Iraqi Honor Guards perform as they mark the day they took control of security.

The U.S. military has completed the transfer of control of all Iraqi cities and towns to Iraq's security forces. The move was part of an agreement made by the U.S. and Iraq in 2008. Iraq's acceptance of sole responsibility for the security of Iraq's cities occurred on June 30th, a day which the Iraqis have designated a national holiday.

Calling the transition a "milestone," President Barack Obama said that the Iraqi people "are rightly treating this day as a cause of celebration":

"This is an important step forward, as a sovereign and united Iraq continues to take control of its own destiny."

U.S. soldiers rest in the shade at Forward Operating Base Warhorse, Baqouba.

U.S. troops led a multinational coalition of forces into Iraq in 2003 and drove Iraqi dictator Saddam Hussein from power. President Obama's strategy is to remove U.S. combat brigades from Iraq by September 2010, and all U.S. forces by the end of 2011.

President Obama noted that Iraq still faces "difficult days," citing as an example the terrorist bombing in Kirkuk on June 30th that killed more than 40 people:

"And there are those who will test Iraq's security forces and the resolve of the Iraqi people through more sectarian bombings and the murder of innocent civilians."

The commander of multinational forces in Iraq, U.S. Army General Raymond Odierno said al-Qaida, though degraded, continues to kill innocent Iraqis to try vainly to reignite sectarian violence in Iraq. Iran, said General Odierno, also continues to pose a problem by providing training and weapons to extremist militias inside Iraq.

But the competence of Iraq's security forces "has grown tremendously" in the last 3 years, said General Odierno, and he is hopeful that the country "is going to move forward as a secure, stable, sovereign Iraq."

President Obama also expressed confidence that Iraqis would be able to secure the gains that have been made in their country:

"The future belongs to those who build, not those who destroy. And today's transition is further proof that those who have tried to pull Iraq into the abyss of disunion and civil war are on the wrong side of history."

"There's more work to be done," said President Obama, "but we've made important progress in supporting a sovereign, stable and self-reliant Iraq."