US Secretary of State Condoleezza Rice said Monday Iran has chosen to scale back much of its most troubling interference in Iraq, and she credits the strength of US pressure. "I don't think it's goodwill," Rice told The Associated Press in a wide-ranging interview covering two wars, the fight against pirates, Mideast peace prospects and more. The Bush administration's top diplomat, who leaves office in 36 days, testily defended US intervention in Iraq as an effort worth the cost in lives, money and heartache. Trying to put the unsettling image of an Iraqi television reporter hurling his shoes at a visiting US President George W. Bush in the best possible light, Rice said it demonstrates how far the former dictatorship has come. The shoe incident Sunday in Baghdad "is a kind of sign of the freedom that people feel in Iraq," Rice said. The Iraqi man yelled at Bush that the shoes - a gesture of profound disdain in Iraq and elsewhere in the Muslim world - were a goodbye present to a dog. Bush brushed it off, and Rice called it insignificant in comparison to the development of a pluralistic democratic government in a country once devastated by Saddam's brutal rule. Speaking before she left Washington for two days of United Nations business, Rice said the clerical regime in Iran is finding it harder to operate inside next-door Iraq, and claimed that a turning point was last spring's rout of Iranian-backed forces in the southern city of Basra. "The Iranians find themselves unable to operate as effectively in Iraq because we've been very aggressive against their agents," Rice said in her farewell interview with AP reporters and editors at the State Department. In Basra, Rice emphasized, "they flat-out lost." Shi'ite militias supported by Iran fought but then fled in the Basra siege. Some fighters apparently fled to Iran itself, and it is not clear what those forces might do next. US President-elect Barack Obama has said he wants to pursue forceful diplomacy with Iran while preparing for a swift withdrawal of fighting forces from Iraq. Iran strongly opposed the recently signed security agreement between the United States and Iraq, which would keep US forces in the country for three years. "They're in a much more difficult situation in terms of Iraq," Rice said. "They did everything they could to stop the strategic forces arrangement - they couldn't do it." US and Iraqi officials have said Iran has made an apparently deliberate decision to curb the supply of a particularly deadly form of roadside bomb used to ambush US forces. The United States has long claimed that an element of Iran's elite Republican Guard funnels the weapons to insurgents. "It was getting to be a very tough business, given that we pursued them and pursued them hard," the secretary said. Rice, an architect of US policy in Iraq, said that Iran will continue to play a role in Iraq. But she also predicted that it will be a less meddlesome force. Rice also repeated claims that slow-moving UN sanctions are hurting Iran in the pocketbook.