Iraqi PM Nouri Maliki has said he will ask the international community to relieve the country's debt, as a UN forum on progress in Iraq begins.
UN chief Ban Ki-moon has praised progress in Iraq at a UN forum in Sweden on the situation in the country.
Officials said the move was aimed mainly at Arab countries, to which Iraq owes most of its $67bn (£34bn) debt.
Mr Ban said Iraq was "stepping back from the abyss that we feared most" but warned the situation "remains fragile".
Meanwhile US Secretary of State Condoleezza Rice urged countries to stand by Iraq during reconstruction.
Iraqi Prime Minister Nouri Maliki called for debt cancellation, mainly from neighbouring Arab nations.
Nearly 100 countries are taking part in the economic and political reform forum near Sweden's capital, Stockholm.
Nearly 100 countries are taking part in the forum, which is aimed at supporting Iraq's efforts to restore stability and rebuild a functioning economy.
UN Secretary-General Ban Ki-moon and Iranian Foreign Minister Manouchehr Mottaki are also in Sweden.
Correspondents say progress in these areas remains fragile.
The gathering is aimed at supporting Iraq's efforts to restore stability and rebuild a functioning economy. Correspondents say progress in these areas remains fragile.
The UN called the conference to review a five-year package it brokered last year, called the International Compact with Iraq.
The UN called the conference to review a five-year package it brokered last year, called the International Compact with Iraq.
Iraqi PM Nouri Maliki called on neighbouring countries to Iraq's forgive debts and waive compensation payments for wars fought under Saddam Hussein.
Condoleezza Rice says Iraqis need international expertise
"Iraq is not a poor country. It possesses tremendous human and material resources, but the debts of Iraq... which we inherited from the dictator, hamper the reconstruction process," he said.
Iraq owes $67bn (£34bn) debt in total, with Russia, Kuwait and Saudi Arabia among the biggest creditors.
However, Swedish officials had earlier played down the possibility of new initiatives at the meeting, and Foreign Minister Carl Bildt said debt was not its subject.
Meanwhile US Secretary of State Condoleezza Rice urged countries to stand by Iraq during reconstruction.
She said Iraq was "making good progress" but "challenges" remained.
But Iran's foreign minister blamed the US-led coalition's "mistaken policies" for the "grave" situation in Iraq, the Associated Press reported.
'Hope'
Mr Ban opened the conference, in Upplands Vasby, about 25km (15 miles) north of Sweden's capital, Stockholm, with an upbeat assessment.
"If we had to use one word to describe the situation in Iraq today I would choose... hope," he said.
"There is new hope that the people and government of Iraq are overcoming daunting challenges and working together to rebuild their country."
Anti-terrorist police have been brought in as part of the security preparations
On the eve of the forum the largest Sunni Muslim bloc suspended talks on rejoining Iraq's Shia-led government.
On the eve of the forum the largest Sunni Muslim bloc suspended talks on rejoining Iraq's Shia-led government.
Grounds for optimism
A number of demonstrations were planned in the Stockholm area and close to the conference centre against the continued US presence in Iraq.
The UN conference in Upplands Vasby, about 25km (15 miles) north of Stockholm, is taking place amid high security.
A number of demonstrations are planned in the Stockholm area and close to the conference centre against the continued US presence in Iraq.
The gathering follows up on a conference in May 2007 at the Egyptian Red Sea resort of Sharm el-Sheikh, where the Iraq Compact was launched.
The gathering follows up on a conference in May 2007 at the Egyptian Red Sea resort of Sharm el-Sheikh, where the Iraq Compact was launched.
Nouri Maliki (left) is demanding nations re-open embassies
Mr Maliki told reporters after arriving in Stockholm: "Iraq is demanding world countries to re-open embassies and to cancel debts."
Most of Iraq's debt, which dates from the time of Saddam Hussein's regime, is owed to the Gulf states of Saudi Arabia, Kuwait, the United Arab Emirates and Qatar.
However, Swedish officials have played down the possibility of new initiatives at the meeting, and Foreign Minister Carl Bildt said debt was not its subject.
On security, optimism has been growing in Iraq that progress is at last being made, with ceasefires in Sadr City and Basra still holding, and the Iraqi government claiming some success in clearing al-Qaeda from the northern city of Mosul.
On security, optimism has been growing in Iraq that progress is at last being made, with ceasefires in Sadr City and Basra still holding, and the Iraqi government claiming some success in clearing al-Qaeda from the northern city of Mosul.
The US military says violence in Iraq is at its lowest levels for four years.
The US military says violence in Iraq is at its lowest levels for four years.
US Secretary of State Condoleezza Rice said the country was in a "fundamentally different" state from a year ago, but was still rebuilding.
The conference was expected to put pressure on Mr Maliki's government to push ahead with political reconciliation between Sunni Arabs, Shia and Kurds, while continuing the clampdown on both Sunni and Shia extremism.
"This work is not done and so the international community needs to stand by Iraq as it continues to move ahead," she said.
Dispute over posts
The conference is likely to see pressure put on Mr Maliki's government to push ahead with political reconciliation between Sunni Arabs, Shia and Kurds, while continuing the clampdown on both Sunni and Shia extremism.
But on the eve of the conference the leader of the largest Sunni bloc suspended talks on rejoining the government, saying there was a dispute over which posts his followers would be given.
But on the eve of the conference the leader of the largest Sunni bloc suspended talks on rejoining the government, saying there was a dispute over which posts his followers would be given.
Adnan al-Dulaimi, who heads the Sunni Accordance Front in the Iraqi parliament, said Mr Maliki had refused to allow his bloc to resume leadership of the planning ministry.
Adnan al-Dulaimi, who heads the Sunni Accordance Front in the Iraqi parliament, said Mr Maliki had refused to allow his bloc to resume leadership of the planning ministry.
Between them, the three parties that make up the bloc hold 44 of the 275 seats in parliament.
Between them, the three parties that make up the bloc hold 44 of the 275 seats in parliament.
Ali al-Adeeb, a Shia MP close to Mr Maliki, played down the bloc's decision, saying it was "not a big step backward".
Ali al-Adeeb, a Shia MP close to Mr Maliki, played down the bloc's decision, saying it was "not a big step backward".
Should the international community do more to help Iraq? Will this move make a difference? You can send us your comments using the form below:
Should the international community do more to help Iraq? Will this move make a difference? You can send us your comments using the form below:
