"The crisis with Turkey has passed," he told the daily Alrai in an interview, without further explanation, even as Turkish troops remain massed at the Iraqi borders over the presence of anti-Turkish rebel fighters in the Iraqi Kurdish region's mountainous hinterland.
His remark came as Turkish helicopters swooped into Iraqi territory Tuesday firing on villages in renewed efforts to dislodge the fighters of the Kurdistan Workers Party, or PKK, which has been fighting for autonomy for Turkish Kurds since 1984.
Talabani, who was set to begin a four-day visit to Kuwait on Wednesday, said conditions in war torn Iraq have improved, but more efforts at national reconciliation were needed to make the situation last.
"The situation is better now. Most of the areas are safe and many Iraqis are fighting terrorists," the president said. He said Iraqis now see members of al-Qaida as a "danger" to them.
He cautioned, however, that the execution of Sultan Hashim al-Tai, a Saddam Hussein-era defense chief sentenced to death for his role in Anfal campaigns against the Kurds in the 1980s, would "harm the general atmosphere and impede reconciliation efforts."
Talabani also warned against the premature withdrawal of U.S. forces, saying it could lead to the fracturing of the country. "When we complete building our armed forces and police, coalition forces can pull out, maybe at the end of next year," he told Alrai.
"But such a withdrawal now and under current circumstances could lead to a sort of civil war, and will not result in stability but into the partitioning of Iraq into more than three entities." he added.
The U.S. military says attacks around Iraq have fallen to their lowest level since February 2006, and U.S. military deaths are on the decline partly due to a surge of nearly 30,000 troops sent by President George W. Bush earlier this year.
Although the streets of the capital are still not entirely safe, Iraqis are venturing more out of their homes. Many Sunni Iraqi fighters who belong to Islamic insurgent groups have turned against al-Qaida and are cooperating with American forces to drive the extremists from their neighborhoods and villages.
Talabani will meet with Kuwait's emir, Sheik Sabah Al Ahmed Al Sabah, and ask that the oil-rich neighbor which Saddam invaded in 1990 and occupied for seven months, to "settle" Iraqi debts owed from Saddam's time.
The Iraqi president did not specifically say he wanted the US$15 billion worth of debts forgiven, but the request has been made previously. Kuwait says it is a matter for its parliament to decide.