Pentagon Prepares For New Military Talks With Iraq WASHINGTON - The Obama administration is preparing to begin talks with Iraq on defining a long-term defense relationship that may include expanded U.S. training help, according to Defense Secretary Leon Panetta's chief policy aide. Michele Flournoy, who is leaving her Pentagon post on Friday to return to private life, said in an interview with a small group of reporters that the administration is open to Iraqi suggestions about the scope and depth of defense ties. "One of the things we're looking forward to doing is sitting down with the Iraqis in the coming month or two to start thinking about how they want to work with" the U.S. military to develop a program of exercises, training and other forms of security cooperation, Flournoy said. The U.S. military completed its withdrawal from Iraq in December after nearly nine years of war. Both sides had considered keeping at least several thousand U.S. troops there to provide comprehensive field training for Iraqi security forces, but they failed to strike a deal before the expiration of a 2008 agreement that required all American troops to leave. As a result, training is limited to a group of American service members and contractors in Baghdad who will help Iraqis learn to operate newly acquired weapons systems. They are part of the Office of Security Cooperation, based in the U.S. Embassy in Baghdad and headed by Army Lt. Gen. Robert Caslen. Additional and more comprehensive training is a major issue because Iraq's army and police are mainly equipped and trained to counter an internal insurgency, rather than deter and defend against external threats. Iraq, for example, currently cannot defend its own air sovereignty. It is buying - but has not yet received - U.S.-made F-16 fighter jets. In a new report on conditions in Iraq, a U.S. government watchdog agency said the Iraqi army is giving so much attention to fighting the insurgents that it has had too little time to train for conventional combat. "The Iraqi army, while capable of conducting counterterrorism and counterinsurgency operations, possesses limited ability to defend the nation against foreign threats," said the report submitted to Congress Monday by the Special Inspector General for Iraq Reconstruction, Stuart W. Bowen, Jr. In an introductory note, Bowen wrote that while Iraq's young democracy is buoyed by increasing oil production, it "remains imperiled by roiling ethno-sectarian tensions and their consequent security threats." Iraq has seen an upswing in violence since the last U.S. troop left, but senior U.S. officials have remained in touch in hopes of nudging the Iraqis toward a political accommodation that can avert a slide into civil war. Vice President Joe Biden spoke by phone on Saturday with Osama Nujaifi, speaker of the Council of Representatives. And Biden spoke on Friday with a key opposition figure, Ayad Allawi, a former interim prime minister and a secular Shiite leader of the Iraqiya political bloc. Allawi has said Iraq needs to replace its prime minister, Nouri al-Maliki, or hold new elections to prevent the country from fracturing along sectarian lines. In a positive sign, Iraq's Sunni leaders announced on Sunday that they will end their boycott of parliament. That may have paved the way for the political leadership to hold a national conference led by President Jalal Talabani to seek reconciliation and to end a sectarian political crisis. George Little, the Pentagon press secretary, said Sunday that Panetta remains optimistic about the outlook in Iraq despite worsening violence. "The secretary believes that the Iraqi people have a genuine opportunity to create a future of greater security for themselves, and that senseless acts of violence will not deter them from pursuing that goal," Little said. The United States remains committed to a strong security relationship with Iraq. U.S. officials have said they aim to establish broad defense ties to Iraq, similar to American relationships with other nations in the Gulf, including Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Oman and Bahrain. Flournoy, 51, is stepping down from her position as undersecretary of defense for policy on Friday after three years in the job. She is the first woman to hold that post. Her chief deputy, Jim Miller, has been picked to succeed her. In the interview last week, Flournoy reiterated that she is leaving government to focus more on her family. She and her husband, W. Scott Gould, have three children aged 14, 12 and nine. She came to the Pentagon in February 2009 from the Center for a New American Security, where she was the think tank's first president. She had served in the Pentagon in the 1990s as a strategist. Flournoy said in an Associated Press interview in December when she announced her decision to quit that she intends to play an informal role this year in supporting President Barack Obama's re-election effort. She was a member of his transition team after the November 2008 election. Robert Burns can be reached on Twitter at http://www.twitter.com/robertburnsAP