Sue Pleming, Jakarta – US Secretary of State Condoleezza Rice began a trip to Indonesia on Tuesday seeking closer ties with the moderate Islamic country in a region where China's influence is growing.

Since the September 11, 2001 attacks in New York and Washington, Indonesia has become a firm US ally in fighting terrorism. Security issues were expected to dominate Rice's discussions with President Susilo Bambang Yudhoyono, along with closer military ties between the two nations.

"The Indonesians are making a real effort to rid the region and not just themselves, but in cooperation with the region, of the terrorist threat that has plagued southeast Asia," Rice told reporters traveling with her to Jakarta.

The end of autocratic President Suharto's 32-year rule in 1998 allowed democracy to flourish in Indonesia and encouraged better US relations. Yudhoyono, a former general with US training, became Indonesia's first directly elected president in 2004 on a strong security platform.

Last November, the United States restored military ties with Indonesia as a reward for cooperation against al Qaeda-linked militants and cited reforms in the military and efforts by the government to improve its human rights record.

Before she began her official meetings, some 400 slogan-shouting anti-American Muslim protesters gathered outside the heavily-guarded US embassy to protest against Rice's visit, saying she was a "vampire from America." As 300 policemen looked on with two water cannons on standby, one of the speakers told the protesters: "Our welcome speech will say, 'Condoleezza Rice go to hell'. Because wherever she goes, the US targets the place not to solve problems but to create problems."

Indonesia has seen large anti-American protests over the past few weeks, but Rice said earlier she was not concerned about that during her visit, adding such protests showed democracy was working.

Rice's first appointment was a visit to one of Jakarta's oldest Islamic schools, where she was welcomed by children waving Indonesian and US flags and students in traditional white Muslim headscarves playing hand-held drums. Rice prayed with the children, took part in a science experiment and announced a $8.5 million grant for an educational Sesame Street program.

Human rights Rice, due to give a speech on democracy on Wednesday before going on to Australia, dismissed criticism from human rights groups that Washington had moved too quickly to restore military relations with Indonesia. She said it was a better strategy for the United States to have contact with the Indonesian military than to isolate it.

Some human rights groups say progress in reforming Indonesia's military and police has been too slow and that the United States has not paid enough attention to abuses committed by the military, losing important leverage to push for change.

But the United States sees Indonesia as a voice of moderation in the Islamic world and Rice hopes it might have some influence in the Middle East, particularly over the militant group Hamas, which won Palestinian elections in January.

One area where Rice may face prickly questions will be Jakarta's demand for direct access to Indonesian militant Hambali, who has been held by the Americans since 2003. Hambali is suspected to be the mastermind behind the bombings on Indonesia's holiday island of Bali in 2002 in which more than 200 people were killed.

Another topic that could have been contentious, a long-running dispute over whether US company Exxon Mobil Corp or Indonesia's state-owned energy firm would operate a promising new oil field, was settled on the eve of Rice's visit with a compromise giving the US firm the dominant role.

[With additional reporting by Jerry Norton, Tomi Soetjipto and Telly Nathalia.]