Prime Minister:

 

Mr Speaker, the statement I wish to make today is to set out detailed proposals for political reconciliation and economic reconstruction in Iraq, for the security of the Iraqi people, the future configuration, equipment for and security of our own armed forces, and about the obligations we owe to the local Iraqi staff who have supported us in our efforts.

 

The House will want me to start by paying tribute to the 7 members of our armed forces who since July have lost their lives in action in Iraq:

 

    * Corporal Stephen Edwards

    * Private Craig Barber

    * Leading Aircraftman Martin Beard

    * Lance Sergeant Christopher Casey

    * Lance Corporal Kirk Redpath

    * Sergeant Mark Stansfield

    * Sergeant Eddie Collins

 

And the 18 who have died in Afghanistan:

 

    * Lance Corporal Alex Hawkins

    * Guardsman David Atherton

    * Sergeant Barry Keen

    * Lance Corporal Michael Jones

    * Captain David Hicks

    * Private Tony Rawson

    * Private Aaron James McClure

    * Private Robert Graham Foster

    * Private John Trumble

    * Private Damian Wright

    * Private Ben Ford

    * Private Johan Botha

    * Private Brian Tunnicliffe

    * Senior Aircraftman Christopher Bridge

    * Sergeant Craig Brelsford

    * Corporal Ivano Violino

    * Colour Sergeant Phillip Newman

    * Major Alexis Roberts

 

They died doing vital work in the service of our country. We owe them, and others who have lost their lives, a deep debt of gratitude. They will never be forgotten.

 

And I also want to send our whole-hearted sympathy to the families of those that have fallen, and to the injured and their families.

 

Mr Speaker, our strategy as a Government has been:

 

    * first, to work to bring together the political groupings in Basra and across Iraq;

    * second, to ensure that the security of the Iraqi people and the new Iraqi democracy is properly safeguarded, as well as the security of our own armed forces;

    * and third, to work for an economy in Iraq where people have a stake in the future.

 

Our strategy is founded on the UN mandate renewed last November in UN Security Council Resolution 1723. Whatever disagreements there have been about our decision to go to war, there can be little disagreement about the unanimous UN position affirming the right of the Iraqi people freely to determine their own political future, calling upon "the International Community, particularly countries in the region and Iraq's neighbours, to support the Iraqi people in their pursuit of peace, stability, security, democracy and prosperity".

 

And so let me affirm: as I told Prime Minister Maliki last week - and as I have agreed with President Bush and our other allies - we will meet our obligations, honour our commitments and discharge our duties to the international community and to the people of Iraq.

 

The future depends first of all upon sustained progress on political reconciliation. That is why when I met Prime Minister Maliki and Vice President Hashemi in Baghdad last week, I said it was vital - and they agreed - that the 3 plus 1 leadership group of the Prime Minister and Presidency Council meet to take the political process forward; that key legislation be passed on sharing oil revenues, de-ba'athification, the constitutional review and provincial elections; that the government must reach out to disaffected groups, as well as decide on next steps on detainees; and that local elections go ahead in early 2008 making Provincial Councils more representative. And our message to the Government of Iraq - and to the leaders of all Iraq's communities and parties - is that they must make the long-term decisions needed to achieve reconciliation.

 

Mr Speaker, the support of Iraq's neighbours - including a commitment to prevent financing and support for militias and insurgent groups - is also critical to ensuring security and political reconciliation.

 

I urge all nations to implement the International Compact to renew Iraq's economy, to participate in the Neighbours Conferences to boost cooperation and surmount divisions in the region, and to support the enhanced mission of the United Nations in Iraq. I renew our call that Iran and Syria play a more constructive role by halting their support for terrorists and armed groups operating in Iraq, by continuing to improve border security and by arresting and detaining foreign fighters trying to reach Iraq.

 

And we must all act against the presence of Al Qaeda in Iraq. When the people and security forces stand up to Al Qaeda as in Anbar province, which they had declared to be their base, they can be driven out.

 

Mr Speaker, as I turn to the security situation I would like to take this opportunity to pay tribute to the steadfastness of our coalition partners also working tirelessly in Multi-National Division South East - troops from Denmark, the Czech Republic and Lithuania - and to the continuing Australian and Romanian role at Tallil in Dhi Qar province. The achievement of a democratic Iraq matters to every civilized nation. And today I pay tribute to all 26 nations - led by the General Petraeus and the US - who have troops on the ground in Iraq.

 

As the Petraeus-Crocker report set out, the security gains made by the multinational forces this year have been significant. And as important as improving current security is building the capacity of the Iraqi forces so they can achieve our aim: that Iraqis step up and progressively take over security themselves.

 

In 2004 it was agreed with the Iraqi Government that in each of the country's 18 provinces security responsibility would progressively be returned to the Iraqi authorities as and when the conditions were right. Now we are in a position to announce further progress.

 

Over the past four years the UK has helped train over 13,000 Iraqi Army troops, including 10,000 now serving with the 10th Division which has been conducting operations in Basra and across the south of the country without the requirement for Coalition ground support. As we tackle corruption, 15,000 police officers are also now trained and equipped in Southern Iraq. And the Iraqi Army 14th Division - with around 11,000 men - are in the process of joining them and have already taken on responsibility for Basra City ----- bringing security forces in the south to almost 30,000 now and over 35,000 by June next year.

 

Since we handed over our base in Basra City in early September the present security situation has been calmer. Indeed in the last month there have been five indirect fire attacks on Basra Air Station compared with 87 in July. And while the four southern provinces have around 20 per cent of the Iraqi people they still account for less than 5 per cent of the overall violence in Iraq.

 

Mr Speaker, during our engagement in Iraq we have always made clear that all our decisions must be made on the basis of the assessments of our military commanders and actual conditions on the ground. As a result of the progress made in Southern Iraq, US, UK and Iraqi commanders judged over the last 15 months that three out of the four provinces in the UK's area of control in Southern Iraq were suitable for transition back to the Iraqis --- and these have subsequently been transferred to Iraqi control.

 

As part of the process of putting the Iraqi forces in the lead in Basra, we have just gone through a demanding operation which involved consolidating our forces at Basra airport. This was successfully completed, as planned, early last month.

 

The next important stage in delivering our strategy to hand over security to the Iraqis is to move from a combat role in the rest of Basra province to "overwatch" which will itself have two distinct stages. In the first, the British forces that remain in Iraq will have the following tasks:

 

    * training and mentoring the Iraqi army and police force;

    * securing supply routes and policing the Iran-Iraq border;

    * and the ability to come to the assistance of the Iraqi security forces when called upon.

 

Then, in the spring of next year - and guided as always by the advice of our military commanders - we plan to move to a second stage of "overwatch" where the Coalition would maintain a more limited re-intervention capacity and where the main focus will be on training and mentoring.

 

And I want now to explain how - after detailed discussions with our military commanders, a meeting of the National Security Committee, discussions with the Iraqi Government and our allies, and subject to conditions on the ground - we plan, from next spring, to reduce force numbers in southern Iraq to a figure of 2,500.

 

The first stage begins now. With the Iraqis already assuming greater security responsibility, we expect to:

 

    * establish Provincial Iraqi Control in Basra province in the next two months as announced by the Prime Minister of Iraq,

    * move to the first stage of "overwatch",

    * reduce numbers in southern Iraq from the 5,500 at the start of September to 4,500 immediately after Provincial Iraqi Control and then to 4,000,

    * and then in the second stage of "overwatch", from the spring - and guided as always by the advice of our military commanders - reduce to around 2,500 troops, with a further decision about the next phase made then. In both stages of "overwatch" around 500 logistics and support personnel will be based outside Iraq elsewhere in the region.

 

At all times achieving our long term aim of handing over security to the Iraqi armed forces and police, honouring our obligations to the Iraqi people and to their security, and ensuring the safety of our forces.

 

Mr Speaker, I would also like to take this opportunity to pay tribute to the work of our civilian and locally employed staff in Iraq, many of whom have worked in extremely difficult circumstances exposing themselves and their families to danger.

 

And I am pleased therefore to announce today a new policy which more fully recognises the contribution made by our local Iraqi staff who work for our armed forces and civilian missions in uniquely difficult circumstances.

 

Existing staff who have been employed by us for more than twelve months and have completed their work will be able to apply for a package of financial payments to aid resettlement in Iraq or elsewhere in the region, or - in agreed circumstances - for admission to the UK. And professional staff --- including interpreters and translators --- with a similar length of service who have left our employ since the beginning of 2005 will also be able to apply for assistance.

 

We will make a further written statement on the detail of this scheme this week.

 

The purpose of economic reconstruction is to ensure ordinary Iraqis have an economic stake in the future. And so as a result of the work I launched with Prime Minister Maliki in July, the Provincial Council have created the Basra Investment Promotion Agency to stimulate private sector development and is forming a Basra Development Fund - financed by $30 million dollars from the Iraqi Finance Ministry - to help small businesses access finance and kick start economic growth.

 

And as announced this morning by the Government of Iraq, we have agreed on the need for a new Basra Development Commission which will bring national, regional and international business knowledge together to provide advice on how to increase investment and economic growth. The Commission will host a business leadership conference to strengthen the engagement of the UK private sector in Iraq and enhance regional investment networks. And it will help the Provincial authorities coordinate projects to strengthen Basra's position as an economic hub, including the development of Basra International Airport and the renovation of Umm Quasr Port.

 

And I can tell the House that in addition to our support for humanitarian assistance being announced by the Department for International Development today, Deputy Iraqi Prime Minster Barham Saleh has announced over $300 million dollars for investment in Basra from the 2007 Iraqi national budget, and this will be increased again in 2008, ensuring economic reconstruction can make real progress.

 

Mr Speaker, the safety and security of our armed forces remains our highest priority.

 

The Mastiff patrol vehicle offers the best known protection against mines and roadside bombs and I can announce today that in addition to the 100 bought and deployed last year in Iraq and Afghanistan, the Ministry of Defence is placing an order for an additional 140 Mastiff patrol vehicles.

 

And in recognition for the work of all our forces in Iraq and Afghanistan - and to help our troops stay in touch with home - we will provide additional funding from the Reserve to double the number of internet terminals and provide free wireless internet for soldiers in Iraq and Afghanistan so they can email their families from their living quarters.

 

Mr Speaker, I am convinced after my visit to the region that progress cannot be fully achieved without progress on Israeli-Palestinian issues. A few days ago this Government published its proposals for an economic road map to underpin the peace process, a programme for economic and social support for the rebuilding of the Palestinian economy and the reduction of the high levels of unemployment and poverty amongst the Palestinian people.

 

My Rt Hon Friend the Foreign Secretary and I believe - as does the whole international community including the US, the EU and the Arab League - that current dialogue between President Abbas and Prime Minister Olmert offers the best chance of final status negotiations since 2000. The next step is a meeting with the parties and key international players, hosted by the Americans, in November at which we would like to see an agreement that puts the Israelis and Palestinians on a path to real negotiations in 2008 leading to a final settlement of two states living side by side in peace and security.

 

There will also be a donors' conference in December, through which the international community will work with Prime Minister Fayyad to strengthen the economy and institutions of a future Palestinian state. And I welcome Tony Blair's work as Quartet Envoy on this. The UK will continue to support the political process and to provide support for humanitarian assistance and economic development. And I assure the House of my personal commitment to doing all we can to ensure progress.

 

Mr Speaker, working for a successful conclusion to the Middle East Peace Process, taking on Al Qaeda terrorism and ensuring a more secure Iraq are all key to the future stability of the region.

 

As I have made clear, we have made commitments to the Iraqi people, through the United Nations, and we will honour these obligations.

 

We will continue to be actively engaged in Iraq's political and economic development.

We will continue to assist the Iraqi Government and its security forces to help build their capabilities - military, civilian and economic - so that they can take full responsibility for the security of their own country.

 

And we will never shirk from but continue to discharge our duties to them and to the international community.

 

Mr Speaker, it is also important to remember what has brought us to this stage. It is the determination, professionalism and sacrifice of our Armed Forces. They have protected the Iraqi people while training their security forces to bring peace to their cities, towns and districts. The scale of their achievement should not be underestimated.

 

I commend this statement to the House.