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.

During the Cold War era, the issue was the containment of Soviet influence, and we tolerated many an authoritarian regime as long as they were useful to us in this respect.

We're dealing with such enormous problems today that we have no other choice but to work together. If Iraq fails, if a religious civil war breaks out and the neighboring states are drawn into this conflict, if the Kurds declare independence and al-Qaida takes over an entire province - that's when the consequences will be dramatic.

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.

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.

The feeling of being an Iraqi unites all ethnic groups within this country. Even the Kurds, who have traditionally pushed for their own state, see the benefits of the current situation. They enjoy an autonomous status in Kurdistan, while at the same time participating in decisions in Baghdad. But if neighboring states were to push for a partition of Iraq, it would be a horrible mistake.