By Matt Spetalnick WASHINGTON, July 31 (Reuters) - U.S. President George W. Bush on Thursday held out the prospect of further troop reductions in Iraq later this year as he hailed a new "degree of durability" in security gains there. Seizing on the latest signs of progress on the ground, Bush delivered perhaps his most upbeat assessment since the early stages of the unpopular 5-year-old war, now a central issue in the U.S. election campaign to pick his successor. "This has been a month of encouraging news from Iraq," Bush said in a hastily arranged White House appearance. "Violence is down to its lowest level since the spring of 2004, and we're now in our third consecutive month with reduced violence levels holding steady." He said commanding Gen. David Petraeus and U.S. Ambassador Ryan Crocker had cautioned that the progress is still reversible but "they report that there now appears to be a degree of durability to the gains that we have made." Normally careful to avoid talk of troop drawdowns, Bush suggested he would be open to the idea if trends continue. "Later this year, Gen. Petraeus will present me his recommendations on future troop levels -- including further reductions in our combat forces as conditions permit," Bush said. Bush's status report on the war came as U.S. military deaths in Iraq fell sharply in July, with the monthly total likely to be the lowest since the U.S.-led invasion of the country in 2003. Five U.S. soldiers have been killed in combat in Iraq this month compared with 66 in the same month last year, according to the independent website www.icasualties.org, which keeps records of U.S. military losses in the conflict. Bush also said progress was being made on a sensitive security pact with the Iraqi government, which would set terms for a U.S. troop presence past the end of the year. Talks were expected to go beyond Thursday's unofficial deadline. "We are close," said Pentagon spokesman Bryan Whitman. But he told reporters that intensive negotiations had yet to lock in formal language for a strategic framework. Prime Minister Nuri al-Maliki, underscoring his government's growing confidence as violence has ebbed, has indicated a desire for some kind of timeframe for troop cuts. But Bush and other U.S. officials have been more cautious and it was unclear whether the deal would specify any dates. PRESIDENTIAL CAMPAIGN Democratic presidential candidate Barack Obama wants to shift the focus of U.S. military efforts from Iraq to Afghanistan. He has pledged to withdraw troops from Iraq within 16 months of taking office in January, if he is elected. That would free up resources for Afghanistan, where the Taliban and al Qaeda are resurgent and U.S. casualties are on the rise. John McCain, Obama's rival and Bush's fellow Republican, while acknowledging the need for more troops in Afghanistan, has backed the president's Iraq strategy as well as his resistance to a fixed timetable for withdrawal. The drop in violence has come as Iraq forces have increasingly taken the lead in major security operations. Bush called the "increasing capability" of Iraq forces a key factor in the progress on the ground, and he declared that al Qaeda was "on the run" in the country. He also credited the "surge," a buildup of U.S. forces he ordered last year to stop Iraq from sliding into civil war. The U.S. military this month withdrew the last of five extra combat brigades that had been deployed, leaving 143,000 U.S. troops in the country. To highlight security gains, Bush pointed out that, effective on Friday, combat tours for U.S. troops heading to Iraq would be 12 months instead of 15 months. Contributing to the reduced violence was a decision by Sunni tribal leaders to turn against al Qaeda and a cease-fire imposed by Shi'ite cleric Moqtada al-Sadr on his Mehdi Army.(Additional reporting by Jeremy Pelofsky and David Morgan, editing by Vicki Allen)
Demonstrators hold Kurdish flags and banners during a protest in Sulaimaniya, 260 km (160 miles) northeast of Baghdad, July 30, 2008. Demonstrators took to the streets in Sulaimaniya condemning the passage ...
