Iraq, U.S. making progress on security pact: Talabani

WASHINGTON (Reuters) - Iraq and the United States are making progress in completing a security pact for U.S. forces to stay in the country after 2008, Iraqi President Jalal Talabani said on Wednesday after meeting U.S. President George W. Bush.

"I think we have very good, important steps toward reaching ... this agreement," Talabani told reporters after the meeting at the White House. "And we continue our struggle to, our efforts to reach ... very soon this agreement."

The two countries have been negotiating a new security deal to provide a legal basis for U.S. troops to stay in Iraq after a United Nations mandate expires on December 31, and a separate long-term agreement on political, economic and security ties.

Earlier this month Iraqi Prime Minister Nuri al-Maliki said the discussions were stalled because of concerns about the country's sovereignty. But last week Maliki and Bush spoke via a video conference call and the White House said the two agreed that talks were proceeding well.

A quarterly Pentagon report released this week that said Iraqi forces could be "mostly self-sufficient" by the end of 2008. However, a senior U.S. military official said earlier this week that they will still need logistic and intelligence help for years.

The Pentagon has been gradually pulling out U.S. troops from Iraq after Bush sent more forces in last year to tamp down violence. By August, five combat brigades will have been withdrawn, leaving about 140,000 U.S. troops there.

Overall violence in Iraq has fallen in recent months. However a flare-up of attacks this week has killed seven U.S. soldiers.

Bush offered praise for Iraq's leaders, pointing to improved security and economic conditions as well as legislative accomplishments.

"I'm proud of what you've done and I thank you for the tough decisions so that the people of a free Iraq can realize hopes and dreams," Bush said.

Talabani also said he believed the Iraqi parliament could approve this year two key new laws, one on oil and another on elections. Iraq's leaders have been debating legislation on revenue sharing and the national oil company.

"I think I can say that we can pass this year two important laws of oil and election," he said.

(Reporting by Jeremy Pelofsky, editing by David Storey and David Wiessler)