Iraq is "stepping back from abyss"

That's the word from UN head Ban Ki-moon at a donor's conference in Sweden on Thursday. Ban said that the word he would use to describe the current situation in Iraq as "hopeful" but added that it "remains fragile."

The optimism comes from an improving security situation in Iraq, with some ceasefires in hotspots like Sadr City in Baghdad and the southern city of Mosul, and reports of al-Qaeda in Iraq losing support with Iraqi insurgents. Ban added that people in Iraq seem to be more willing to work with the elected government. Iraq's oil production is also recovering, with a published report this weekend putting it at the same level as 2003 for the first time since the US-led coalition invasion.

The purpose of the Sweden donor conference was to try to reduce Iraq's crippling foreign debt. Iraq owes more than $60 billion - the majority of it to Saudi Arabia and Kuwait, but with 100 other nations also holding IOUs. The huge level of debt is standing in the way of reconstruction efforts. The UN is hoping that these nations will forgive Iraq's debts.

US Secretary of State Condoleezza Rice was also on hand for the meeting. She agreed with Ban that things are improving, but said "challenges” remain and urged other countries not to abandon Iraq when progress is being made.