The French prime minister is visiting Baghdad on Thursday, with a large delegation of French political and business leaders, in another positive sign for the war-torn nation. A trip to Kurdistan is also on the agenda for the French official.

French Prime Minister Francois Fillon is the first foreign leader to visit Iraq since US-led forces officially withdrew combat troops from Iraqi cities on June 30.

He told a joint press conference with Iraqi Prime Minister Nouri al-Maliki that in the wake of the U.S. pullout, Iraq had "now entered a new phase."

Mr. Fillon arrived in the Iraqi capital, Baghdad, with a large delegation of French officials and top French business leaders for a short visit.  The French prime minister's office said  several business agreements would be signed during the visit.

Iraqi Prime Minister Maliki, for his part, urged the French government and French firms to invest in Iraq, now that the security situation in the country has improved.

He says that a horizon of cooperation is now open for French firms and they welcome their presence in Iraq in all fields to help rebuild infrastructure. France, he adds, is an historic partner of Iraq, and Iraq will work toward strong political and economic ties.

France was a top business partner of Iraq during the long reign of Saddam Hussein, building many roads, bridges, and other infrastructure projects, including Iraq's telecommunications network.

Iraqi Defense Ministry spokesman, Mohammed al-Askari told a press conference that the country's military was aiming to build its forces to meet the challenges facing it, after the U.S. pullout.

He says "we have the power to quash any violence, but that we hope that we don't have to face too many challenges at once." He adds that Iraq is trying to build its air capabilities, first with helicopters, and eventually with fighter jets, to be ready for the final U.S. pullout in 2011.

Baghdad security spokesman, Qassem Mohammed Atta, also told journalists that Iraqi security forces were busy taking all precautions to stop terrorist attacks, now that U.S. troops had handed over most security responsibilities to Iraqi forces.

He says that it's necessary to erect barriers to stop terrorist attacks across Baghdad, but that this is just a temporary step to bring the security situation under control. "Once things improve," he adds," we will re-evaluate, before taking steps to remove all concrete barriers."

Iraq announced, Wednesday, that the month of June was the bloodiest in eight months, with an increase in deadly attacks in the lead-up to the withdrawal of U.S. troops.