Sunday's "NBC Nightly News" featured retired General Barry McCaffrey, NBC News military analyst and "one-time war critic," as he voiced his "surprising new assessment" that conditions in Iraq have improved "dramatically" since the surge. McCaffrey, former Drug Czar of the Clinton administration, remarked: "A year ago, I thought the thing was going over the edge of a cliff. That has changed dramatically in a very short period of time."

Anchor Lester Holt played up McCaffrey's history of being a war critic as he teased the December 23 show: "Reality Check: New progress in Iraq, and a surprising new assessment from a four-star general and one-time war critic, just back from Baghdad." (Transcript follows)

After the show led with two reports regarding the holiday weekend, one on the travel situation and one on last-minute shoppers, Holt introduced the story on Iraq as he touted "measurable progress" and "a dramatic drop" in violence. Holt: "This will be the fifth Christmas American troops have marked the holiday inside Iraq, but this year, for the first time, they will also be celebrating measurable progress on the ground: a dramatic drop in the level of violence. And as NBC's Stephanie Gosk reports, that progress is also changing the lives of the people who live there."

Correspondent Stephanie Gosk began her report by relaying that "improved security in Baghdad means the quality of life for many is turning around" as she showed an Iraqi family having a picnic. She remarked that "the progress has surprised many," and then showed a clip of McCaffrey's comments. McCaffrey: "A year ago, I thought the thing was going over the edge of a cliff. That has changed dramatically in a very short period of time."

Gosk further mentioned that "attacks throughout the country are down 62 percent since March," before focusing on potential problems that could arise in the future. Holt then brought aboard McCaffrey for further discussion. The NBC anchor opened the discussion by again mentioning the retired general's history of being a war critic: "You have been certainly critical of American efforts in Iraq before, but you returned from this trip with an upbeat assessment. How real and how sustainable is this drop in violence we're seeing?"

Before turning the discussion to potential problems in the future, such as the Kurds becoming "possibly the next entrant to this civil war," McCaffrey summarized the improvements in Iraq's security. McCaffrey: "The objective numbers, Lester, are dramatically different. Violence is down, abductions, assassinations, truck bombings. Baghdad, the principal day I was in the city, had two violent incidents in a city of six million people. I was out in Anbar province and drove around Ramadi, which was the Wild West a year ago. And now it's relatively secure."

McCaffrey also complimented "this new Secretary of Defense, Bob Gates, and General David Petraeus and Ambassador Ryan Crocker" as "an unbelievable leadership team."

Below is a complete transcript of Gosk's report and the interview with McCaffrey from the Sunday December 23 "NBC Nightly News":

LESTER HOLT, in opening teaser: Reality Check: New progress in Iraq, and a surprising new assessment from a four-star general and one-time war critic, just back from Baghdad.
...

LESTER HOLT: This will be the fifth Christmas American troops have marked the holiday inside Iraq, but this year, for the first time, they will also be celebrating measurable progress on the ground: a dramatic drop in the level of violence. And as NBC's Stephanie Gosk reports, that progress is also changing the lives of the people who live there.

STEPHANIE GOSK: Improved security in Baghdad means the quality of life for many is turning around, enough to make even an outdoor picnic possible.

UNIDENTIFIED WOMAN, through translator: A few months ago, we would not have come to this park. We could not do anything, and we locked the doors at 5 PM.

GOSK: The progress has surprised many.

Retired General BARRY MCCAFFREY, NBC News Military Analyst: A year ago, I thought the thing was going over the edge of a cliff. That has changed dramatically in a very short period of time.

GOSK: The U.S. military says that attacks throughout the country are down 62 percent since March. That's because small bases are keeping the peace in Baghdad's most violent neighborhoods. Radical Shia cleric Muqtada al-Sadr declared a cease-fire in September, reining in his militia. And in al-Anbar province, what the military calls an awakening movement. Tribal leaders tired of al-Qaeda's brutal tactics rose up against the insurgents. Still, commanders point out the militants are still out there.

Major General MARK HERTLING, Multinational Division North: Some of the extremists have been pushed east from Anbar province, as they've seen the awakening movement there, and north from Baghdad.

GOSK: And they're going to places like Diyala province, where, just recently, U.S. troops say they found an al-Qaeda torture chamber. And in southern Iraq, where British troops have turned control over to Iraqis, there are fears rival Shia groups will continue to attack each other. But even with the dangers, U.S. commanders are talking about a troop drawdown.

General DAVID PETRAEUS, Multinational Force Iraq, From Fox News Sunday: We want to reduce the strain on our ground forces as much as we can while recognizing that what has been achieved here remains tenuous and is still fragile in a number of areas.

GOSK: Thirty thousand troops will likely be withdrawn by this summer, and the military hopes to pull out an additional five brigades by this time next year. Stephanie Gosk, NBC News, Baghdad.

LESTER HOLT: Retired General Barry McCaffrey, who you saw in Stephanie's report, is an NBC military analyst, and recently returned from a fact-finding mission to Iraq. He joins us now from Washington. General, good evening. You have been certainly critical of American efforts in Iraq before, but you returned from this trip with an upbeat assessment. How real and how sustainable is this drop in violence we're seeing?

General BARRY MCCAFFREY, NBC News Military Analyst: Well, that was a terrific report by Stephanie Gosk. I think she really makes the case. The objective numbers, Lester, are dramatically different. Violence is down, abductions, assassinations, truck bombings. Baghdad, the principal day I was in the city, had two violent incidents in a city of six million people. I was out in Anbar province and drove around Ramadi, which was the Wild West a year ago. And now it's relatively secure. I think we've seen a lot of things happen at the same time. One is this new Secretary of Defense, Bob Gates, and General David Petraeus and Ambassador Ryan Crocker are an unbelievable leadership team. And then I think the Iraqis are changing. The Sunnis are trying to get back in the game before our expected pullout-

HOLT: Right.

MCCAFFREY: -and the Shia are actually in a cease-fire mostly. The question is: What happens as we withdraw?

HOLT: And, General, you certainly talk in your report that there's still a lot of unfinished business, there's still a level of violence there. But one thing, I had a double take in your report, you stated that al-Qaeda in Iraq has been defeated at a tactical and operational level in Baghdad and Anbar province. If you take al-Qaeda in Iraq out of the equation, where does that leave the battle?

MCCAFFREY: Well, a lot better off. They were clearly one of the biggest lethal threats to both the Iraqi police and army as well as U.S. forces. Now, having said that, Lester, again, fundamentally this is a civil war. So, the struggle that we're trying to tamp down is between the Shia and the Sunni, with the Kurds possibly the next entrant to this civil war. I don't think that's gone away. Mr. Maliki's got a dysfunctional government. There's a real struggle for political power, which in this society means survival. So, again, let's see what happens. Can reconciliation start at the bottom and work its way up, sort of instigated by greater security by these brave U.S. Marine, Army and special operations units?

HOLT: Right.

MCCAFFREY: Or will it come apart on us?

HOLT: General Barry McCaffrey, we always appreciate your insight. Thanks for being with us tonight.

MCCAFFREY: Good to be with you, Lester.