In his first visit to the country since US troops withdrew from cities and towns at the end of last month under a security pact with Baghdad, Gates portrayed the transition as a success so far.

"The feedback I got here is that the agreement has changed the chemistry of the relationship ... in a positive way," Gates told reporters. "Nobody's the boss or the occupier or however you want to put it, but there's a real sense of empowerment by the Iraqis."

A major Iraqi army operation launched on Tuesday appeared to underscore his point, as Baghdad authorities moved without US troops against a camp housing members of exiled Iranian opposition group the People's Mujahedeen.

The top US commander in Iraq, General Ray Odierno, said he had no advance warning of the operation at Camp Ashraf and that American units were not involved.

US troops disarmed Camp Ashraf in 2003 and then patrolled it until handing over control three months ago to Iraqi forces.

The status of the camp had been a source of friction between Washington and Baghdad and the Iraqi army's offensive drove home how the US military's mission was being scaled back.

With the security accord requiring US forces to pull out from Iraq entirely by the end of 2011, Gates urged the country's Shiite, Sunni and Kurdish communities to settle their power-sharing disputes while American troops remain on the ground.

"We will continue to support Iraq's progress toward national unity," he said at a joint press conference with Defense Minister Abdel Qader Obeidi. "And we will encourage progress toward ensuring all of Iraq's communities are represented in its security forces and institutions."

As the US military mission winds down, President Barack Obama's administration has called for greater efforts to tackle disputes which threaten to revive ethnic and sectarian strife.

Odierno later told reporters violence continues to decline overall in Iraq but warned tensions between Kurds and Iraqi Arabs represent the biggest threat to the country's stability.

The US defence secretary, who also held talks with Iraqi Prime Minister Nuri al-Maliki, was due to travel Wednesday to the autonomous Kurdish region.

His visit follows elections in the Kurdish region on Saturday that saw a new reform-minded opposition group hail a breakthrough against the long-dominant former rebel factions.

In his talks in Baghdad, Gates said the US administration is working to help Baghdad build up its own military while offering more training for Iraqi forces.

Among the weaponry on Baghdad's wish list are fighter jets and Odierno confirmed Baghdad had discussed possibly buying US F-16 fighter planes.

Odierno said that a US Air Force team will travel to Iraq to help Baghdad examine possible options for developing a modern air force.

He said French or Russian fighter aircraft would also be considered as well as "creative solutions" such as supplying Baghdad with F-16s retired from the US fleet.

Implementation of the so-called Status of Forces Agreement signed between Baghdad and Washington in November has caused some tensions between the remaining 128,000 American troops and Iraqi security forces.

An Iraqi officer ordered the detention of US soldiers this month after they shot dead three Iraqis while pursuing insurgents.

But Maliki said during a visit to Washington last week that the detention of the US soldiers was a mistake.

Odierno said the accord was initially misinterpreted by some Iraqi commanders but those problems had been ironed out.

Iraqi officials have not definitively ruled out US troops staying after 2011, but Gates and Odierno declined to discuss a possible role for US forces after the deadline.

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