"Iraq is moving forward in a way that is promising but still fragile," Rice told reporters after talks with Iraq's leaders.
"I must say that from the time I was here a month ago I have also seen progress on the political front, particularly in the reconciliation that the Iraqi people themselves are carrying out at the grassroots front," she said.
Steps taken early in the US occupation in Iraq had stripped tens of thousands of members of the Baath Party – most of whom were Sunni Arabs, the community that has driven Iraq's insurgency – of their government jobs. Many analysts said this had fueled anger at the new, Shiite-led political order the US helped install in the country.
The US has now made political reconciliation between Shiite and Sunni a key goal to ultimately ending the war there. But some critics believe the new law, which will allow some Baathists to go back to work, does not go far enough.