Homeland Security

This testimony will first describe the current state of Jemaah Islamiya and 12 reasons that are of concern as to why this organization will pose a long-term threat to the United States and her allies. The second part will address 9 aspects of US counter-terror policy strategies and the ongoing challenges of counter-terrorism in Southeast Asia.

The war on terror has continued apace in Southeast Asia, and the governments in the region and their Western counterparts deserve credit for the arrests of some 200 Jemaah Islamiya (JI) members through September 2003, including more than 30 in Singapore, 80 in Malaysia, approximately one dozen in the Philippines, 8 in Thailand and Cambodia, and some 100 in Indonesia. Several of the members of JI’s regional shura, its leadership body, were arrested, including Hambali, its operational chief. Hambali has revealed more names of JI members throughout the region. The spiritual leader of the group, Abu Bakar Ba’asyir, will be incarcerated for an additional three years. Although Hambali may have been leading his interrogators astray he has stated that the JI organization has been devastated.

The Bali investigations, in particular, have led to a far greater understanding of how the network operates and their command and control structure leading to subsequent arrests. These arrests were significant, especially as the JI is not a large organization, between 500 and 1,500 people. Those who have been arrested have been forthcoming in their interrogations, which have greatly assisted on-going investigations. Many of the detainees have cooperated and revealed a significant amount of information about the scope and modus operendi of the organization. The quality of new members may decline as they have not been as thoroughly trained. They are less able to plan and execute terrorist attacks than they were a year ago, especially against hardened targets, such as US embassies, though they still maintain their capacity to attack soft targets, such as the 5 August 2003 bombing of the JW Marriott Hotel in Jakarta, or other venues such as nightclubs or malls. One cannot forget that since the 11 September attacks on the United States, Jemaah Islamiya has been one of the most active Al Qaeda affiliates, and Southeast Asia one of the most important theaters of operation. Although Al Qaeda has suffered severe setbacks and the arrest of two-thirds of its known senior leadership, the organization will continue to rely more on regional affiliates. One would be foolish to underestimate JI’s capabilities or goals.  As many of the key operatives are still at large, the organization retains the capacity and will to launch devastating terror attacks throughout the region. In particular, there are 12 causes for alarm that this paper will address.

1. The Psychology of Terror: There is no single psychological makeup of terrorists, yet there are traits, that have emerged in the vast literature of the psychology and sociology of terrorism: Terrorists are violent, stimulus seeking, zealots. They are true believers who tend not to waiver from the cause. For example, although one of the Bali bombers, Ali Imron, expressed guilt for the bombings, he disagreed with the means, not the ends. More cynically, one could also argue that he was simply trying to escape the firing squad, which he did, unlike his two brothers and Imam Samudra. Terrorists are rational and engage in cost-benefit analysis; they are not psychopaths. (Mentally unstable individuals pose a great security risk for terrorist groups and can jeopardize entire operations.) They are driven by small-group dynamics, which tend to create in and out groups and engage in "group-think behavior," alienating members who do not conform ideologically.

Finally, they are often driven be a desire for revenge. When the Bali bombers were arrested in the fall of 2002, they expressed confusion that most of the victims were Australians and not Americans; which they only rationalized by stating that Australians were allied to the United States and their prominent role in East Timor. Yet, Australians have become targets of JI in their own right. For example, Hambali has already admitted that because of the prominent role of the Australian Federal Police (AFP) in the Bali investigation (in addition to their role in East Timor), Australians are targets, not simply seen as an extension of the Americans. As such, Australian Federal Police are now preparing for time-delayed bombs that would specifically target them; they believe that JI clearly has the technical capability to do this.

An arrest and seizure of a stockpile in Semerang, Indonesia in July 2003, revealed a huge cache of not just explosives, chemical precursors and detonators, but of light arms and sniper rifles. This raised alarm that JI was adopting a new tactic: politically-motivated assassinations. As the intended targets, noted on a JI list found in the safe house, were all members of President Megawati’s PDI-P, clearly indicates a desire for revenge against the leadership that authorized the crackdown on JI.

2. Lying Low: Jemaah Islamiya, like Al Qaeda, is not event driven. Terrorism is asymmetric warfare and terrorist groups tend to strike when they have a high probability of success; they cannot afford failure. JI has suffered setbacks in the past year and a half and will have to patiently rebuild its ranks in order to remain a viable organization. On the one hand, an attack is important for morale and to reassure their constituency that they are still a viable fighting force. Many members may simply want to lash out and cause as much pain as possible. On the other hand, JI must give priority to rebuilding their network, recruiting and training. Hambali seems to have confirmed that there was a debate within the organization whether to continue the pace of attacks or lie low and rebuild in the wake of the post-Bali arrests. Hambali, himself, seemed to support the latter course.

These principles are long-standing. The PUPJI, a 1996 document that codified the authority structure and ordering principles and philosophy of JI, also includes the General Manual for Operations, which is a vague and somewhat philosophical document, and a far cry from the Al Qaeda training manual that was found in the Manchester house. It does however talk about how operations should be conducted. The document calls for four-stages of operations: 1) Planning, 2) Execution, 3) Reporting, 4) Evaluation. Emphasis is placed on education, meticulous planning, and learning from past acts (including mistakes). Later the document discusses how members should focus on Intelligence Operations, Strength Building Operations, Strength Utilization Operations and Fighting Operations. Almost all emphasis is placed on Strength Building Operations, which is defined as a lengthy process that includes spiritual and physical strengthening. The goals of this educational period, include enlightenment, discipline, instilling a sense of loyalty, physical readiness and skills to use weapons, tactical and strategic thinking, and leadership development.

One of the lasting legacies of Hambali is the importance placed on maintaining the integrity of the organization. Press reports indicate that he has confessed that Dr. Azahari and Zulkarnaen have replaced him, indicating that they had contingency plans in place. Although the Mantiqi structure - the middle level of the organization that was based on geographical commands - seems to be in disarray, there seems to be more direct interaction between the top leaders and the fiah- the individual cells that have more operational autonomy.

JI leaders have always placed a premium on maintaining the integrity of the organization, and in particular, its command and control. When leaders are arrested, they are quickly replaced. JI, like Al Qaeda has an ability to quickly tap new leaders to maintain the organization’s command and control network. On the one hand, the new leaders may not have as much experience or authority; yet the organization is still able to hold meetings and maintain some degree of command and control. On the one hand there was a conscious decision to make sure that the organizational command and control system remained in tact. There was an authority system, and there were rituals, such as pledging bayat or an oath of duty. There was always an attempt made to have a reasonable quorum of leaders when important decisions were made.

There is also a philosophical point to the idea of lying low. In the philosophy of Al Qaeda, a strategic retreat is not demoralizing or anything to be ashamed of. If one looks at the works of Abdullah Azzam, especially Join the Caravan, who created the ideological model for Al Qaeda, the organization is based on the life of the Prophet. After god spoke to the Prophet Mohammed, and he tried to convert people, he was driven from Mecca. Mohammed had to retreat (hijra) to Medina to regroup, recruit, and train (tarbiyyah) so that he could defeat the enemies of Islam (qital) and impose Islamic law (sharia). Lying low and regrouping is nothing to be ashamed of or become demoralized over in the thinking of Islamic militants. Both organizations, Jemaah Islamiya and Al Qaeda, have always placed a high premium on education, training and meticulous planning. There is no evidence that they are trying to lash out with ill-timed and conceived attacks to take the pressure off themselves.

JI is in full recruitment mode. One aspect of JI that is so impressive is their ability to recruit across the board, irrespective of education or class. Their recruits are not just students from the madrasa of the region, but young technical students and disenfranchised youth with little prospects. They are younger, angrier, and they are technically savvy. JI members also include many technical faculty members, including architects, engineers, geo-physicists, chemists, and robotics engineers. So much of the JI motivation is driven by extreme anti-Westernism that is simply cloaked in simplistic interpretations of Islam.

One of the prime motivating factors and recruitment mechanisms is often a charismatic spiritual leader who can inspire people to jihad. Since the arrest of Ba’asyir and his successor Rusdan, there is no apparent amir, or spiritual leader. It is of course possible that Ba’asyir has remained the spiritual leader of the organization. From behind the porous walls of his Jakarta prison, his speeches and writings are still available to his audience, and his jail sentence makes him a martyr for the JI cause. It is clear that in the near future no one will be willing to take on as high a profile as Ba’asyir did. One interesting thing to look at in trying to ascertain where future JI religious leaders will emerge from is which madrassas JI members are educating their own children and which clerics they entrust the spiritual upbringing to. There is a lot of concern on the part of regional intelligence officials regarding the Thai Wahhabi leader and anti-western firebrand Ismail Lufti, whom they suspect s a member of JI. Although there is no evidence that he is a leader of JI, he is a very prominent and respected cleric with a similar world view.

In short, we must be concerned about the current counter-terror strategy of simply trying to decapitate the organization. Leaders are replaceable and there is an endless pool of recruits. The failure of counter-terrorism in Southeast Asia is that it has not necessarily targeted the institutionalized aspect of JI.

3. Motivation for Jihad: The underlying conditions that drove these people to terror have not diminished. The economies of Southeast Asia have not fully recovered from the Asian Economic Crisis, nor are they likely to in the face of intense economic competition over trade and investment now posed by China. Mass unemployment, especially in Indonesia, is very destabilizing. Diminished expectations and frustration-aggression, especially amongst educated youth, will provide fertile recruitment grounds for years to come. Although President Bush announced $157 million in educational aid to sure-up Indonesia’s secular and non-secular schools (much of the aid had already been pledged and committed) during his two-hour and thirty-six minute stopover in Bali following the APEC summit in Bali, such aid will do little to diminish anti-American sentiment unless there are concurrent steps to increase trade, investment, lower tariffs, and import quotas on Southeast Asian goods. A key component of our counter-terrorism strategy must be job creation.

But there are other important motivating forces and factors at work. When one analyzes the motivation for suicide bombing and terrorism in the Middle East, and especially amongst Palestinians, it is clear that one of the most important factors is a deep seeded sense of humiliation. This is quite easy to understand in the context of the daily lives Palestinians live and across the Arab world, there is a deep seeded sense of humiliation on the part of Muslims by the West. It is obvious that Southeast Asian extremists also feel humiliated to be driven also to terrorism. What is causing this sense of humiliation?

First, there is a desire to identify the Southeast Asian jihad with the global Islamist jihad. Simply, militants in Southeast Asia want to identify themselves with the Muslim core, and no longer want Southeast Asians to be considered the Islamic periphery. They are seeking to inculcate Southeast Asians in Islamic values; and they are clearly tapping into the rapid growth of Islamic consciousness that has transpired across the region. Southeast Asians, through greater media coverage and the so-called Al Jazeera effect are identifying more with the plights of their co-religionists around the Islamic world especially the Iraqis and Palestinians. The Palestinians have become a metaphor for injustice around the region. The Pew Charity’s Global Attitudes poll found that the number of Muslims in Indonesia who believed that Islam was under siege almost doubled: from 33 percent in 2002 to 59 percent in 2003. Moreover, 80 percent of the respondents felt more solidarity with the Islamic world then they did in the past; and we must also worry about the glorification of martyrdom.

A second way that Southeast Asians are feeling humiliated, again ties in with their changing attitudes towards their co-religionists. The same poll found that with regards to Iraq, 82 percent of the Indonesian respondents were upset that the Iraqi regime did not put up a stronger fight against US forces, and that the cost of victory for the Americans was not higher; the third highest rate behind Moroccans (93 percent) and Jordan (91 percent) and ties with Lebanon and Turkey. (P4) In simple terms, they didn’t want the west to humiliate the Muslim world by defeating one of its stronger states so easily. Southeast Asians in general see the US occupation of Indonesian as the paramount of hegemonic arrogance and some are starting to rally around the jihadist campaign.

The West tends to be too focused on the madrasa education; both Al Qaeda and JI were able to recruit across the spectrum- and successfully at the technical schools. Does Indonesia, Thailand, Malaysia or the Philippines, in the current economic conditions, need another 22 year-old computer science graduate? Simply, no. They sit around, blame the West and globalization for their predicament, hack, create malicious computer viruses and worms, and learn their jihad on-line. This jihad is as much about anti-Western-ism (especially anti-Americanism) as it is about Islam. The Pew Global Attitudes Project reported one of the most precipitous drops in support for the United States in the past three years among Indonesians. Whereas 75 and 61 percent of Indonesians had positive images of the United States in 2000 and 2002 respectively, only 15 percent did in 2003. Whereas 31 percent of Indonesians supported the global war of on terror in 2002, only 23 percent supported it in 2003, despite the deadly terrorist attacks in Indonesia in October 2002.

The war on terror is as much a war within Islam; and to that end, the United States needs the support of moderate Muslim leaders throughout the war to attack terrorism and intolerant radicals and to provide an ideological counter to them. Yet, we seem to undermine them at every chance with our policies. Moderate Indonesian clerics who supported the war on terror were often leading demonstrations against the war. And even those that did not have a hard time assuaging popular anger against the United States and her policies.

Such sentiments have only increased with the Iraq war. For Muslims of the world, there is only one lesson to be learnt from Iraq: no state can confront the United States and her allies; the only way that they can be made to pay and "taste" the humiliation that Muslims feel every day is through terror. States in the Islamic world have failed to stand up to the United States and defend fellow Muslims; only Al Qaeda and its affiliates have the will and capacity.

4. The Colonels: Although a number of shura members were arrested, the majority of the 2000 arrests to date have been of foot soldiers with no knowledge of operations or the organization. These individuals performed specific functions (running safe houses, meet and greeters, surveillance, procurement). Very few "operatives" have been arrested; i.e. people with technical proficiency and who are able to plan, coordinate and execute attacks. They have the rank and stature to command foot soldiers. Most of these individuals were trained either in Al Qaeda camps in Afghanistan or Camp Abu Bakar in Mindanao. These include Zulkaraenen, Syawal, Dulmatin, Dr. Azahari Husin, Noordin Mohammed Mop Top, Abu al-Furkan, Abdul Jabar, and others. These individuals have technical and bomb-making expertise, a knowledge of secure communications, where to go for funding, how to communicate with the diversified Al Qaeda center, and finally the clout to bark orders at their underlings.

One of the key variables is who these people are training to serve as their own lieutenants as well as the question as to how well new members are being trained. What counter-terrorist operations hope to achieve is the "degrading" of JI members. As one American CT official said to me recently, "Yes they’re actively recruiting, but they’re not as good."

We have all seen the Al Qaeda training video-tapes that give bomb-making lessons. Likewise, Dr. Azahari’s bomb "cook books" were written in a way that nearly anyone, even someone with only a limited Koranic education, could understand. Indonesian and Australian police have found pre-weighed bags of chemicals in some quarter-master dens allowing for quick construction of bombs with little technical expertise. Moreover, the Bali and Jakarta bombs indicate a sharp learning curve over the 2000 bombings, in terms of the complexity and lethality of the bombs. Has that knowledge been effectively transmitted? How are JI recruits being trained? Can the training be as effective while they are on the run, and spending most of their resources on trying to ensure their own survival? The September arrests of 19 JI members in Karachi, Pakistan, may indicate that JI is moving further afield to conduct its training in a more secure environment. But the issue of training also brings into question the next variable, the role of the MILF.

5. The MILF: The MILF has been fighting for a homeland since the 1970s, and began to receive significant amounts of funding (lethal and non-lethal) from Al Qaeda beginning in the early-1990s. In return for the aid, the MILF opened its doors to Al Qaeda trainers, who instructed not just MILF cadres in terrorism but also local JI operatives who were unable to get to Pakistan and Afghanistan in significant numbers.

Until the MILF cuts its ties to JI, there will be a terrorist problem in the region as without the MILF camps and secure base area JI cannot train effectively. Yet, to date there have been no incentives for the MILF to cut ties or cooperate. Although they strenuously deny it, the MILF resorts to terror when it suffers battlefield losses, such as this past spring when it bombed the Davao airport or after the 1999 offensive when it bombed the LRT in Manila. It has become standard operating procedure for them. They deny every act of terror - or when confronted with overwhelming evidence that implicates them, blame the attack on "lost commands."

Although peace talks are set to resume again at the time of writing (there have been preliminary talks and negotiations since early August though they have come to nothing), there seems to be no willingness on the part of either side to compromise on the three issues that led to the breakdown of talks in late-2001. First, the MILF has given no indication whatsoever that that they have abandoned their quest for an independent state or would accept the government’s offer of autonomy. The MILF rejected the 1996 peace treaty between the government and their rival Moro National Liberation Front which created the nominally self governing Autonomous Region of Muslim Mindanao (ARMM). The MILF believes (not without reason) that the ARMM has been a failure, and refuse to accept a similar proposal.

Second, the MILF is unlikely to accept "joint development projects" that the Philippine government hopes to use to legitimize their position; despite the $30 million that was put on the table by the Americans, or the $130 million offered by the Philippine government. The MILF has demanded that the government simply give them the funds to use for development projects, through the Bangsamoro Development Agency. The government obviously refuses as they want the money to legitimize their position, not to buy political support for the MILF.

Third, the MILF sees cantonment, disarmament and demobilization as tantamount to surrender.

On top of the three issues that led to the talks breaking down in 2001, are four additional concerns: The first is the very palpable sense of mistrust on the part of the warring parties. It will take a long time to get back to the level of trust that was reached in the fall of 2001. Both sides blame each other for violating cease fires, seizing land, or perpetrating terrorist attacks.

The second concern is the apparent unwillingness of each side to implement the ceasefire, or alternatively, the inability to exert command and control over their troops. Third, the death of Hashim Salamat, the MILF’s founder and leader, also calls into question the ability of the MILF Central Committee to cut deals with the government. The fact is, we know very little about generational and factional differences and how this will play out in the peace process. The new MILF leader, Ebrahim al Haj Murad is known to be a pragmatic individual and a more moderate leader than Hashim Salamat, but we do not know how well he is holding the organization together or his ability to make significant compromises. He has been a vice-chairman for political and military affairs for over a decade and is well respected amongst the rank and file, yet the senior ranks of the MILF have been monopolized by the same individuals for a long time, thus limiting opportunities for a new generation of leaders to emerge. Fourth, the Philippine government, in the midst of a presidential election, is unlikely to yield much at the negotiating table. Although President Arroyo’s poll numbers are substantially up, depite breaking her December 2002 vow not to run for re-election, the best indications are that she will win. Certainly she has the backing of Lakas, former President Fidel Ramos and the recently retired and politically powerful prelate, Cardinal Jamie Sin. Her appeal is not based on her policies, but on the fact that none of the current crop of presidential aspirants has yet captured the imagination of Filipino voters or has national stature or integrity.

Perhaps the only tangible difference is that the United States is more involved in the peace process. Deputy Assistant Secretary of State Matt Daley secretly met with members of the MILF leadership in Kuala Lumpur and warned them to cut their ties to JI, and tried to indicate the seriousness the US attaches to this issue. Daley offered $30 million to the MILF as an incentive to signing a peace accord. Yet the MILF is insistent that this revolution is about principles and they cannot be bought off.

The outbreak of hostilities between government forces and the MILF is likely, and to that end, terror will remain part of their arsenal, thus necessitating ties to JI and Al Qaeda. There is now significant evidence that there are two new camps in operation deep in MILF territory where Indonesians are being trained. There are other reasons to be concerned about the MILF:

First, the growing closeness of the MILF and the Abu Sayyaf is also going to complicate matters. Although there have been talks between the two organizations in the past, they have never consummated an alliance due to differences over strategy, ideology and jealousy over foreign money. Yet recent reports of the MILF shipping an arms cache to the recently reconstituted Abu Sayyaf is very alarming. Although differences between the groups remain, clearly like their terrorist strategy, the MILF views the Abu Sayyaf as an effective way to keep the Philippine armed forces spread thin.

Likewise, there is now evidence of cooperation at the unit level between NPA and MILF units. Again, there is little ideological affinity, but there is a shared enemy. One also has to look at the evidence of collusion between the two with regards to arms shipments. For example, when Philippine troops over-ran the Buliok Complex they found evidence that the MILF was purchasing weapons from North Korea; a tie that was likely facilitated by the NPA.

6. Countries of Convenience: Terrorism differs from transnational crime in that it has no profit motive; but the underlying conditions that benefit one, benefit the other. Thus effective counter-terrorism must be based on rigorous law enforcement that targets gun-running, people smuggling, anti-corruption, money-laundering, and document forging. All of these are endemic in Southeast Asia; indeed that is a reason Al Qaeda was first attracted to the region. The will of states to crack down on these activities- especially in concert with one another is sorely lacking. The states of the region have not addressed the issue of terrorist-transnational crime convergence.

7. Range of Vulnerabilities: Although JI has lost the capacity to target a hard-target such as a well defended standing US embassy, there is an enormous range of targets to defend against. In one of his last major recorded statements, in October 2002, Ayman al-Zawahiri, Al Qaeda’s number two leader, warned that "We will strike at the nodes of your economy." We must take him very seriously. The goal of Al Qaeda is to rock the economic foundations of the west and its allies. Mass unemployment leads to frustration which leads to aggression. Although I refuse to accept the proposition that poverty causes terror, poverty does create the underlying conditions that allow terrorism to prosper. The west and its policies of globalization are convenient scapegoats.

Likely targets include less-guarded Western embassies (in particular Australia and the United Kingdom), especially those in office towers; symbols of US economic power, such as office towers with corporate logos; critical infrastructure such as refineries or pipelines and power-grids (that the MILF has started targeting with ease and effectiveness). JI cell members arrested in conjunction with the Semerang raid stated that US gas and mining firms were being specifically targeted (Unocal, Halliburton, ExxonMobil, Caltex, Conoco-Philipp, and Union Texas) while footage of Freeport McMoRan appears to be on a video produced by an Al Qaeda suspect detained in Indonesia. These firms represent the core of the Indonesian economy.

In addition, there is a huge range of soft targets: hotels, shopping malls, bars-nightclubs, housing complexes, and international schools. Airport security is abysmal in smaller regional airports and thus suicide-hijackings remain a distinct possibility. The potential for a plane taking off from Riau or Batam and being crashed anywhere in Singapore is not an unreasonable scenario; and it is an attack that would devastate the Singaporean economy.

The Mombasa attack and the apparent Al Qaeda attempt to procure surface to air missiles are significant in Southeast Asia as the two most prominent corporate symbols of Australia and Singapore are their airlines. An attack on airliners would be economically devastating in this region that is so dependent on foreign investment and tourism. Hambali has admitted that he and a colleague were planning to purchase shoulder-launched SAMs (MANPADS) to attack jetliners in Thailand. Indicating the concern that the US government places on the threat of such attacks, the single most important agreement that came out of the October 2003 APEC summit in Bangkok was an agreement that pledged states to control the sale and transfer of these weapons; though it fell short of a complete ban.

Although there is still no consensus on this amongst law enforcement officials regarding whether Iqbal was a suicide bomber at Paddy’s Bar in Bali, the psychological threshold for suicide bombings has been crossed in Southeast Asia. A former Darul Islam member, which in many ways was a ore-cursor organization to JI, stated "Suicide bombings are a new development in Jemaah Islamiya activities. When I was in the movement, we never had the concept. But what we did have is the understanding that we will face death in our struggle." Interrogations in Malaysia revealed that Hambali had recruited some six individuals for martyrdom missions. Sydney Jones of the International Crisis Group contends that a JI leader, Zulkarnaen established a suicide cell of the JI, known as the Laskar Khos, which has approximately 15 members. Martyrdom missions are not going to become a regular occurrence in Southeast Asia, but they are now part of the arsenal and cannot be discounted.

Two recent arrests portend the future of JI attacks. Malaysian authorities arrested one person with 10kg of Bali-like chemicals, as well as sodium azide which can be used to make poison gas. This fits into a pattern of Al Qaeda activity indicating a strong desire to operationalize WMD. He confessed that he was in a 6 person cell, of which each member was charged with the procurement of similar chemicals; none of whom have been arrested. In a 2003 raid on a JI safe house in the southern Philippines, a manual on bio-weapons was found.

8. Independent Al Qaeda Cells: Much of the focus of the war on terror in Southeast Asia has been on Jemaah Islamiya, yet there has been little attention paid to independent Al Qaeda cells and operatives. States in the region feel threatened by JI, yet not by Al Qaeda. This is a dangerous attitude. First, if we begin with the premise that Al Qaeda seeks to expand its war, to spread American and Western resources too thin, than we should expect that Southeast Asia will only increase in its importance as a theater of operations. Indeed Southeast Asia has emerged as one of the key theaters of operation. Second, we cannot forget that Al Qaeda first came to Southeast Asia in the early 1990s, years before JI was founded. It developed its network slowly and deliberately without attracting the suspicion of the region’s security services.

There is no way to ascertain the number of operatives in the region, yet Al Qaeda has been a more dispersed organization. One should not forget that when Abdullah al-Rahim al-Nishiri was arrested in Yemen in early-October 2002, the senior Al Qaeda operative was reportedly on his way to Malaysia. It is a more dispersed and decentralized organization, with multiple nodes of power, and thus operations.

Obviously states in the region have become more vigilant about the inflow of Middle Easterners. Yet, the economic costs of heightened vigilance, over time, will be too great. This was already seen in Malaysia, which following 9/11 no longer had visa-free entry requirements for members of OIC states. Yet, as Malaysia poised itself as a center of Islamic banking and business and an important tourist destination for Middle Easterners, it lifted most of those visa requirements. The porousness of Southeast Asia’s borders and its tourist-friendly lax visa requirements will continue to attract operatives.

9. Lands of Jihad: From 1999-2000, JI leaders were actively engaged in leading sectarian conflict in the Malukus and Central Sulawesi, and to that end, established two paramilitary arms. The logic was simple: if Al Qaeda’s first generation of members were veterans of the anti-Soviet Mujiheddin, than new generations of recruits to Al Qaeda and affiliates, had to have their own holy war to radicalize them. Although the Indonesian government finally stepped in, restored order and negotiated fragile peace accords, since this summer, there have been a number of deadly attacks in Poso, both bombings and assassinations, to wreck the peace process and rekindle sectarian violence. The outbreaks of sectarian violence will play into the hands of militants who will manipulate these conflicts and use them to propagandize against the state, recruit and fundraise.

10. The Money Trail: The financial war on terror has failed in Southeast Asia and to date almost no assets have been frozen although the region has become more financially important to Al Qaeda. Much of the fundraising is impossible to stop: hawala, cash being brought in on person, and petty crime. Hambali has revealed that JI was increasingly dependent on cash infusions for terrorist acts. But even the money that we should be able to curtail, we have not. Although the US Department of the Treasury identified 300 individuals, corporations and charities, the list was winnowed down to 28 individuals and corporations, many of which are already arrested or defunct. The designations that were finally announced on 5 September 2003 were a diplomatic compromise and really belied the scope of the problem. The US government designated 14 individuals while Malaysia submitted a list of 10 terrorist funders directly to the United Nations. Yet, of those 24 individuals, 9 had already been arrested, while none of the others are expected to have significant assets. The list included none of the charities and known front companies.

Saudi charities remain very active in the region, despite considerable evidence that they have directed funds to JI and its paramilitary arms. They, like their domestic counterparts, are maintaining a lower profile, but in part that is due to the fact that there is less overt sectarian conflict. The banking sectors remain weak and under-regulated, especially the Islamic banking sectors. Even states that are threatened by terrorism either question the utility of going after terrorist funding, or fear the adverse effect that such measures will have on their economy.

The Arabization and spread of Wahhabism in the region is deeply troubling. Although there is no centralized body or over-arching plan, the fact is the charities are the primary vehicle for the spread of Wahhabism throughout the region.

11. JI Reaches Out: Between 1999 and 2000 JI held a series of three meetings that included members of other small and radical Muslim groups from around the region, including Thai and Bangladeshi organizations. This was known as the Rabitatul Mujiheddin. There is significant evidence that JI cadres are using southeastern Bangladesh to regroup and there are close ties between Fazlul Rahman’s HUJI - Rohinga Solidarity Organizatio and JI. Bangladesh has been off most people’s radar screen and there has been an appalling lack of transparency on the part of the Bangladeshi government, whose mantra eerily sounds like the one that emanated from Jakarta pre-Bali.

The May-August 2003 arrests in Thailand-Cambodia further highlight the penetration of societies that were thought to be fairly immune to Islamic radicalism. Thailand and Cambodia became important staging grounds, but also very important financial conduits.

The 19 arrests in Pakistan, a group led by Hambali’s brother, in September 2003 are also indicative of how JI has developed its network overseas and how it uses foreign territory to regroup and rebuild.

12. Political Will: 2003-04 is a seminal year in the politics of the region that will see parliamentary and a presidential election in Indonesia; a presidential election in Philippines; the first leadership transition in Malaysia in 23 years, as well as a parliamentary election and a parliamentary election in Thailand. The war on terror will be a major campaign issue in all of these countries. Secular nationalists are all vulnerable to charges of being lackeys of the Americans.

Second, the underlying economic conditions are beneficial to the Islamic parties who can argue that globalization has led to the impoverishment of their country and especially the bumiputera/pribumi community.

Third, there is a lack of political will to take on the Islamists or expend the political capital to challenge them on small issues. For example, in Malaysia UMNO has become increasingly Islamic to court the Muslim electorate and win them back from the Islamic opposition party PAS. In Indonesia, although the Jakarta Charta failed, there is an Islamic component to more than 20 bills in parliament; to which no party is willing to stand up to. The Islamist vice president Hamzah Haz was to open the MMI congress, despite the fact that many MMI leaders have either been arrested for terrorist activities or linked to JI. It was only the Jakarta bombing that forced him to not attend.

In Indonesia, JI still has not been designated a terrorist organization and under the Indonesian legal system, there are no conspiracy laws. Despite the arrest of one JI suspect in conjunction with the arrests in Semerang, he was released for "lack of evidence." Indonesian officials fear a political backlash if they designate JI as a terrorist organization as proponents also want the MMI designated as well. One must also consider what effect the acquittal of Ba’asyir on terrorism charges will have on the Islamists in Indonesia. If anything, it will motivate them and vindicate their position that Ba’asyir was arrested on politically motivated charges under intense pressure from the United States. The Pew poll found that there is considerable support for Islam’s political role in Indonesia: 86 percent of respondents agree that currently Islam plays a large role in Indonesian politics, while 82 percent agreed that Islam should play a role in politics.

We have to be prepared that some states no longer have the incentive in continuing the war on terror. Thailand seems to already be in "denial mode" following the arrest of Hambali. This is our war on terror, not necessarily theirs. In some cases they do not have the resources to maintain the current pace in the fight against militants, in other cases they are being hampered by intense bureaucratic competition.

I should briefly mention some of the key electoral issues as they pertain to the war on terror. In Thailand, although Prime Minister Thaksin Shinawatra’s Thai Rak Thai Party is almost guaranteed to be returned to power, it wants to deal the Democratic Party a crushing defeat. The Democrat Party’s regional stronghold is in the Muslim dominated south, which limits the degree to which Thaksin will allow the war on terror to be conducted.

In the Philippines, President Arroyo broke her 30 December 2002 vow to not run for re-election, despite her eligibility to run for her own full 6 year term. She made the decision for a number of reasons, but most importantly she stated that she wanted to focus on making hard choices that though politically unpopular would benefit the economy. Her popularity ratings were also quite low at the time. Hovering around 15 percent, though which not unprecedented in Philippine politics, it was enough to give her pause. She has a lot of pride and could not countenance an election in which she would be humiliated. Yet since then, her position in the polls has risen steadily, while no other candidate has yet captured the imagination of Filipino voters. The party system in the Philippines is quite week; parties are more vehicles for personalities, and thus it is hard to have nationwide appeal. Regardless, it will be difficult for Arroyo to make concessions with the MILF and a durable peace is unlikely. There are concerns that now resigned Secretary of National Defense Angelo Reyes is a potential presidential candidate. There are also attempts by the opposition parties to form a broad coalition, though that seems unlikely to succeed as the parties will likely clash regarding the presidential nominee.

In Malaysia, Prime Minister Mahathir Mohammed and UMNO milked 9/11 for all it was worth, linking Malaysians in Afghanistan and those detained under the ISA to the Islamic opposition party PAS, which did much to discredit the party. The PAS party paper Herakah afterwards complained that Mahathir was "fear mongering." Mahathir clearly hoped to increase the 60 percent of the Malay population who support UMNO. There are a few key issues: first, in the 1999 election, PAS had substantial gains at the expense of UMNO- winning 20 seats. For the first time, UMNO did not win the majority of Bumiputera community. The ruling coalition Barisan Nasional held 148 of 193 seats, but only won 56.3 percent of the votes cast, down 7 percent. To what degree was the 1999 election a protest vote? Has PAS been able to hold onto those UMNO voters that it captured in 1999? Following the death of Fadzil Noor, the spiritual leader of PAS, UMNO was only able to win the by-election by 283 votes- in Prime Minister Mahathir’s home state of Kedah. PAS is poised to not only retain control of Kelantan and Terengganu in the 2003 elections, but to make substantial inroads and possibly gain control of the BN-controlled states of Perlis, Perak and Kedah. Due to the considerable gerrymandering on the part of the Barisan Nasional, PAS will not win in any of those three states, but it looks as though they will win more votes absolutely. If PAS makes significant gains in the election, the ability and willingness of the government to maintain its high degree of cooperation in the war on terror will be constrained. With the retirement of Prime Minister Mahathir on 31October 2003, Malaysia will experience its first leadership transition in over 30 years. His heir-apparent Deputy Prime Minister Abdullah Badawi is a much less charismatic figure, and has a much weaker political base. Although Badawi is a capable man who will continue to maintain the hard line on militants that he has shown while Home Minister, he will be a weaker leader who will have to bargain more with political rivals. There will be more dissent and factionalism in the ruling Barisan Nasional coalition. Although the deputy prime ministers have pledged to support Badawi, this is not a certainty and this is the first time in 23 years that there has been an opening at the top. Although Badawi has Islamic credentials, as the current Home Minister, he ordered the detainment of all JI and KMM suspects.

In Indonesia it is really too early to make any predictions. The new constitutional reforms allow for a direct election of the president, some 3 months after the parliamentary (DPR) elections in April. Parties that win at least 3 percent of vote will be allowed to field candidates. Over the summer, Jakarta was filled with rumors regarding backroom negotiations between the heads of parties and mass-based organizations over potential coalitions. Golkar is clearly in a much stronger position and is fielding a number of candidates; it also has the strongest grass-roots network across the archipelago. Their decision not to nominate their candidate until after the April 2004 parliamentary election is a smart one, as it allows 4-5 candidates to constantly tour the archipelago and drum up grass-roots support. The fact that Bambang Yudhono Susilo, the current Coordinating Minister for Politics and Security Affairs, has emerged as one of the strongest Golkar candidates must be troubling to Megawati; and has grave implications for how the war on terror is being conducted. Megawati no longer has the cache of being an outsider, and her party the PDI-P is riddled with allegations of egregious corruption and factionalism. This is her election to lose, which she will, unless she can form a durable coalition with the PKB/NU. It is telling that Megawati did not meet with Australian Prime Minister John Howard who came to Bali to commemorate the first anniversary of the Bali attacks.

Of immediate concern is the question of how well the Islamic-based parties will fare in 2004. There is no consensus at present. While some people see a natural and inevitable swing to the Muslims, a slight majority expect that they will poll roughly at the same rates they did in 1999. However, this has more to do with their inherent weaknesses than their ideological appeal. There are pockets where Islamic parties are strong, but not across the nation. The Islamic parties are riddled with factionalism and rivalries and have trouble working together. The Crescent and Star Party has a very weak organizational structure and has more or less split into two factions. The only Muslim party that stands to gain from the election is the Justice Party, which is a very un-Indonesian party. Although they were courted by the government, they have turned down ministerships, preferring to remain in opposition, to maintain their integrity. The Justice Party is by far the cleanest party in Indonesia and ministers have a good reputation for eschewing graft. Moreover, it has a strong party organization and can assemble huge numbers of people. Most importantly, there are no discernable factions within the party.

1. Intelligence sharing and cooperation is essential. However, the criticism one hears from across the region is that intelligence sharing is a one way street to Langley, Virginia; that the United States gives little to these states on terms of what they need. The issue of access to Hambali is a case in point. Whereas I understand that it is critical to the long-term interrogation process to control the environment, it is insulting to the Southeast Asians, as well as the Australians, to not have direct access to him and other leaders. We must put in place a mechanism that would allow our allies to have access to these suspects. Our intelligence presence around the world is smaller than one thinks, and we rely on our counterparts to provide the "boots on the ground." Therefore we must build up trust and a close working relationship with them. Adding irritants such as this will set us back in the long-run.

2. Inter-state cooperation has improved dramatically, though it began from a very low level. The instances of joint operations are no longer the exceptions. States are cooperating with one another more regarding the handing-over of suspects (recently Hambali’s wife was turned over by Thai officials to Malaysia, while Malaysia turned over Abu Jibril to Indonesia). There seems to be consensus that if tele-conferencing is to be used in the future, there should be universal ground rules and procedures. There is some momentum regarding getting each state to amend their existing laws to bring them into line with other states. There still, however, has been no interest in developing an ASEAN extradition treaty. The United States should facilitate inter-state cooperation, and assist states in developing courses at the Regional Counter-Terrorism Centre in Kuala Lumpur.

3. The United States must get involved in the Government of the Republic of the Philippines (GRP) and the Moro Islamic Front (MILF) peace process. Yet financial incentives are not enough to buy off the MILF. The MILF must understand how important the United States Government takes their ongoing relationship with JI and Al Qaeda, and they must understand that there will be costs entailed if they maintain such relationships. To that end, the United States must reach an agreement as soon as possible to get troops back into the Philippines for "robust training exercises." We must be sensitive to Philippine law and political sensitivities. We cannot afford the fiasco of stating that the troops will be there in a combat capacity for as long as it takes. But we do need troops on the ground in the Philippines providing training and equipment; and also, keeping the Philippine armed forces honest. Most importantly it will send a strong signal to the MILF. The MILF never believed that the US troops that were stationed in the Philippines in the first half of 2002 were there for the Abu Sayyaf. They believed the US presence was directed at them. That is a feeling thatwe should maintain.

4. Terrorist Financing in Southeast Asia must be addressed. First, we must continue to pressure the Government of Saudi Arabia to control its charities that are very active in Southeast Asia. Many of these charities have been implicated in financing terrorism and militant activities. Second, we should pressure governments to shut down domestic charities, such as KOMPAK, that have been involved in fomenting sectarian violence. Third, whereas the governments of the region have expressed willingness to freeze individual bank accounts, none has been frozen. Moreover, they have resisted shutting down front companies for fear of any commercial backlash against their economies. This is particularly true with regard to Malaysia. Fourth, the US government must continue assisting governments in the region who have limited capacities to regulate their banking systems, to establish and or train financial intelligence units in these states, and to strengthen regulations and put into place laws and regulations that criminalize terrorist financing.

5. Counter-terror policies and assistance programs must be developed and implemented that focus on overcoming bureaucratic competition amongst the Southeast Asian security services. One of the most critical issues should be getting tactical level cooperation between the police and intelligence services, which seem to be more concerned with discrediting one another and competing for foreign assistance programs.

6. Whereas US investment in Southeast Asian education is important, especially in the Philippines and Indonesia, it alone is not enough. $157 billion in educational assistance to Indonesia is important, but unless we create jobs, we are sowing the seeds of more unrest. Policy-makers cannot remain transfixed on madrassas. JI recruits across the socio-economic spectrum. We need to put in place economic policies and incentives that will facilitate job creation. For example, increasing the amount of Philippine tuna or other agricultural products or Indonesian textiles and shoes.

7. Our visa policy is insulting and has little efficacy and must be changed for Southeast Asia. It is bad for our economy, universities and counter-terrorism efforts as it breeds ill-will and resentment.

8. The Middle East peace process is a metaphor for injustice throughout the region. The plight of the Palestinians resonates widely amongst the vast majority of the population, while members of the elites believe that America is doing nothing to facilitate a return to the negotiating table. Islamic militancy and the threat of terrorism will grow around the world unless America uses its political and economic clout to restore the peace process. There can be no progress in the war on terrorism until a durable political solution that necessarily entails Palestinian statehood is reached. The war in Iraq, likewise, was universally unpopular in Southeast Asia. Southeast Asians now view the war on terror as patently anti-Muslim. Until there is a quick transition in Iraq to self rule, there will be strong-anti-American sentiment. Radicals in Southeast Asia are actively trying to identify with their radical co-religionists in the Middle East, thus we must take the wind out of their sails.

9. The hypocrisy of US policies must be ended. Americans often ask themselves "why do they hate us?" The fact is most people in Southeast Asia do not. They admire us for our economic and technological success, for our entrepreneurial spirit, hard work and determination, for our cultural values and freedoms. What people hate is the hypocrisy of our policy: demanding others to do one thing why we do otherwise. Because of that we alienate even our allies. There are two good examples of this. First, the United States was very unhappy that the alleged spiritual leader Abu Bakar Ba’asyir was acquitted of the terrorism charge, and received 4 years, rather than the 15 years Americans had hoped for. While we pressured the Singaporeans to make a JI suspect, Faiz Bin Abu Bakar Bafana, available for video testimony, the United States refused to give the Indonesian prosecutors access to Omar al Faruq, one of the most senior Al Qaeda operatives caught in Southeast Asia. The second case has to do with America’s condemnation of the Internal Security Acts that are used in Singapore and Malaysia, which allow the state to hold people without charge indefinitely. Yet while we routinely criticize the ISA, we are doing the same thing in Guantanamo.