Robert Gates, U.S. President George W. Bush's choice to take over as Secretary of Defense, testifies before the Senate Armed Services Committee during his confirmation hearing on Capitol Hill in Washington December 5, 2006. [Photo: Reuters]

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Robert Gates, U.S. President George W. Bush's choice to take over the Pentagon, said on Tuesday America was not winning in Iraq and warned the Middle East could explode into violence.

Appearing at his confirmation hearing before the Senate Armed Services Committee, Gates said Bush wanted him to take a fresh look at the war and that all options were on the table.

Asked by Democratic Sen. Carl Levin of Michigan if the United States was winning in Iraq, Gates replied: "No, sir."

Gates, a former CIA director, was expected to win U.S. Senate confirmation to replace Donald Rumsfeld as defense secretary.

"Our course over the next year or two will determine whether the American and Iraqi people and the next president of the United States will face a slowly and steadily improving situation in Iraq and in the region or will face the very real risk of a regional conflagration," Gates said.

He said he believed Iran was trying to acquire nuclear arms capability but military action in that crisis should be an "absolute last resort."

In the more than three years since U.S.-led forces invaded Iraq, the conflict has killed more than 2,900 U.S. troops and at least tens of thousands of Iraqis.

Gates said he believed the U.S. was not losing either "at this point." He said his impression the United States was not winning was based in large part on his recent work on the Iraq Study Group, a bipartisan panel that is to make recommendations to Bush on Wednesday

Gates also said Al Qaeda leader Osama bin Laden had become more of a symbol than an active plotter of attacks against the United States.

"I think that his ability to directly organize and plan the kind of attacks against us that hurt us so badly in September of 2001 is very limited now," he said.

Bush nominated Gates to replace Rumsfeld -- an architect of the war -- after the president's Republican Party lost control of the U.S. Congress in elections last month driven largely by voter anger over Iraq.

DRAMATIC CONSEQUENCES

In the first morning of questioning, Gates faced smooth sailing, with senators from both parties praising him for his candor about Iraq.

Gates told senators the situation in the Middle East could become far worse, with Saudi Arabia, Turkey, Iran and Syria all likely to get increasingly involved if Iraq was left in chaos.

"My greatest worry, if we mishandle the next year or two, and if we leave Iraq in chaos, is that a variety of regional powers will become involved in Iraq," he said.

Gates did not completely rule out an attack on Iran, which insists its nuclear program is only for power generation, but said: "I believe that military action against Iran would be an absolute last resort."

"We have seen in Iraq that once war is unleashed, it becomes unpredictable, and I think the consequences of military conflict with Iran could be quite dramatic," Gates said.

He also said he did not favor an attack on Syria, another opponent of the United States in the Middle East.

Senators have said they expect Gates to be confirmed quickly, partly as they are eager to be rid of Rumsfeld.

Sen. Carl Levin, a Michigan Democrat and the incoming chairman of the committee, said at midday Gates' testimony "bodes well for a speedy confirmation."

Bush urged the Senate to move quickly, saying he would make a fine secretary of defense.

Many Democrats want a phased withdrawal of U.S. troops from Iraq, to begin in four to six months, and say their victory in last month's election gives that option a popular mandate.

Gates said he would consult widely on the options in Iraq but did not say which he favored.

The outgoing committee chairman, Virginia Republican John Warner, hopes the panel will send Gates' name to the full Senate in time for a Wednesday vote.

That would coincide with the recommendations by the Iraq Study Group. Gates was on that panel until Nov. 8, the day Rumsfeld resigned.

Gates, 63, has no Pentagon experience but he is a former CIA analyst who ran the agency from 1991 to 1993.