The terrorists want civil war. Al-Qaida is attacking Shiites. The Shiite militias are taking revenge on the Sunnis. And the Sunnis are become more extremist, with some joining al-Qaida.

I consider the modernization of the Middle East the central challenge of our time. This region behaves as if it were disturbed, if you'll excuse the clinical expression.

Iran is undertaking a massive effort to expand its influence in southern Iraq. At the same time, that influence decreases the more the political process in Iraq progresses.

I don't believe that military intervention is always the right approach. What we need is a comprehensive strategy, one that advances democratization, economic reforms and equal rights for women.

The Sunnis continue to see themselves, possibly for nostalgic reasons, as the most influential group and want a stronger central government - quite unlike minorities in other countries. The circumstances here are far more complex than many people in Washington imagine.

The U.S. and Iraq will work together next year to shift Iraqi resources from unproductive subsidies to productive uses that enable Iraqis to earn livelihoods.

Americans have eliminated Iran's worst enemies, the Taliban in Afghanistan and Saddam [Hussein]. I occasionally threatened my Iranian counterpart in Kabul that one day I would send him a big bill for what we did. But, seriously, Iran is pursuing a dual strategy in Iraq. On the one hand, the Iranians, after decades of hostility, are now interested in good relations. On the other hand, they want to keep the country weak and dominate the region.