WASHINGTON, Dec 5: President Pervez Musharraf, bubbling with exuberance and confidence after a historic meeting with US President George W. Bush, has said that the meeting has paved the way for a long-term , strategic and broad-based relationship with the world's only superpower.

Gen Musharraf, who was publicly praised by Mr Bush as a 'world leader' at the White House on Saturday, told a luncheon hours later that he had informed the American leader the world could no longer afford to fail in resolving the Palestinian and Kashmir disputes.

Pakistan and the United States, he said, had had a 'warm and cordial' relationship since 9/11. "I am fully satisfied, (the relationship is) long-term and broad-based, of a strategic nature, not short-term, not unifocal but long-term and strategic. Together we can fight terrorism."

Pakistan, he said, was a 'frontline state' successfully fighting Al Qaeda and other terrorist groups. He reminded the audience that so far Pakistan had arrested 600 Al Qaeda and Taliban operatives, including some of their key leaders.

Gen Musharraf rejected the allegation that Pakistan was 'dragging its feet' in the war against terror. "If anything, Pakistan is doing the maximum when it comes to fighting terrorism. Our cities have been almost cleared of terrorists and major successes have been scored and the phenomenon is almost eliminated."

Gen Musharraf said so far the Pakistan Army had fought five major battles in South Waziristan where "terrorists are on the run," though some of them still remained in the mountains. "We have broken the back of terrorism in Pakistan, although we still have a lot of work to do," he added.

He then reminded the audience that there's a need for addressing the root causes of terrorism, "which are poverty and political disputes like Palestine and Kashmir." The speech was important not so much in what it said but in the way it was said. There was a new confidence in the president's manners and new buoyancy in his voice.

He displayed a new cheerfulness and resilience in addressing the issues he confronts, both at home and abroad, giving a clear message that he was very much in command of his affairs.

"I had a wonderful meeting with President Bush. And we discussed our bilateral relations. We discussed the issue of terrorism and the fight against terrorism that we are a part of," he said.

"And more than that, we discussed international issues, main focus being the Palestinian dispute, which lies at the core of all disputes, which lies at the core of extremism, militancy, and terrorism in the world.

"And I am glad to say that President Bush is very conscious of the necessity of resolving it (and) of his critical role in resolving this dispute. So I am very glad, and I am very hopeful that the future augurs well for peace in the world.

"At this moment, the Palestinian and Kashmir disputes are very ripe for solution. And may I also add that failure is no more an option. We have to resolve them. We have to succeed in resolving these international political disputes," he said.

The president said he had also told Mr Bush that Pakistan wanted more focus on trade with the United States and would like to initiate talks on a free trade agreement with Washington.

"Such an agreement will help accelerate Pakistan's economic development, welfare of the people and will also help the fight against terrorism by reducing poverty and extremism," he said.

President Musharraf, who was praised by Mr Bush also for restoring democracy to Pakistan, said he had introduced a sustainable democracy in his country, which could not be derailed now.

Earlier, at a joint media appearance, Mr Bush had said that the world could learn from Pakistan that Muslims could also have a democratic set-up. "There are some in the world who do not believe that a Muslim society can self-govern.

Some believe that the only solution for government in parts of the world is for there to be tyranny or despotism. I don't believe that. The Pakistan people have proven that those cynics are wrong," said Mr Bush.

Referring indirectly to this statement, Gen Musharraf said although he was a military man, he had introduced democracy in Pakistan where there was no democracy before and whatever democracy there was, it was 'dysfunctional'.

The president also referred to a World Bank report which said that his local self-government reforms had brought about a 'silent revolution' in Pakistan. He said some in the media 'keep talking against' him but he did not care because he had "no skeletons in my cupboard" and had given more freedom to the media than any other government before him had.

He promised to hold local bodies elections in 2005 and parliamentary elections in 2007. The luncheon, at the residence of a local physician Dr Mubashir Chaudhry, was attended by PML President Chaudhry Shujaat Hussain, several prominent US lawmakers, senior government officials, heads of US agencies, business leaders, scholars from important think-tanks and universities and prominent members of the Pakistani community.