Petraeus says Iraq "surge" working: paper

CANBERRA (Reuters) - The U.S. troop surge in Iraq has thrown al Qaeda off balance and led to a reduction in sectarian violence and bombings, the U.S. commander in Iraq was quoted on Friday by an Australian newspaper as saying.

"We say we have achieved progress, and we are obviously going to do everything we can to build on that progress and we believe al Qaeda is off balance at the very least," General David Petraeus told the Australian in an interview after briefing Australia's defense minister, Brendan Nelson, in Baghdad.

Petraeus and U.S. ambassador Ryan Crocker will testify before the U.S. Congress on either September 11 or 12.

Their reports on Iraq's security and political situation could prompt a shift in U.S. President George W. Bush's Iraq policy amid calls from opposition Democrats and some senior Republicans for U.S. troops to start leaving Iraq.

Bush urged coalition allies to make pullout decisions based on security conditions on the ground.

"Failure in Iraq would lead to, in my judgment, turmoil, chaos in the Middle East, and other attacks on the United States and other nations," Bush told Sky News Australia in an interview broadcast on Friday ahead of the next week's 21-member Asia-Pacific leaders summit in Sydney.

"What matters is success and I believe we can be successful."

Bush said two forms of extremism had converged on Iraq, counting Sunni extremists inspired by al Qaeda and Shi'ite extremists fostered by Iran.

"We need all our coalition partners. Whether it be Afghanistan or Iraq, we've got more work to do, the free world has got more work to do."