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Philippines president: Abu Sayyaf losing clout

"While there's been much progress on terrorism, there's still much work to do and it is very important that the countries work together in order to address this threat together," Gloria Macapagal Arroyo told CNN.

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WASHINGTON (CNN) -- Philippines President Gloria Macapagal Arroyo held talks with President Bush on Monday and was later the guest of honor at a state dinner. The two leaders discussed the war on terror. Arroyo talked with CNN's Wolf Blitzer about al Qaeda-linked militant group, Abu Sayyaf, that is operating in the Philippines, and about the threat of international terrorism.

BLITZER: Thanks very much, madam president, for being with us. How much of a problem is this terror threat to you in the Philippines, specifically from Abu Sayyaf, this group associated with al Qaeda?

ARROYO: When September 11 happened, we had already been contending with a terrorist threat of Abu Sayyaf.

Now Abu Sayyaf has lost their last hostages because the last two hostages escaped from their clutches while their guards were sleeping and it was raining hard, so they could not chase after them with footprints. So I would say that this is a threat that has lost a lot of its clout.

Nonetheless, we have seen from the alert that it's happening now here in the United States. While there's been much progress on terrorism, there's still much work to do, and it is very important that the countries work together in order to address this threat together.

BLITZER: Madam president, is al Qaeda making a comeback right now? How significant of a threat is this terror organization, not only to you and your people in the Philippines, but around the world, including here in the United States?

ARROYO: What I understand is that al Qaeda is only half as strong as it used to be.

Nonetheless, if that one-half is still there, then the work is not yet over. I believe that al Qaeda is on a strategic retreat, and that is a tactical offense.

BLITZER: When you say strategic retreat, they're waiting, they're trying to regroup, but they will resurface with a vengeance? Is that what you're suggesting?

ARROYO: They're on a strategic defensive. In other words, they have a strategic setback, so they're going on a tactical offensive. It is -- it's like the death throes of somebody who is defeated or it is like a crab who's cornered, and therefore it's making its last brave stand. ...

Again, I repeat, while the threat or the strength has declined, it is now on a tactical offense to make up for strategic losses.

BLITZER: What can U.S. allies like the Philippines do together with the United States to significantly reduce, if not eliminate, this threat from international terrorism?

ARROYO: Because terrorism is now a transnational phenomenon, it is important that we also approach it in a transnational manner, and the most important way is to exchange information and intelligence and also to be able to cut the networks of the terrorist cells wherever they may be found. So this is very important.

The fight against terrorism is not conventional warfare. It is not so much moving troops all over the place. It is really a fight of intelligence and copying the networks.

BLITZER: The Abu Sayyaf terrorists in the Philippines, they've taken out their vengeance mostly against Philippine target, other targets, but not U.S. targets. Would they, together with al Qaeda, based on the intelligence that you have, go after U.S. targets in the Philippines?

ARROYO: If they could, perhaps, but what we've done is that we have -- we have brought them to a very defensive posture.

What we have done is that we are actively seeking them out and rooting them out from their terrorist lairs. So even tactically now, they are on the defensive because the Philippine military is in a strong offensive.

BLITZER: There was some controversy over how much of a role the U.S. military should play in the Philippines in fighting together, with your military, these terrorists. Have you and President Bush worked out an acceptable arrangement, acceptable to your country as well as to the Pentagon?

ARROYO: What President Bush said yesterday in his press conference is America will help the Philippines upon my request and in the manner in which I want it to be done in accordance with our constitution.

Now our technical people will be defining the limits of our constitution in accordance with the language that this is also known and used by the Pentagon authorities. So this is where we are now. It's a work in progress.

BLITZER: So basically, so far, right now you can have joint training exercises. They can serve as sort of advisers, but you're not going to let U.S. military forces actually go out there and fight and launch offensive mission against terrorists? Is that where it stands right now?

ARROYO: That's right, because in any case, when you're fighting a transnational threat like terrorism, the best tool that we should help one another with is the tool of intelligence and exchange of information.

BLITZER: What's next on the front? What's the most important thing that you and the United States, other allies, can do right now to defeat this threat?

ARROYO: We cannot underestimate the importance of exchanging information and intelligence and also try to cut off the money trail from one terrorist cell to another across borders.

BLITZER: The money trail is still flowing to Osama bin Laden and al Qaeda? Is that what you're suggesting?

ARROYO: What I'm saying is that there is still movement of money from across borders, and this is what -- what makes these -- this makes the threat of terrorism a transnational threat. That's the connection among the cells. And therefore, that has to be stopped and interdicted.

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