Bush says not satisfied with Iraq political progress

WASHINGTON (Reuters) - President George W. Bush said on Thursday he was not satisfied with political progress in Iraq but insisted its government was making some advances.

"There is a functioning government," Bush said. "Are we satisfied with the progress in Baghdad? No."

But Bush told reporters it was wrong to say nothing was happening and said Washington would keep up pressure for efforts at national reconciliation in Iraq.

Violence in Iraq has fallen sharply over the past few months after Washington deployed an additional 30,000 troops in an effort to give the Baghdad government a more peaceful atmosphere for political dialogue and compromise.

But Iraqi leaders have made little progress passing laws aimed at reconciling majority Shi'ites and minority Sunnis.

Asked at a news conference about the lack of political progress, Bush pointed to Iraq's success in passing a budget, distributing oil revenues among the provinces and considering a law to ease curbs on former members of Saddam Hussein's Baath Party.

"They've got a lot of work to do. Don't get me wrong, you know. I mean, I'm not suggesting that we shouldn't, as a government, continue to press them," Bush said.

But he added the U.S. Congress had been more than two months late in wrapping up legislation providing funding for the current fiscal year, finishing only Wednesday evening.

"It took our Congress until the last minute to get things done," he said. "I mean, the legislative process is not all that smooth at times."

Bush said the United States would continue to press Iraqi officials to reach agreement on provincial election laws, power-sharing between the central government and provinces, an oil law and other efforts aimed at national reconciliation.

"There is local reconciliation taking place," he added. "And a lot of times it's local politics that will drive national politics."

(Reporting by Matt Spetalnick, writing by David Alexander, editing by Doina Chiacu)