Free Iraq huge defeat for Al-Qaeda: Bush

"I assured Iraq that the United States will continue to assist them in the formation of a free country," Bush said.

US President George W Bush has said that the formation of Iraq's new government will serve as a "devastating defeat" for the Al-Qaeda and other terrorists seeking to create unrest in the region.

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"I fully understand that a free Iraq will be an important ally in the war against terror, and will serve as an example for others in the region who desire to be free," Bush said at the White House.

The speech followed the formation of Iraq's new government in Baghdad on Saturday.

Bush said that he had spoken to Iraq president Jalal Talabani, the country's new prime minister Nuri al-Maliki, and the speaker Mahmud Mashhadani to congratulate them on forming a new "unity government".

"I assured them that the United States will continue to assist the Iraqis in the formation of a free country," Bush said.

"The formation of the unity government in Iraq begins a new chapter in our relationship with the country," Bush said.