Mr. Foucheux: Good evening, and welcome to "Dialogue," I am your host, Rick Foucheux.

President Bush will welcome President Arroyo of the Philippines to Washington on November 20. The United States and the Philippines are treaty allies and share a long history of close friendship and cooperation. President Bush has said he is particularly pleased to host President Arroyo this year, which marks the 50th anniversary of the mutual defense treaty between the United States and the Philippines.

In a White House statement, Mr. Bush said, "Though borne of the Cold War, the alliance is as important today as ever, as the United States and the Philippines work together to combat the threats of the 21st century, especially international terrorism."

To discuss Washington's relations with Manila, we are pleased to have with us today James Kelly, U.S. assistant secretary of State for East Asian and Pacific Affairs. Secretary Kelly, welcome to "Dialogue."

Mr. Kelly: Thank you very much, Rick.

Mr. Foucheux: It's a pleasure to have you with us. Would you care to make a brief statement to start us off on our program today?

Mr. Kelly: Sure, I'd be delighted. And good evening to friends in Manila. Thanks for the opportunity to meet with you via satellite conferencing on the eve of your president's visit to Washington. She's in New York today I believe making a speech to the United Nations General Assembly.

The U.S. welcomes the first visit of President Gloria Macapagal-Arroyo as president of the Philippines. And this working visit is going to cover the entire range of U.S.-Philippine relations and discussions on other items, especially the global coalition against terrorism.

President Arroyo's schedule in Washington is going to reflect the scope and importance that the U.S. attaches to this visit of a valued partner and ally. President Arroyo is going to meet of course with President Bush, Vice President Cheney, Secretary of State Colin Powell, Secretary of Defense Rumsfeld, National Security Advisor Dr. Rice, and also with the secretaries of Commerce, Treasury, Agriculture and Veterans Affairs. Frankly, your president has an exhausting schedule here. But, having met her, I am more than certain that she's up to the hard work.

She is also going to meet of course with important other executive branch officials and the leaders and members of our Senate and House of Representatives.

In addition to the matters to be discussed, this visit will also allow President Bush to deepen his acquaintance with President Arroyo, to expand the personal relationship that began when they first met face to face at last month's APEC's conference in Shanghai.

With over two million Filipinos and Filipino Americans living in the United States, and over 100,000 Americans living in the Philippines, our bilateral relationship is one of personal relationships. Added to this is the fact that we share so many common values and agree on so many important issues.

As partners and friends, our two countries have shared personal joys and sorrows over the years. And, reflecting on the events of September 11th, it's sad to note that the Philippines shared our grief in a most personal way, as lives of Filipinos and Filipino Americans were also lost of course in the brutal attacks on the United States.

The Philippines is of course one of our staunch military allies in Asia, and we are celebrating the 50th anniversary of the mutual defense treaty. Under President Arroyo's leadership, the Philippines was one of the first nations to offer its early, principled and unequivocal support to the international fight against terrorism. We are very grateful for that support, and I am sure that President Bush is going to make that clear in his discussions with President Arroyo.

We will also be discussing ways our two countries can continue this cooperation. We are also mindful that the Philippine government is not just talking about fighting terrorism; it has provided support to the international coalition. Most importantly, it is also fighting terrorism at home through its efforts to track down the brutal Abu Sayyaf terrorist and kidnapping group, rescue the remaining Filipino and American hostages. We honor the courage of the Philippine armed forces who have given their lives, and those who continue the struggle in the fight against terrorism.

Thank you. I'd be delighted to take questions.

Mr. Foucheux: We thank you, Secretary Kelly, and we open our discussion to our participants now in Manila. We begin with the bureau chief, the Manila bureau chief of Agence France Presse. And we welcome you to the program, sir. Good morning. Please go ahead with your question.

Question: Thank you. This is a very broad question to get the ball rolling. The Southeast Asian leaders recently at the summit meeting in Brunei, adopted a two-pronged declaration, anti-terrorism declaration. One condemned the September 11 terror attacks in the United States, and the other broadly pledged to take steps to counter terrorism in their own backyard. How does the United States see this two-pronged declaration, and how does the U.S. intend to help Southeast Asia in combatting terrorism? Thank you.

Mr. Kelly: Well, this statement by the 10 countries of the Association of Southeast Asian Nations was of course exceptionally welcome. We welcome their condolences and feeling with us. It suffered, as we all know too well, the countries in Southeast Asia have suffered against terrorism as well.

How we are going to help them is going to be in as many ways we can. This is a tough battle against a determined and hard-to-find enemy. And among the ways we are going to try to do this are by training and assistance, by providing technical advice, by sharing information across our borders, by trying to keep close tabs on people with suspicious backgrounds that are trying to travel from place to place -- all kinds of things like that. There's no magic solution, but we are looking forward to working with the countries of ASEAN, as we are with the Philippines.

Question: Secretary Kelly, this is Gigi Grande from ABS-CBN News. Pakistan's bilateral debt of $6 million is being rescheduled as a result of Pakistan's support for the U.S.-led coalition against terrorism. Can the Philippines except similar financial concessions with respect to its debts to the IMF and the World Bank, considering the fact that President Arroyo has played a key role in mobilizing support for the war on terrorism within the ASEAN region?

Mr. Kelly: I don't think that you will find that Pakistan's debts were forgiven. There were some delays in repayment, and I know that's happened in the past with respect to the Philippines. I am not familiar with the details of what's planned. President Arroyo is going to be meeting with our secretary of the Treasury, and also with other financial officials here. And if this is something that the government of the Philippines needs and wants, it's certainly going to be given very careful consideration.

Question: Assistant secretary, this is Malou Talosig from Today. I believe that the Departments of Defense of both the U.S. and the Philippine governments are now trying to hammer out an agreement that is similar to the ACSA, Acquisition and Cost Servicing Agreement, that was shelved in 1994. How important is this ACSA to you and your terrorism campaign? Are you confident that it will be concluded during the visit of President Arroyo?

Mr. Kelly: Frankly, no I am not. I don't think we intend to work very hard -- not at the White House. This may well come up in the discussions at the Pentagon that the President will have. That work I think has been going on for a while, and it's a sort of day-to-day tending of our alliance that we do.

Right now we are very happy to have the Visiting Forces Agreement, and we think that's working really quite well.

Question: Secretary, I am Sandra Aguinaldo, Sandra Aginaldo from GMA7 Broadcasting, Manila. I would like to ask you what role does the United States expect from the Philippines to play in the wake of threats from terrorists?

Mr. Kelly: We don't expect the Philippines to play any particular role. That role and contribution is up to the Philippines. And I have got to tell you it's been outstanding. President Arroyo was very quick to speak up, very quick to take action -- not only in granting overflight rights, offer of logistics support, medical personnel. In support of the effort against financing, there was a remarkable legislative accomplishment in Manila in passing the bill that would act against money laundering. So there have been many different kinds of cooperation, and we are very pleased with them. But the choice of what these are is entirely up to Manila.

Question: Yes, it's -- (inaudible) -- from Agence France Press. Mr. Kelly, one of the impediments facing the Philippines in its battle against terrorism is the lack of equipment, military armor and military aircraft, artillery, et cetera. How does the U.S. intend to help the Philippines in this aspect? Thank you.

Mr. Kelly: The war against terrorism has many components. I am not sure, frankly, that heavy artillery and fighter aircraft and bombers are necessarily the only solutions against them. There is a software requirement and training. And in the end these things just have to be done on the ground, as we are seeing now in Afghanistan, and as we are seeing in Basilan Island and near Mindanao with the ongoing efforts of the Armed Forces of the Philippines. So the software part is as important -- and perhaps more so sometimes -- than the hardware. And we have had a group last month in the Philippines working closely with the armed forces of the Philippines to assess the things that are most needed in this ongoing struggle. And Admiral Blair returned to offer the report, and I think there are going to be some discussions early next week with President Arroyo when she's here over what are the best next steps.

Question: Gigi Grande again from ABS-CBN News. If and when the terrorist group Abu Sayyaf is wiped out, can the Philippines expect development aid from the U.S. with respect to southern Mindanao?

Mr. Kelly: Our development aid, including the focus on Mindanao, has recently increased, and it is by no means dependent on some particular objective. Obviously for the Philippines' own purposes, it is extremely important that the Abu Sayyaf group be vanquished. And this habit of seizing people, whether they be visitors to the Philippines or even from nearby adjacent countries, and holding them for ransom is simply unacceptable. And the terrorism against other Filipinos -- many have been killed, savagely killed -- is also equally unacceptable. And I know that's the position of the government in the Philippines, and it has been working very hard against it.

But the assistance in Mindanao to try to develop institutions, try to help fight against poverty, to help work on health questions, has been raised over the last several years, and I expect it certainly to continue.

Question: Mr. Kelly, Sandra again from GMA7 News Manila. I would like to ask you -- recently the Abu Sayyaf was identified by the U.S. government as among the groups with links to the al Qaeda of bin Laden. I would like to ask has there been any new evidence that you uncovered that would establish the links of the Abu Sayyaf group to al Qaeda?

Mr. Kelly: I am not aware of any new evidence that would link Abu Sayyaf with al Qaeda. Earlier, some six, seven years ago, at the time that group was set up, there were apparently some very direct links, even by blood and marriage relations, to the al Qaeda and Osama bin Laden groups. Recent evidence is much less clear, and it seems to me the Abu Sayyaf has not needed to have ongoing advice and support to do what it is doing. But we don't know. These things are very shadowy, and there may be ongoing contact. But I think this represents a serious problem for the Philippines, and that represents a basis for including Abu Sayyaf on the U.S. terrorist organization list.

Question: May I follow up on Sandra's question? This is Malou again from Today. If and when some Abu Sayyaf members were arrested, and considering the fact that -- well, an American hostage was beheaded, are you willing to have one of them or all of them be extradited to the United States and put them on trial?

Mr. Kelly: I don't know that that's on the radar screen right now. I think the government of the Philippines and its judicial system are fully capable of exacting justice from the Abu Sayyaf terrorists. If problems come up, or if the government of the Philippines asks for some help on that, I think our lawyers would certainly take a good look at it. But right now we are entirely confident in the ability of the Philippines to handle this terrorist threat.

Question: Mr. Kelly, this is -- (inaudible) -- again from Agence France Presse. If the Abu Sayyaf threat does not go away soon, would the U.S. lead a campaign like what it did in Afghanistan to get rid of the problem? Thank you.

Mr. Kelly: At this time this is entirely a threat it seems to me to be within the capabilities of the Armed Forces of the Philippines and the Philippine police. The attacks, the actions, have all been within the territory of the Philippines. So therefore I don't think there would be any need. We do see, if we are requested, an opportunity to share intelligence and perhaps offer advice. But this is something that the Philippines needs to do for itself, and I know intends and is able to do for itself.

Question: Mr. Secretary, Gigi Grande from ABS-CBN News. Seven kidnapped victims of the Abu Sayyaf were released on Wednesday night. Unfortunately the persons who were released did not include the two American hostages, Gracia and Martin Burnham. I was wondering if you could issue a statement on this.

Mr. Kelly: Well, we are certainly happy that the terrible period of being held as hostages has ended for those seven Filipinos, and we very much hope that Mr. and Mrs. Burnham, and any other Philippine hostages can soon be released. And we are encouraged by any positive movement, and I think the release of these seven was very positive.

Question: (Off mike) -- here again. I am sure, Assistant Secretary, that the President's visit to the United States will not only be about terrorism, but also other issues, particularly with the Philippines and the United States. One of them is -- one of the reporters here would like to ask about the toxic waste allegedly left behind by the U.S. military in Clark and Subic. How far is your commitment, or is President Bush willing to commit on the clean-up of the toxic waste?

Mr. Kelly: We have of course offered in the past environmental training. There was an agreement I believe in the summer of the year 2000 that is being carried out of exchanges between our environmental experts on both sides. I don't know whether this matter is going to come up. If it does, we are certainly going to consider it. But there has been very little discussion of the matter at the government-to-government level before, and I don't think that we have any pending requests on that now.

The feeling was that when we left the turnover and the clean-up under the circumstances of the Mount Pinatubo eruptions was quite complete. But as new facts are developed, we are going to be very happy to discuss these with the government of the Philippines.

Question: Mr. Kelly, Sandra here again from GMA7. In terms of maintaining the balance of power in the region, and maybe the presence of the U.S. in Asia, how important is the Philippines? Do we expect any form of -- of course the U.S. base is no longer allowed under the Philippine Constitution, but in what form would the relationship between the Philippines and the U.S. be in terms of uniting -- working together in terms of maintaining security in the region, or helping us in the security?

Mr. Kelly: The bases at Subic and Clark are gone. They are something out of the past. The relationship that our militaries have right now is really quite good, and we are quite satisfied with what it is. There were always details and things -- Admiral Blair's visit to the Philippines, our regular consultations under the mutual defense treaty -- all provide opportunities to do that. And of course the Philippines' secretary of defense and I believe the chief of staff are accompanying President Arroyo, and they are going to be having their own meetings here.

But I see changes really only in degree, and not in scope. The U.S. forward-deployed presence of military forces in East Asia continues. Our ability to stop off in the Philippines and perform in exercises with the armed forces of the Philippines -- the visit is most welcome, as it is in other places in Southeast Asia and East Asia in general. So we are quite satisfied with the degree of cooperation, and we are certainly not pressing for anything that's much larger.

Question: (Off mike) -- Agence France Presse again. Can I just touch on the situation in Afghanistan now? Now that the Taliban problem seemingly is out of the scope now, how do you -- what is your immediate concern now in Afghanistan?

Mr. Kelly: Afghanistan is not my area of expertise, and I don't think that the Taliban problem is really over. We have to keep our eye on the ball, and this one is about dealing with the menace that was caused and that was so vividly obvious on the atrocities of September 11th, and that's with Osama bin Laden and the al Qaeda force. And that job is not yet done, and we are going to keep working on it until lit is done.

Question: Mr. Secretary, Gigi Grande again from ABS-CBN News. This a question from the Business World correspondent. He wants to know if there are any economic agreements or trade agreements to be signed between Presidents Bush and Arroyo?

Mr. Kelly: No, I don't think so. But I do expect that there's going to be a lot of discussion on the economic side -- not only financially but on trade. The U.S. Trade Representative, Ambassador Zoellick, is just freshly back from the World Trade Organization meetings in Doha, which have been really quite successful. And I know that Ambassador Zoellick is going to call on your president early next week. And so we are ready to talk about all of these things that can enhance what's already a very significant and welcome trading arrangement that we have with the Republic of the Philippines.

Question: Assistant secretary, one of the reporters here wants to follow up the Abu Sayyaf question. It says that RP has set the deadline in crushing Abu Sayyaf, which means the Burnhams would be freed -- perhaps before the year ends, or maybe before the president and -- President Arroyo and President Bush would meet in Washington. So if this deadline is not met, do you think it's wise for the U.S. to military advisors again to Mindanao?

Mr. Kelly: I'm not sure I follow all of the question, because I am not really familiar (with a deadline) either set by the terrorists or anybody else. We all hope, and we know the government of the Philippines is working very hard on freeing Mr. and Mrs. Burnham and other Filipinos who are held by Abu Sayyaf. And this job, just as our own effort against al Qaeda, is going to go on until it's finished.

Question: Mr. Kelly, Sandra from ABS-CBN News. There's a question here from one of the correspondents. Kindly evaluate the RP-U.S. mutual defense treaty. And in what direction does the U .S. want it to go in the next years?

Mr. Kelly: This is along the lines of the earlier answer. I think we are perfectly happy with the Mutual Defense Treaty, and it just needs to proceed along the way. As far as the Treaty is concerned, our day-to-day interactions of the military, our training, our help to the Philippine forces on equipment and maintenance of the equipment that they have -- this is all the sort of thing that goes on within that umbrella, and we expect it to continue. And, frankly, we expect it to get better.

Question: Another question from one of the correspondents. After the September 11th attacks in New York and Washington, has the United States tightened its policy on the issuance of visas?

Mr. Kelly: Yes, we are looking very carefully at visas. I am not aware of anything that would impact on the ability of Filipinos to visit the U.S.A. In some cases, people who were born in Islamic countries may have some delays in getting their normal visas. It's always a good idea to apply for tourist and student visas well in advance. This is always a hard-working matter of a lot of interest to people who want to visit, and it's certainly going to continue. But there is no secret that we are looking very carefully at how people come into America, because some people came in who did us some very great harm, and we are going to look at what we do to make sure that people like that can't very easily get in in the future.

Question: Mr. Assistant Secretary, this is Karen Kelley, the press attache at the American Embassy. I am afraid we have run out of time, although we haven't run out of questions. But we would like to thank you very much for the time that you have taken with us this evening -- your time in the morning. Thank you, again.

Mr. Kelly: Well, Ms. Kelley, it's good to hear your voice again, and I look forward to another visit to Manila before long, and maybe we can have some time to talk in a little more depth. Meanwhile, we are looking forward to a great visit from President Gloria Macapagal-Arroyo to Washington beginning on Sunday and ending on late Monday next week -- or rather Tuesday. Thank you.

Mr. Foucheux: And from everyone here at "Dialogue," our thanks as well to Assistant Secretary of State James Kelly, and all of our panelists who joined us from Manila. In Washington, I'm Rick Foucheux. Thank you very much for being with us, and have a good day.