CHICAGO (AP) _ President Bush heralded the Iraqi government that took office over the weekend, saying Monday the swearing-in represents ``a watershed event'' for the troubled region.

``The world saw the beginning of something new _ constitutional democracy at the heart of the Middle East,'' Bush said in a speech here focused on Iraq and the war on terror.

Bush spoke to officials from the restaurant industry gathered here as Iraq's parliament prepared to meet for the first time after swearing in a new government on Saturday. The national unity government faces security challenges and a host of other problems, while Bush faces calls at home to say when U.S. soldiers will leave the country.

The White House has regarded the establishment of a new government as a key step toward stabilizing Iraq and making discussion of an eventual American troop pullout possible.

``This is a free goverment under a democratic constitution and its formation marks a victory for the cause of freeom in the Middle East,'' Bush said.