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.

Nation building is our central task, both in Afghanistan and in Iraq. And states, nations can't just be built with military power. Despite all difficulties, it's very inspiring to see how the Kurds, the Arab Sunnis and the Shiites are coming together here, how they're jointly defining the basis on which their state is to be built, the political course this state will pursue and who is to receive which cabinet positions.

Today we're seeing fundamental conflicts within political Islam, with the fundamentalists on the one side and the moderates on the other. Who gains the upper hand means a great deal to the world.

The national unity government will need to implement a program that brings all Iraqis together, builds a happy future for the people of Iraq, and gets Iraq to stand on its own feet.

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.

Success in Iraq will be a major setback for terrorists and a major asset for the security of this region. The struggle for Iraq is the struggle for the future of the world.

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.