From what I just read they are building many smaller high security complexes.
The New Embassy
Indeed, the massive $592-million project may be the most lasting monument to the U.S. occupation in the war-torn nation. Located on a on a 104-acre site on the Tigris river where U.S. and coalition authorities are headquartered, the high-tech palatial compound is envisioned as a totally self-sustaining cluster of 21 buildings reinforced to 2.5 times usual standards. Some walls as said to be 15 feet thick or more. Scheduled for completion by June 2007, the installation is touted as not only the largest, but the most secure diplomatic embassy in the world.
The 1,000 or more U.S. government officials calling the new compound home will have access to a gym, swimming pool, barber and beauty shops, a food court and a commissary. In addition to the main embassy buildings, there will be a large-scale US Marine barracks, a school, locker rooms, a warehouse, a vehicle maintenance garage, and six apartment buildings with a total of 619 one-bedroom units. Water, electricity and sewage treatment plants will all be independent from Baghdad's city utilities. The total site will be two-thirds the area of the National Mall in Washington, DC.
Yes, but in one set of walls = 1 building to external Iraqi. A compound like that is sensiblem, but not so close to the heart of things. It looks arrogant and it dislocates the normal business and day to day life of the city. It should have been externalised (eg outskirts of Baghdad) if it's going to be lumped together like that.