BAGHDAD, IRAQ - The United States and Iraq are making progress toward forging a complex political and security agreement to allow U.S. troops to legally operate in Iraq next year, Iraq's foreign minister said Wednesday.

"We have reached a comfortable stage of negotiations, and the differences have been narrowed," Hoshyar Zebari told reporters.

The comments came nearly two weeks after Iraqi Prime Minister Nouri al-Maliki declared that the negotiations had "reached a dead end." The talks had been bogged down by concerns over Iraq's sovereignty and growing fears of a possible long-term U.S. presence.

Zebari, who recently returned from meetings with U.S. officials in Washington, said the United States had shown "a great deal of flexibility on many thorny issues." In particular, he said U.S. officials had agreed to lift immunity for private security contractors, which leaves them open to prosecution under Iraqi laws. The legal shields have enraged Iraqis, especially after a shooting incident last year involving Blackwater Worldwide, a private security company that protects U.S. officials, that left 17 Iraqi civilians dead.

"It is a sensitive issue for the Iraqi public," Zebari said.

U.S. Embassy spokesmen Mirembe Nantongo said she could not comment on ongoing negotiations but said they were taking place in "a constructive spirit."

Still, many hurdles remained, Zebari said. The two sides differ on the authority and level of independence given to U.S. troops in further military operations. He said that joint U.S.-Iraqi committees could be created to approve in advance U.S. military operations.

Another point of contention is control of Iraq's air space. Zebari said that U.S. negotiators were open to the idea of Iraq controlling its own skies, as long as it has the proper air power and technology.

Other sticking points include the immunity for U.S. troops, which many Iraqis would like to see lifted. Since the U.S.-led invasions in 2003, there have been several high-profile cases of the killing, torture and abuse of Iraqis at the hands of U.S. soldiers.