The United States is ready for greater military cooperation with Indonesia and is confident Jakarta can handle any terrorist threats, visiting US Secretary of State Colin Powell said.

Powell was speaking after a morning meeting with Foreign Minister Hassan Wirayuda after flying in early Friday for the penultimate leg of a six-nation Southeast Asian tour to promote the US-led war on terrorism.

"As a result of the leadership shown by President Megawati [Sukarnoputri], we are able now to start down a road to greater military-to-military cooperation and more work with the police forces as they deal with those elements within every society these days that are determined not to respect the rights of people, not to respect democracy but to undertake terrorism as a way of pushing their feeble agenda," Powell told reporters after the meeting.

"We have full confidence in President Megawati and her officials and the TNI [armed forces] to deal with threats." The US broke off most ties with Indonesia's military in 1999 in response to its role in bloody rampages by pro-Jakarta militias in East Timor.

Powell said the US is "starting down a path to a more normal relationship with respect to military to military [cooperation]. We are not there yet but we are starting." The Congressional Leahy amendment bars a resumption of military ties until Jakarta accounts for past abuses in East Timor and elsewhere.

Powell said Congress "is watching carefully and expecting action to be taken with respect to past abuses that might have occurred." A 16-million-dollar program to fund counter-terrorism activities by the Indonesian police is now awaiting President George W. Bush's approval.

If approved, 12 million dollars of that funding will go to create a special anti-terrorism police unit, according to US officials. In addition, Indonesia may be eligible for a proposed US program that would set aside 17 million dollars for counter-terrorism "fellowships," according to the officials.

As the world's most populous Muslim country, Indonesia could play a critical role in ensuring that Osama bin Laden's brand of militant Islam does not spread, US officials believe. Jakarta has always played down the threat.

"The fact is that Indonesia is not Afghanistan and we don't believe that Indonesia will be a future Afghanistan," Wirayuda told reporters, saying extremists were very much in a minority.

Powell was later scheduled to hold talks with top economy minister Dorodjatun Kuntjoro-Jakti, Megawati and top security minister Susilo Bambang Yudhoyono.

The secretary of state also plans to meet leaders of moderate Muslim groups Friday afternoon in an effort to explain that the war on terrorism is not directed at Islam.