Iraq looms large as Bush to focus on legacy

Bush, freed from the burden of seeking reelection by the constitutional ban on serving more than two terms, hopes to leave his mark by transforming the Middle East and revamping the US tax and pension systems.

The November 2 elections slightly widened the thin majorities his Republican party enjoys in the US Senate and the House of Representatives, which may ease the way for some of his legislative proposals.

Bush, who says voters ratified his Iraq policy and gave him a mandate to push his domestic agenda, hopes to make his massive tax cuts permanent and partially privatise the government-run Social Security pension plan.

But foreign affairs may dominate his second term the same way it dwarfed other priorities after the September 11, 2001 attacks, the wars in Afghanistan and Iraq, and the ongoing global campaign to stamp out terrorism.

Just ten days after taking his second oath of office Iraqis are scheduled to vote in the first elections of the post-Saddam Hussein era, amid a deadly insurgency eager to derail the process.

Bush has been upbeat about Iraq's January 30 election, even as senior aides downplay the contest as just a "first step" towards eventually building a democracy where Saddam's dictatorship once stood.

The US president has linked it to other elections like those in Afghanistan and the Palestinian territories, and sees it as a sign of growing momentum towards democracy in the region.