baghdad five years ago to escape economic deprivation and who rode a bus from Athens to attend the match here. "They make us very happy. We are very proud of them."

The team did not exist a year ago, and was cobbled together in the aftermath of the U.S. invasion of Iraq partly in an attempt to restore some normalcy to the country.

With opponents unwilling to brave the security threats of Baghdad, the squad was forced to play its home games in Jordan prior to the Olympics and traveled in and out of Iraq on military planes.

Team members also had to deal with the constant distractions posed by the conflict back home. Salih Sadir, a 22-year-old midfielder, played Tuesday while his family in Najaf endured firefights in that city between insurgents and U.S. and Iraqi security forces. Striker Ahmed Manajid is from Fallujah, another town that has been torn apart by warfare.

"We are proud of this team," the coach, Adnan Hamad, said after the loss. "Our country is almost destroyed and we are living in a very difficult situation."

Until last year, the soccer team and the rest of Iraq's Olympic delegation reported directly to Uday Hussein, son of the Iraqi dictator, who meted out brutal treatment to athletes.

Players recalled being forced to walk barefoot over broken glass and to kick balls made of concrete after losses. One midfielder was thrown in prison for 10 days for missing a penalty kick. After the U.S. invasion, torture devices -- including a sarcophagus embedded with spikes -- were found in the basement of the Iraqi Olympic headquarters in Baghdad.

"This team qualified [for the Olympics] under very difficult circumstances," said Hussein Saeed Mohammed, director of the Iraqi soccer federation, who had worked as a sports official under Uday Hussein. "The economic experiences were difficult. The security experiences were difficult. So we are very proud of it.

"We want to say to the world and we say to Iraqis, we [have] solved many problems," he said. "We want to put a smile on the faces of the Iraqi people."

While the soccer squad found itself free of the oppression from the Hussein regime, it still got caught up in politics. Some players in recent days said they were irked by television advertisements for President Bush's reelection campaign taking credit for enabling Iraq to field an Olympic team as a "free nation."

"Bush helps destroy our country," Hamad, the coach, told the Associated Press. "After a year and a half, we have passed into a very bad situation."

Manajid, the midfielder, gave an even harsher response to Sports Illustrated last week, saying: "How will he meet his God having slaughtered so many men and women? He has committed so many crimes."

In the aftermath of such politically provocative comments, Iraqi Olympic officials and soccer federation representatives have tried to limit reporters' access to the players and coaches from the team. Only Hamad attended a news conference after the loss to Paraguay and Olympic organizers deflected questions about politics.

"We have nothing against American people, or any people in the world," Hamad told reporters through an interpreter. "As Iraqis, we love all the people in the world. They are all human beings, even the Americans."

While the match against Paraguay was hyped for its politics, the contest was not close. Paraguay's leading scorer, Jose Cardozo, scored two goals in the first half and Iraq never came any closer.

In spite of the heavy publicity, only about 3,000 fans attended the semifinal matchup here in Greece's second-largest city. The most vocal fans pulled for Iraq throughout, but had little to cheer about.

Several noisy busloads of Iraqi emigres made the six-hour trip north from Athens and filled an entire section of Kaftantzoglio Stadium, chanting "Iraq is Back" and "Bye-Bye Paraguay," and waving dozens of red-and-black striped Iraqi flags.

Raeed Yakob, 35, made a last-minute decision to fly to Greece from his home in Sweden, saying he felt compelled to be present to celebrate Iraq's improbable success in the Olympics.

"All of the world is surprised," said Yakob, whose family emigrated from Iraq when he was 9 because of political oppression. "We were happy just to be playing in Athens at all. To reach the medal round, this is unbelievable."

Despite defeat, Mohammed Emad and Iraqis can look forward to bronze medal match vs. Italy on Friday.Emilio Martinez slides at Iraq's Mohammed Emad, but Paraguayans kept their footing throughout semifinal.