US President George Bush and Iraqi Prime Minister Nouri al-Maliki signed a ‘declaration of principles’ on Monday to establish permanent US military bases in Iraq.

Washington and Baghdad aim to have the details of the long-term US presence in Iraq hammered out by the end of July next year.

“Iraq and the United States will begin bilateral talks as soon as possible to reach an agreement before July 31, 2008, outlining friendship and cooperation between the two independent governments and states in the areas of culture, the economy and security,” said Mr Maliki in a televised national address.

Next month, Mr Maliki will ask the UN Security Council to renew its mandate for US-led coalition forces to remain in Iraq one final time. This would expire on December 31, 2008.

Lieutenant General Douglas Lute, President Bush’s adviser on the wars in Iraq and Afghanistan, confirmed that negotiations for a long-term US military presence would go ahead next year.

The agreement signed between Mr Bush and Mr Maliki on Monday, by way of secure video conference, set the agenda for those talks.

“What US troops are doing, how many troops are required to do that, are bases required, which partners will join them – all these things are on the negotiating table,” said Lt. Gen. Lute. “The basic message here should be clear. Iraq is increasingly able to stand on its own. That’s very good news, but it won’t have to stand alone.”

Most US military commanders believe that Iraq will not be able to defend its own territory until 2012.

Iraqi officials estimate that a permanent presence of 50,000 troops will be required.

Two senior Iraqi officials interviewed by CBS News indicated that US security guarantees would likely lay the groundwork for preferential treatment for American investors to exploit the war-torn country’s vast oil resources.

A long-term US presence would also serve to curb the expansion of Iranian influence in the region.