(Adds Hagel quote)
DAYTON, Ohio, March 27 (Reuters) - U.S. President George W. Bush defended the pace of political and economic reform in Iraq on Thursday and accused members of the U.S. Congress of "hectoring" Baghdad and threatening its leaders.
Bush also praised Iraqi Prime Minister Nuri al-Maliki for launching a "tough battle against militia fighters and criminals" in the oil city of Basra, citing it as evidence that Baghdad is increasingly able to handle security without U.S. leadership.
Bush's speech at the National Museum of the U.S. Air Force was one of a series of public addresses he has delivered in defense of the 5-year-old war ahead of congressional testimony next month by the Iraq commander and his decision on the way forward after last year's increase in U.S. forces in Iraq.
Bush has argued that the increase in U.S. troop levels in Iraq would lower the level of violence, giving the government in Baghdad time to enact political reforms and train its own security forces to take over policing and military defense.
Democrats and other war critics say that despite a reduction in violence, Iraa has made little political progress and the United States should set a timetable for withdrawal to pressure Baghdad to act more quickly.
Sen. Chuck Hagel of Nebraska, a Vietnam War veteran and Republican war critic, rejected Bush's assertions that Iraq had improved markedly, telling CNN "this is still a very unstable, serious, dangerous situation."
"I think this is another episode of Alice in Wonderland, what's up is down and what's down is up," Hagel said of Bush's portrayal of the war. "What do you mean stability and security? Baghdad, for example, has been over the last year essentially ethnically divided."
NOT 'FOOT DRAGGING'
Bush rejected criticisms of the war's progress on Thursday.
"Some members of Congress decided the best way to encourage progress in Baghdad was to criticize and threaten Iraq's leaders while they're trying to work out their differences," he said. "But hectoring was not what the Iraqi leaders needed."
He said what the Iraqis needed was security "and that is what the surge has provided."
"When it takes time for Iraqis to reach agreement, it is not 'foot dragging,' as one senator described it," Bush added. "They're striving to build a modern democracy on the rubble of three decades of tyranny."
Despite U.S. public pressure to bring more troops home from the unpopular war, Bush has said any decision would depend on recommendations from commanders on the ground and has warned the security gains could easily disappear if Iraq is not ready to assume more control.
"As I consider the way forward I will always remember that the progress in Iraq is real, it is substantive, but it is reversible," he said.
Iraq commander Gen. David Petraeus will give a status report to Congress early next month. The military will complete the withdrawal of about 20,000 troops by July, leaving about 140,000 in Iraq, approximately the same number as before last year's reinforcements.
Petraeus is expected to recommend a pause in troop withdrawals to avoid losing the gains made in recent months.
Bush cited the Basra fighting as evidence Iraqi security capabilities were growing, saying Iraqis planned the campaign, were leading it and were providing extra troops for it.
"Prime Minister Maliki's bold decision, and it was a bold decision, to go after the illegal groups in Basra shows his leadership and his commitment to enforce the law in an even-handed manner," Bush said. "It also shows the progress the Iraqi security forces have made during the surge."
The Iraqi government launched the military operation in Basra on Tuesday, targeting districts of the city where the Mehdi Army militia of prominent Shi'ite cleric Moqtada al-Sadr has a strong presence.
Sadr, a fiery anti-American preacher, twice led revolts against U.S. forces in 2004 but won praise for helping reduce violence last year by declaring a cease-fire. He helped install Maliki in power in 2005 but later broke with him.
The Basra violence, which the Bush administration has portrayed as a fight pitting the government against criminal gangs and illegal militias, has killed more than 130 people and sparked protests and violence in Baghdad, including the Sadr City slum named after Sadr's father. (Writing by David Alexander; editing by Xavier Briand)
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