The North Atlantic Treaty Organization formally left behind the 20th century today, as leaders of the military alliance signed off on a major transformation designed to confront the 21st-century threats of terrorism and the proliferation of weapons of mass destruction far beyond the West European borders that NATO was created to defend.

In a second stage of post-Cold War enlargement that will expand the alliance's frontiers to the shores of the Baltic and Black seas, the summit also invited in seven East European nations, including Latvia, Lithuania and Estonia, the first former Soviet republics to join.

Reflecting their new priorities, NATO leaders issued a statement of "full support" for the resolution on Iraq that the U.N. Security Council unanimously adopted two weeks ago. Today's four-paragraph statement committed the 19 current NATO members to "take effective action to assist and support" U.N. efforts to ensure Iraqi disarmament, and noted the resolution's warning that Iraq will "face serious consequences" if it does not comply.

White House national security adviser Condoleezza Rice called the statement "very powerful." But European NATO diplomats, noting that Europe is still divided over what to do about Iraq and that some NATO members remain concerned about U.S. talk of war, emphasized that it does not specify any kind of action beyond what the resolution itself says, and commits NATO members to nothing more than supporting it.

The administration, which first proposed the Iraq document Tuesday at NATO headquarters in Brussels, "wanted a strong statement, but they wanted a united statement," one European diplomat said. "They did not try to pick a fight."

President Bush, in comments to reporters this morning before meeting with British Prime Minister Tony Blair, said his "expectation is that we can do this peacefully, if Saddam Hussein disarms." While repeating that the United States, "with our close friends," will use military force if Hussein balks at new U.N. weapons inspections, Bush continued his emphasis of recent weeks on a peaceful outcome in Iraq.

"Our first choice is not to use the military option," he said. "Our first choice is for Mr. Saddam Hussein to disarm. And that's where we'll be devoting a lot of our energies."

In avoiding a contentious debate over Iraq, NATO leaders were able to focus on what all agreed was a historic summit. Its main order of business was major transformation of the 53-year-old alliance, set up to counter a feared invasion of Western Europe by the Soviet Union, into a larger yet leaner and more mobile military organization with a new writ to confront terrorist and other threats anywhere in the world.

The decisions made here, said NATO Secretary General George Robertson, "will strengthen NATO as we confront the challenges of post-September 11 security."

The summit convened when many defense analysts are questioning NATO's usefulness and even relevance in a world no longer defined by the old East-West rivalry and where the possibility of a large-scale conflict on the continent is seen as unlikely. At the same time, a gap in resources and technology between the United States and its allies has been widening, and few NATO members have been willing to finance their own modern, full-service defense operations.

The seven-page Prague Summit Declaration adopted today is designed to address both the changing threat and the divergent capabilities.

To deal with terrorism and other emerging threats, summit leaders approved the creation of a NATO Response Force, a joint 21,000-troop land, sea and air unit with high-tech weaponry designed for quick deployment anywhere in the world. The leaders directed that the force "have its initial operational capability as soon as possible, but not later than October 2004" and for it to be fully operational two years after that.

The declaration also adopted a plan by NATO defense ministers to streamline the alliance's military framework, dividing it into two commands -- one for operations, headquartered in Brussels, and a new "transformation" command, headquartered in the United States.

Leaders also endorsed a new division of labor, with individual members committing themselves to focus on and improve capabilities in one or more of eight specific areas: chemical, biological, radiological and nuclear defense; intelligence; air-to-ground surveillance; command, control and communications; combat effectiveness, including precision guided munitions; long-range transport of troops and equipment by air and sea; aerial refueling; and deployable combat support units.

For example, the Germans have agreed to lead a group of countries that will lease, and ultimately purchase, transport aircraft. Hungary and the Czech Republic, which are part of that group, plan to contribute Russian-made Antonov planes they will get as part of a write-off of unpaid Russian debt. Norway and Denmark volunteered to lead a consortium to develop a NATO sealift capability, and Spain is leading a group specializing in aerial refueling.

"We will work on the basis that it's better to prevent or deter attacks than to deal with the consequences of terrorism," said a senior NATO diplomat. While the old NATO was confined to defending the territory of Western Europe, he said, the new alliance "can act in support of the international community more widely and can act to deal with the consequences of a terrorist attack."

Despite the importance of the technical and organizational agreements, most attention -- and a quite a bit of diplomatic emotion -- focused on the invitations issued to the three Baltic countries, along with Romania, Bulgaria, Slovenia and Slovakia. In a rare public session this morning, leader after leader hailed the historic importance of the expansion, and the fact that a NATO summit was taking place for the first time in a country once behind the Iron Curtain, in a city that fought, and lost, a struggle for freedom from Soviet domination. The Czech Republic was admitted to NATO in an eastward expansion round in 1999, along with Hungary and Poland.

"For Romanians, Prague has a special meaning," Romanian President Ion Iliescu told NATO leaders this afternoon. "It is a place where, in 1968, Romania, alongside other Warsaw Pact countries, was commanded to come with tanks in order to end the 'Prague Spring,' " as the uprising in Czechoslovakia became known. "Romania not only refused but also condemned the invasion of Czechoslovakia," he said, and in 1991 he and Czech President Vaclav Havel signed a treaty dissolving the Warsaw Pact.

For several of the new countries, it was long in doubt whether they would meet the requirements of NATO membership before the summit here. In a brief statement this afternoon, Lithuanian President Valdas Adamkus seemed both amazed and relieved, saying, "You have acknowledged my country as a credible ally."

Two applicants that did not make the cut in this expansion round, Albania and Macedonia, were told that NATO's door remains open and that more invitations would be issued in the future.

The declaration also sought to reassure Russia, saying that NATO transformation and expansion "should not be perceived as a threat by any country or organization, but rather as a demonstration of our determination to protect our populations, territory and forces from any armed attack, including terrorist attack, directed from abroad."

Ancillary dramas outside the NATO meeting halls included the Iraq-related spat between the United States and Germany, which had diplomats and reporters carefully watching Bush and German Chancellor Gerhard Schroeder for signs of rapprochement. Schroeder angered the United States by making opposition to war in Iraq a prime theme of his recent reelection campaign.

Although the two held no one-on-one meeting, and seemed to be ostentatiously avoiding each other yesterday, they seemed equally ostentatious today in greeting each other and chatting during a group photo session.

And, after Canadian newspapers reported that an unnamed senior official from their country had called Bush a "moron," Prime Minister Jean Chretien moved quickly to smooth things over with Washington. "He [Bush] is a friend of mine, he is not a moron at all," Chretien told reporters in Prague.

President Bush and Secretary of State Colin L. Powell applaud at NATO summit in Prague, where seven countries were invited to join the alliance.President Bush and German Chancellor Gerhard Schroeder shake hands during a group photo of NATO leaders in Prague. Bush had been cool to the German leader after he expressed opposition to U.S. policy on Iraq.