WASHINGTON, March 20, 2008 - The "economic lifeblood of the developed world" flows through U.S. Central Command, a region beset by "vast instability," the CENTCOM commander said here last night.

Navy Adm. William J. "Fox" Fallon said the command's efforts, which include operations in Iraq and Afghanistan, aim to provide stability and security, restore hope in the region and allow future generations the chance to live peaceably.

"There are a lot of challenges, but we're succeeding, and we're going to succeed because we have (the) best people in the world working with us," he said. "And we have the great power and spirit of the American people, and many others in this world are behind us."

In one of his last public appearances in military uniform, Fallon spoke at the Navy League's Sea, Air, Space Expo on the fifth anniversary of U.S. operations in Iraq.

The commander's remarks came a week after he submitted his resignation amid news reports suggesting he had fundamental disagreements with the White House on key elements of U.S. foreign policy in the Central Command region.

"Although I don't believe there have ever been any differences about the objectives of our policy in the Central Command area of responsibility, the simple perception that there is makes it difficult for me to effectively serve America's interests there," Fallon said in a statement released by Central Command March 11.

Revisiting the issue last night -- which he dubbed "the elephant in the room" -- Fallon dismissed as "pure bunk" the speculation over a reported disconnect between his own views and those of the Bush administration.

"The sad part is that this kind of inside-the-beltway drama is really obscuring what's really important to me, and that is the effort of our men and women in Iraq and Afghanistan, the Horn of Africa and these other troubled places in the Middle East and Southwest Asia," he told the 1,250-member audience.

The commander's civilian boss, Defense Secretary Robert M. Gates, accepted Fallon's resignation "with reluctance and regret."

"I believe it was the right thing to do, even though I do not believe there are, in fact, significant differences between his views and administration policy," Gates told reporters March 11 during a Pentagon news conference.

Fallon's deputy, Army Lt. Gen. Martin E. Dempsey, will take over as acting commander of Central Command on March 31 until a permanent replacement is nominated and confirmed.

Some of the misperceptions about Fallon's relationship with the Bush administration involved perceived differences over U.S. policies regarding Iran. The admiral briefly discussed the majority-Shiite country last night, saying that Iran poses a challenge to the United States and exhibits behavior that is "not good."

"They are a real problem, killing and maiming our troops in Iraq; they're meddling in Afghanistan," he said. "They don't really present a very nice face to their neighbors."

On regional security issues, Fallon described Iraq as his main focus over the past year and expressed guarded optimism over dramatic improvements to the country's security.

"It seems as I look back on the year that's gone by very quickly, and recognize the changes that have occurred, it's remarkable, to say the least," he added, while acknowledging that "tough pieces of turf" still exist in northern Iraq.

The commander portrayed some Iraqi provinces as transforming so rapidly that those who haven't been there for months, or even weeks, are "behind the times." He attributed the stability in part to coalition forces' increased cooperation with Iraqis at the local level, adjustments in detainee rehabilitation, improved services and economic progress.

"It hasn't happened with some magic wand," he said. "It's because of the hard work by our people in setting the conditions that enable the Iraqi army and the Iraqi police to step up, and (allow) people to begin to go about living the kind of lives they want."

Unlike resource-rich Iraq, Fallon said, progress in Afghanistan is hampered by problems stemming from the country's isolation and poverty. "Most (Afghans) are illiterate," he said. "Jobs are pretty scarce, and there's a pretty long history (there) of butting heads with everybody."

Fallon expressed optimism that the country is "turning around" under the direction of strong leadership, and with assistance from the military-civilian hybrid groups known as provincial reconstruction teams, which are helping to revitalize the country's basic services and infrastructure.

"The things they need in Afghanistan are roads, electric power, water management, a little bit of agricultural development, and they'll be rolling like big wheels," he said.

Fallon said efforts in the Horn of Africa, Central Asia and across Central Command are succeeding due to support from American citizens and U.S. allies.

"It seems to me that we in this country have a responsibility, because we are blessed above all others, to share what we have and to do what we can to make things better and to give people opportunities," he said. "That's what our people do for us every day."