MAJORITY APPROVAL OF U.S. PRESENCE

On September 11, President Arroyo was the first Asian leader to support America's campaign against the new threat. Her leadership was based on her moral repugnance of terrorism and the shared values between the U.S. and the Philippines.

In return, the Filipino nation is indeed grateful for the American support in our campaign against terror. A recent national survey showed that 84 percent of the 78 million Filipinos approve of the U.S. presence in the country. A bipartisan consensus was also reached on this matter within our National Security Council. The joint exercise furthermore enjoys bicameral support from our Congress. The opposition party is as well represented in the Visiting Forces Agreement Commission which oversees the conduct of the exercise.

The majority of Filipino Muslims, who comprise around 5 percent of our total population of 78 million, also approve of the activity. An interfaith forum of Catholic bishops and Muslim clerics called the Bishop-Ulama Forum (BUF) has thrown its support behind the government's offensive against terror. The Moro National Liberation Front has condemned the Abu Sayyaf. The head of the MNLF's Executive Council, Dr. Parouk Hussin, who is concurrently the governor of the new Autonomous Region for Muslim Mindanao (ARMM), has himself welcomed American support in our counterterrorism efforts.

Even our stock market has applauded the "Balikatan." Along with the announcement of positive macro-economic results, when the first batches of U.S. troops arrived in the Philippines, it posted a positive from below 1,000 points to 1,400 points. Certainly, the exercise boosted our national security. And usually, what follows is confidence. With confidence hopefully comes investments and good business.

As in any democracy, there will always be dissent. There is a vocal minority including Marxist-Leninists and ultra-nationalists who, reflexively, will always be anti-American and anti-establishment, notwithstanding who is governing.

TERMS OF REFERENCE

The Terms of Reference for the exercise were jointly crafted by the U.S. and Philippine side. Among others, the Terms of Reference include the following at the policy level.

First, the Balikatan is an exercise to advise, assist, and train the Philippine military relative to Philippine efforts against the Abu Sayyaf, which will be conducted in Basilan and in Zamboanga. Related support activities are to be conducted in Cebu.

Second, it shall be conducted and completed within a period of six months with the participation of 660 U.S. personnel and 3,800 Philippine forces.

Third, only 160 U.S. troops organized in 12-man Special Forces Teams shall be deployed with the Armed Forces of the Philippines field commanders.

Fourth, the U.S. troops will not engage in combat operations, without prejudice to their right to self-defense.

STATUS OF THE EXERCISE

The "force buildup" phase and the "integration" phase of the training exercise have been completed. An aspect of this training is on "command and control" operations. An intelligence fusion center was established and satellite equipment has been set up to track down the terrorists. All U.S. forces are now effectively integrated with the Philippine task groups and battalions. They have adequately "acclimatized" themselves to their new area of operation.

Limited on-site training between Philippine and U.S. forces on basic weapons and tactics has started in some units to develop rapport and interoperability among the troops. American experts have already trained an elite anti-terrorism unit called the Light Reaction Company and are training two additional units.

Last month, Task Force Gentle Wind was created to serve as a coordinating mechanism for the civil-military operations. Focusing on the community development aspect of the exercise, this Task Force complements the activities of the government's pro-poor programs in Basilan. Task Force Gentle Wind is coterminous with the joint military exercise. There are currently proposals to increase the number of U.S. troops for civic action but these are still being discussed.

CAMPAIGN AGAINST THE ABU SAYYAF

I went to Basilan a few weeks ago to personally assess and gain a first-hand insight of the situation there. I found the cooperation between the Philippine and U.S. troops outstanding. The strategy for the rescue of the hostages is materializing. We pray that the hostages will eventually be rescued and reunited with their loved ones.

Military officials say that mounting pressure has forced many Abu Sayyaf to seek sanctuary outside Basilan, leading to a wave of arrests. The most high-profile one was the recent arrest of two Abu Sayyaf commanders. The Abu Sayyaf is reportedly constantly on the run, not staying in one place for more than one hour, and have split up into smaller groups.

However, the availability of high-tech military equipment and the assistance of American military experts have upgraded our troops' communications, mobility, intelligence and firepower capabilities.

Our Southcom commander also reported more clashes between the Abu Sayyaf and our troops. He attributes these to a marked increase in sightings with the aid of sophisticated equipment and improved intelligence operations.

PEACE TALKS WITH THE MILF

Our government has entered into a cease fire agreement with the Moro Islamic Liberation Front (MILF) last November in Kuala Lumpur and peace talks have been held. Recently, the talks have stalled. Our military has accused some MILF elements of harboring the Abu Sayyaf and of having engaged our troops to recapture some of the camps it lost to a government offensive in July 2000.

We decided to suspend the peace talks. Instead, we have been resorting to informal, back-room channels before formally facing each other in the negotiating table. The Coordination Committee for the Cessation of Hostilities (CCCH) met to discuss problems associated with the cease fire agreement.

MILF'S LINKS WITH AL-QAEDA

Prior to our cease fire agreement, the MILF's links with al-Qaeda and other international terrorist groups had been uncovered by our intelligence community. The MILF, like the Abu Sayyaf, had received funds from a purported "charity organization," the International Islamic Relief Organization (IIRO), set up in the Philippines by Osama bin Laden's brother-in-law, Mohammed Jamal Khalifa.

An Indonesian key leader of another terrorist group called Jemaah Islamiyah, by the name of Fathur Rohman al-Ghozi, was recently arrested in the Philippines. He was reportedly dispatched by his organization to Mindanao to teach demolition jobs in MILF camps.

Within the context of these historical links and the recent problems in the cease fire agreement, President Arroyo strongly warned that the government will employ all its might if the MILF undertakes terrorist and criminal actions. While our military supports the peace talks, it will respond quickly and forcefully against terrorist attacks. Our presidential spokesman made clear that "no cease fire lines can be invoked to impede hot pursuit." We will definitely be guided by what the MILF does, and not what it says.

TRILATERAL AND REGIONAL COOPERATION

Our anti-terror campaign has also assumed a regional dimension. Upon the Philippines' initiative, a draft "Agreement on Exchange of Information and Establishment of Communication Procedures" was negotiated among the Philippines, Malaysia, and Indonesia last December. It is designed as a deterrent against terrorist threats and other transnational crimes. Thailand, Singapore, and Brunei have shown keen interest in this agreement and we look forward to their concurrence.

Though the agreement is yet to be formally signed, it is de facto in effect. An early collaboration was prompted by the discovery of a terrorist network called Jemaah Islamiyah operating in Malaysia, Indonesia, and Singapore. Upon a tip from Singaporean authorities, Philippine police arrested al-Ghozi, and a cache of weapons and explosives was seized. During questioning, al-Ghozi admitted his participation in the December 30, 2000, bombings in Manila. He further revealed that the weapons and explosives being stockpiled were to be used to attack U.S. facilities and other Western interests in Singapore.

A few days ago, three suspected Indonesian terrorists were arrested in Manila. They were about to depart from our international airport and were reportedly carrying components for improvised explosives. U.S. FBI Director Robert Mueller said that so far, there is no solid evidence of any al-Qaeda cell in the Philippines. However, he expressed his concern to us that al-Qaeda members in Afghanistan might flee from there and seek refuge in Southeast Asian countries.

We are maintaining our high state of alert and vigilance in tracking down terrorists. As our National Security Adviser underscored, "there is a national threat and we have to prepare; otherwise these terrorists would go to places where the resistance is weak." We must therefore strengthen our resistance against terrorism.

BASILAN ACCELERATED DEVELOPMENT STRATEGY

Poverty is the spawning ground of terrorism. Based on the latest published human development index (HDI) of the Philippines' 77 provinces, the last five lagging provinces in overall HDI are all in the Muslim South.

Basilan is the province with the lowest per capita income, the highest incidence of poverty, the lowest literacy rate, and the highest mortality rate. Within the framework of the Basilan Accelerated Development Strategy (BADS), the Arroyo government's aim is to enable Basilan to uplift itself.

It has redirected its priorities and is focusing its resources not only in Basilan but in the entire Mindanao to ensure peace and accelerate its economic transformation, especially in the predominantly Filipino-Muslim areas. This year saw the doubling of U.S. assistance to that region to $55 million.

ACCEPTING NEW RESPONSIBILITIES

During the World Economic Forum last January, President Arroyo stressed the connection between poverty and extremism. She pointed out that over one billion people, or around 20 percent of the world's population, live on less than one dollar a day.

Developed and developing countries alike must therefore accept new responsibilities to address this situation. President Arroyo stressed that developed countries must recognize their duty to open their markets, transfer resources, and reform international institutions. Poor countries, for their part, must implement essential reforms without which international assistance will do little good. President Arroyo urged them to adopt standards of transparency and accountability and build market economies to become real partners in investment and trade.

President Bush articulated the same point when he recently launched the New Millennium Challenge Account. It provides incentives to countries that undertake reforms to eventually reduce, if not negate their need for external aid. He emphasized that "when governments fail to meet the most basic needs of their people, these failed states can become havens of terror." It is therefore imperative for the international coalition against terror to equally apply its collective force in confronting global poverty.

President Bush's latest initiative is a giant step towards this goal. We note with appreciation that the criteria which he cited before any country can avail itself of the fund--specifically, a strong commitment to good governance, health and education of the people, and sound economic policies that foster enterprise and entrepreneurship--are key elements of the Arroyo administration's anti-poverty program.

In closing, I wish to inform you that the Philippines will participate actively in pushing forward President Bush's new initiative.

Ambassador Albert del Rosario is the Ambassador of the Republic of the Philippines to the United States.