STOCKHOLM (AFP) — World leaders, including UN chief Ban Ki-moon and US Secretary of State Condoleezza Rice, on Thursday hailed Baghdad's progress in combatting violence and stabilising Iraq.

A declaration adopted by 100 delegations at a Stockholm conference said the participants "recognised the important efforts made by the (Iraqi) government to improve security and public order and combat terrorism and sectarian violence across Iraq."

It also acknowledged political and economic progress made, and said that "given the difficult context, these successes are all the more remarkable."

In a speech earlier to the conference, Ban said Iraq was "stepping back from the abyss that we feared most," adding that with international help the war-torn country could fulfill its "vision of becoming a free, secure, stable and prosperous nation."

He cautioned however that "the situation remains fragile."

The one-day conference in Stockholm, hosted by Ban and Iraqi Prime Minister Nuri al-Maliki, was attended by Rice, Iranian Foreign Minister Manouchehr Mottaki and British Foreign Secretary David Miliband among others.

Rice said that while Iraq was "making good progress there remain challenges. Not everything that needs to be accomplished has been accomplished."

Miliband was also optimistic and noted that at the conference, "instead of talking about the last five years every speaker has talked about the next five years, and that is a really profound change of perspective."

Their comments came as two suicide bombings targeted police and security forces in northern Iraq, killing at least 20 people and wounding another 42, officials said.

The attacks shattered a relative calm, after the US military said violence across the nation had hit a four-year low last week.

In Stockholm, Maliki stressed that great progress had been made toward creating long-term stability in all areas, and asked world leaders "to end the international sanctions that were imposed on Iraq because of the previous regime and to write off debts."

He noted that his country was not poor thanks to its rich oil resources, but said the debt was weighing down reconstruction efforts.

According to the Iraqi government, Iraq's total debt, excluding interest, is some 140 billion dollars, including 10 billion dollars owed to Saudi Arabia and a little less to Kuwait.

Iraq's debt has been reduced by 66.5 billion dollars, US State Department figures show.

Rice urged the world community and especially Iraq's Arab neighbours to re-establish diplomatic ties with Baghdad.

"I encourage everyone to increase their diplomatic, economic, social and cultural engagement with the people of Iraq," she said.

"We especially urge Iraq's neighbours and friends to strengthen these ties through official visits to Iraq, the reopening of embassies and consulates and the appointment of ambassadors," she said, adding that Iraq could do its part by "appointing Iraqi ambassadors to Arab countries."

The Stockholm conference was the first follow-up meeting since the International Compact with Iraq, a five-year peace and economic development plan, was adopted in Egypt in May 2007.

At that meeting senior officials from more than 60 countries and organisations promised to cancel 30 billion dollars of Iraqi debt.

Maliki said he wanted Iraq to host the next follow-up meeting in 2009, and in a sign of the meeting's upbeat tone, Ban said he was "quite confident that the Iraqi government will be able to hold this meeting next year."

In one of the few signs of criticism, Iranian Foreign Minister Manouchehr Mottaki fired a salvo at the United States, saying the major security problems remaining in Iraq were "due to mistaken policies by occupiers in Iraq."

"Security in Iraq is now so grave that it has cast a shadow over" the lives of all Iraqis, he added.
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