Baghdad, Iraq ? Two months after elections, Iraq’s new government finally began to take shape Wednesday as lawmakers elected as president a Kurdish leader who promised to represent all ethnic and religious groups. Ousted dictator Saddam Hussein watched the session, broadcast across the country, from his prison cell.

A prominent Shiite Arab was expected to be named on Thursday as prime minister, the most powerful post in what will be Iraq’s first democratically elected government in 50 years. That would open the way to picking a Cabinet.

Kurdish leader Jalal Talabani was chosen for the largely ceremonial job of president, while Adel Abdul-Mahdi, a Shiite, and current interim President Ghazi al-Yawer, a Sunni Arab, were elected vice presidents.

Talabani’s selection and the expected choice of Ibrahim al-Jaafari as prime minister further consolidate the power shift in Iraq, where both the Shiite Arab majority and the Kurdish minority were oppressed, often brutally, under Saddam’s Sunni-dominated regime.

Talabani, 71, reached out to all sectors of the country, appealing for them to join with fellow Iraqis who are working “to found a new Iraq, free of sectarian and ethnic persecution, free of hegemony and oppression.”

He also urged Iraqi insurgents, who are believed to be mostly Sunni Arabs, to sit down and talk with the new government.

President Bush called Wednesday’s session a “momentous step forward in Iraq’s transition to democracy.”

“The Iraqi people have shown their commitment to democracy and we, in turn, are committed to Iraq,” the president said in a statement. “We look forward to working with this new government, and we congratulate all Iraqis on this historic day.”

Saddam and 11 of his top aides were given the choice of watching a tape of the National Assembly session in their prison and all chose to do so, said Bakhtiar Amin, human rights minister in the outgoing interim government.

Amin said Saddam watched by himself, while the others viewed it as a group at their undisclosed detention center, which is believed to be near Baghdad’s airport.

“I imagine he was upset,” Amin said. “He must have realized that the era of his government was over, and that there was no way he was returning to office.”

Iraq’s new presidential council, made up of the president and his two deputies, is to be sworn in Thursday. The three are then expected to immediately name the prime minister.

Lawmakers can then start to draft a permanent constitution, which is supposed to be finished by Aug. 15.

Among the touchiest issues that remain are whether the oil city of Kirkuk should be part of the autonomous Kurdish region, what role Islam should play in Iraq’s governmental system and who will be named defense minister.

Negotiators had agreed on Talabani for the president’s job weeks ago, but news of his formal election was greeted with dancing in the streets of the Kurdish north.