Iraqi leaders have agreed to try to form an interim government within a month, as thousands of Shiites rallied to demand more influence over the country's future. The Baghdad meeting of around 250 delegates with Jay Garner, the retired US general running Iraq.The meeting coincided with a trip to the Gulf by US Defense Secretary Donald Rumsfeld, who said US forces in the region could now be reduced.

Delegates in Baghdad reached an agreement to hold a national congress within four weeks to elect the first Iraqi government since the fall of Saddam's regime on April 9.

Sharp Divisions Over Duration of US-led Occupation & the Role of Islam in a New Government

But there were sharp divisions within the assembly over the duration of the US occupation and the role Islam should play in a new government.

While some, including many exiles, appeared to favour a quick US exit, others who endured Saddam's brutal rule were skeptical over their own readiness to lead the nation.

"We here prefer the Americans to rule us in the interim period. We are not ready to handle this yet," said Suheil al-Suheil, a Baghdad lawyer: "Saddam's orphans are still alive."

Tribal leader Hussein Shaanan said: "We thank the forces that have freed us from the dictatorship, but now we'd like them to leave as soon as possible."

As the leaders debated the future of Iraq, thousands of mainly Shiite Muslims rallied in Baghdad, in a further demonstration of their influence in postwar Iraq, where they make up 60 percent of the population.

Led by dozens of religious leaders from the powerful Hawza Shiite School in the revered Shiite city of Najaf, they called for their own leaders to be given a role in running the country as they marched to al-Fardus Square, where Saddam's statue was toppled on April 9.

However the United States has rejected allowing a Shiite-led Islamic theocracy, similar to the system in neighbouring Iran, to take root in Iraq.

Bush Wants Iraq to Be an Example of Peace, Prosperity & Freedom to Entire Middle East

President George W. Bush vowed to see Iraq through to democracy and said the US-led occupation was already improving the lives of Iraqis.

"Iraq can be an example of peace and prosperity and freedom to the entire Middle East," he said in a speech to a primarily Arab-American crowd in Dearborn, Michigan where there is a large Iraqi community.

"It'll be a hard journey, but every step of the way, Iraq will have a steady friend in the American people," he said in the speech, aimed as much at the Middle East as the American Midwest.

US Forces in the Gulf to Be Reduced

At US Central Command in Qatar, the US Defense Secretary announced that the United States will be able to reduce the size of its military forces in the Gulf now that Iraq no longer poses a threat.

Although no final decisions had been made, General Tommy Franks is thinking about changes in US basing requirements in the region, including a possible move of air operations command center from Saudi Arabia, he said.

Rumsfeld lavished praise on US troops, comparing the toppling of Saddam to the fall of the Berlin Wall and the 1945 liberation of Paris.

His weeklong tour will reportedly include a visit to Iraq, but the exact programme has been kept secret for security reasons

PHOTO CAPTION

Delegation members take part in a conference led by retired US general Jay Garner, director of the office of reconstruction and humanitarian assistance to Iraq, in Baghdad. (AFP/Romeo Gacad)