TONY BLAIR and George Bush declared yesterday that the early handover of Iraqi sovereignty is proof they have kept their word to liberate Iraq, returning it to its people.

They told a joint press conference at the Nato summit in Turkey that the transfer of sovereignty was a “moral” achievement that transcended American and British values, representing a triumph for humanity.

Last night Washington released private written exchanges between President Bush and Condoleezza Rice, the National Security Adviser, saying the handover had been successfully completed.

She wrote: “Mr President, Iraq is sovereign.”

Passed to Mr Bush by Donald Rumsfeld, the US Defence Secretary, the President wrote on the note: “Let freedom reign!” Standing next to Mr Blair yesterday, 15 months after the invasion of Iraq, Mr Bush said: “After decades of rule by a brutal regime, the Iraqi people have their country back. Terrorists are doing all they can to stop the rise of a free Iraq but their bombs and attacks have not prevented Iraqi sovereignty and they will not prevent Iraqi democracy.”

He added: “This day also marks a proud moral achievement for members of our coalition. We pledged to end a dangerous regime, to free the oppressed and to restore sovereignty. We have kept our word.”

Mr Bush said that elections in Iraq and Afghanistan would “serve as an agent of change in this part of the world” and that the “vibrant” people of Iran would be watching with interest.

The President said that the early handover was a sign of confidence, praising Iyad Allawi, the Iraqi Prime Minister, and fellow Iraqi leaders as “gutsy and courageous”. They had “staying power”, he said.

He added: “There’s a saying in Texas: they are stand-up guys.”

In a marked departure from earlier claims that Saddam Hussein possessed weapons of mass destruction, the President referred to Iraq’s “history of using WMD”.

Asked whether Dr Allawi would be justified in imposing martial law or hunting down insurgents, Mr Bush said: “He may take tough security measures to deal with Abu Musab al-Zarqawi (the Jordanian-born terrorist leader in Iraq). He may have to — (al-Zarqawi) beheads people on TV and sends suiciders to kill women and children.”

Mr Blair added: “Their purpose in taking tough security measures is to guarantee freedom for people, not to take it away.”

Mr Bush said that “the civilised world would not be frightened or intimidated” by insurgents and terrorists trying to destabilise Iraq and pledged: “Iraq and its people will not stand alone.”

But American forces would stay in Iraq “only as long as their presence is required”.

Mr Blair described the handover as an important staging post on the journey to a new future for Iraq. “We can look forward to the possibility and hope of an Iraq that genuinely guarantees a future for people from whatever part of Iraq they come from,” he said.

He added: “The battle for Iraq and its future is in a genuine sense the frontline of the battle against terrorism.”

Mr Blair issued a strong denial that the Iraq war had encouraged terrorism, saying: “The terrorist threat had been building up for a long time.”

He also dismissed a suggestion that the early, low-key handover showed the US-led coalition was desperate to get Iraq off its hands. “We will stay as long as it takes.”

While Mr Bush and Mr Blair glowed, President Chirac of France found it difficult to share their euphoria. After Nato’s decision to help to train Iraqi security forces, Mr Chirac said that French troops would never enter Iraq. He said France, Germany and possibly Spain would train Iraqi troops outside Iraq.

When asked whether Mr Bush was right to say the differences within Nato over Iraq were over, Mr Chirac said: “Well, if Mr Bush says that, I can only say I agree.”

• Keith Maupin, a 20-year-old US soldier who was taken hostage in Iraq in April, has been executed, according to a statement sent to al-Jazeera, the Arabic broadcaster. A video which accompanied the claim by a hitherto unknown group appeared to show a man being shot. The group claimed that the victim was Pfc Maupin. The US military said that it was reviewing the tape.

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