President Bush was greeted with ample cheers Monday when he told Arab-Americans in Dearborn, Mich., that Saddam Hussein, the source of countless stories of horrors and fear, is finished.

"He's gone," Bush said to a standing ovation.

Boisterous supporters filled the room at the Ford Community and Performing Arts Center, even as reports surfaced Monday that former Deputy Prime Minister Tariq Aziz (search), now in U.S. custody, said he saw Saddam after the war started. Monday was Saddam's 66th birthday and some protesters in his hometown of Tikrit continue to support him.

U.S. officials discounted Aziz's comments and said they didn't apply to post-April 7, when military forces dropped four 2,000 pound bombs on a building in which the deposed leader was said to be meeting with other officials.

Dearborn (search) is home to the nation's largest Arab population. Bush went there in hopes of garnering support for plans for a democratic Iraq and for shoring up votes for the next election.

Bush told members of the community -- made up of about 90,000 to 150,000 Iraqi-Americans (search), mostly Christian and Shiite Muslims -- that the Iraqi people are fully capable of governing themselves and restoring order and prosperity to their country.

"Freedom is God's gift to every people of every nation," Bush said. "People that live in Iraq deserve the same freedom that you and I enjoy here in America."

He said, however, that Iraq must be democratic.

"America has no intention of imposing our form of government or our culture, yet we will ensure that all Iraqis have a voice in the new government and all citizens have their rights protected," he said.

The president also said Iraq's liberation can serve as an imprint for other nations in the region.

"Iraq can be an example of peace, prosperity and freedom to the entire Middle East," the president said. "It'll be a hard journey but every step of the way, Iraq will have a steady friend in the American people."

Earlier in the day, leaders from different sects in Iraq met for the second time with retired Lt. Gen. Jay Garner, the administration's point man on establishing a new government. The attendees agreed to hold a larger meeting in about four weeks in which they would vote on an interim government.

Several of those at Monday's meeting suggested that a presidential council be created rather than election of a single leader, at least for the time being.

Back in Dearborn, the president declined to declare combat in Iraq over. Aides say a proclamation could come later this week as the country swiftly gets back on its feet.

Rail lines are reopening, fire stations are responding to calls, Iraqi oil is fueling Iraq's power plants, and clean water is flowing in many parts of the country, Bush said. Electricity is coming back on in much of the country and water treatment plants are being inspected.

Coalition forces are also working to ensure access to immunizations and emergency treatment for all Iraqis and are funding a "back to school" campaign to train and recruit teachers and provide supplies.

"Day by day, hour by hour, life in Iraq is getting better for the citizens, yet much work remains to be done," Bush said.

Iraqis and coalition teams are clearing land mines and recovering artifacts and other antiquities that were looted after the regime fell.

The nearly $2.5 billion that Congress appropriated for Iraq reconstruction and relief efforts will help fund these efforts.

Bush also renewed his call for the United Nations to lift sanctions on Iraq.

"Now that Iraq is free, economic sanctions are pointless … it is time for the United Nations to lift the sanctions so the Iraqis can use their own resources to build their own prosperity."

France told the U.N. Security Council that it wants sanctions suspended, but not lifted. France led the opposition to using military force to oust Saddam.

But with more than 60 percent of Iraq's population Shiite Muslim, helping craft an "Islamic democracy" may be tricky business.

The United States has promised democracy for Iraq, but has ruled out the kind of Islamic government that democracy could yield. Some want a government run according to Islamic law, which could produce a system like that in Iran, formed by anti-American Shiite clerics during the 1979 revolution.

Although there is no love lost between Iraq and Iran, Bush administration officials say Iranian agents are inflaming anti-American sentiment within Iraq.

Defense Secretary Donald H. Rumsfeld argued that the United States will not allow a religious government like Iran's to take hold in Iraq.

Soon after U.S. troops rolled into the center of Baghdad on April 9, Iraqis in Dearborn and other Iraqi enclaves celebrated in the streets, many promising to return to their native country to help restore it.

"Many Iraqi-Americans know the horrors of Saddam Hussein's regime first hand," he told the cheering crowd. "You also know the joys of freedom you have found here in America. You are living proof the Iraqi people love freedom and living proof the Iraqi people can flourish in democracy."

After Baghdad's liberation, a group in Michigan wrote a communique outlining its hopes for Iraq, and delivered it to Bush on Monday. It asks that "Iraqis be allowed to be the masters of their own destiny," said Jafar al-Musawi, a Dearborn-based Iraqi writer.

Two months ago, Deputy Defense Secretary Paul Wolfowitz convened a town hall meeting of Iraqi-Americans in Dearborn, and asked them to help oust Saddam.

Wolfowitz said about 150 Iraqis who have been living in the United States or Europe volunteered to go back to help establish a democratic government. Some already have gone.

Among those returning is Emad Dhia, who left Friday. He is an engineer who has been living in Michigan and heads the Iraqi Forum for Democracy, formed in the United States in 1998. Dhia will be the top Iraqi adviser to Garner, who is overseeing reconstruction efforts.

But others declined the offer, among them al-Musawi.

"What was I supposed to tell the people in Iraq: 'Listen to me, I've lived in America, I know?"' he asked. "No one would listen to me, or to the others, because we don't have the kind of clout the clergy do."

The 2004 presidential campaign looms as Bush met with the Arab community in Michigan to discuss Iraq.

The president is visiting battleground states -- like Michigan, which he lost to Al Gore in 2000. His visit Monday is the ninth to the state. Earlier this month, he visited Missouri and Ohio, also considered crucial states.

Monday's nonmilitary venue reflects Bush's broadened focus on matters beyond Iraq, such as the economy. While in Michigan, however, the president did meet with the heads of the Big Three automakers to discuss economic issues.

Fox News' Liza Porteus and The Associated Press contributed to this report.