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Baghdad, Iraq – The departing U.S. ambassador said Monday that talks with insurgent representatives are focusing on persuading them to join forces against al-Qaeda, hoping to take advantage of anger over attacks increasingly targeting Sunnis as well as Shiites.

In a farewell news conference, Zalmay Khalilzad said he was cautiously optimistic about efforts to bring stability to Iraq.

“In my view, though difficult challenges lie ahead and there is a long way to go, Iraq is fundamentally headed in the right direction and success is possible,” he said, pointing to a nearly 25 percent reduction in violence during a 6-week-old security crackdown in Baghdad as well as economic progress.

He acknowledged, however, that he was leaving his post with a litany of unfinished business, including an oil law that is waiting for parliamentary approval, and he called on Iraqi leaders to make progress on legislative and political measures to bring disaffected Sunnis into the political fold.

“The members of the coalition as well as other countries have made enormous sacrifices to give Iraqis a chance to build a stable and democratic order,” Khalilzad said. “Iraqis must not lose this opportunity, and they must step up and take the tough decisions necessary for success.”

The Afghan-born diplomat, who has been nominated by President Bush to be ambassador to the United Nations, said U.S. Embassy and Iraqi officials had talked to people representing insurgent groups. But he ruled out contact with al-Qaeda in Iraq, which has been blamed for many high-profile suicide bombings.

U.S. officials have been working for years to encourage dialogue with Iraqi groups – including major Sunni insurgent groups, except al-Qaeda. Khalilzad said Monday that the talks have shifted from “unreasonable demands” by the groups for a U.S. withdrawal to forming an alliance against al-Qaeda. He said the effort has gained support among tribal leaders and even some insurgents. Khalilzad said the U.S. hopes to build on that momentum.

His comments came as debate heated up in the U.S. over a Democratic push for a bill that would set a 2008 date for the withdrawal of American forces. The House narrowly passed a bill Friday that would pay for wars in Iraq and Afghanistan this year but would require that combat troops come home from Iraq before September 2008 – or earlier if the Iraqi government did not meet certain requirements. Bush has said he will veto such legislation.

The ambassador – who will be replaced by the U.S. ambassador to Pakistan, Ryan Crocker – said Iraqi leaders should take it as a warning. “I know that we are an impatient people, and I constantly signal to the Iraqi leaders that our patience, or the patience of the American people, is running out,” he said.

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