U.S. Secretary of State Colin Powell on Friday promised Indonesia 50 million U.S. dollars to help security forces fight terrorism but he said restoring military ties was still some way off. Powell praised Indonesia's level of cooperation in fighting terrorism and said the world's most populous Muslim nation had made a dramatic return to democracy. While Powell said he was confident President Megawati Sukarnoputri and the security forces could deal with terrorist threats, he added the U.S. wanted to boost their capabilities.

Most of the 50 million U.S. dollars to be spent over several years will be used by police, including 12 million U.S. dollars to set up a special counterterrorism unit. Washington largely cut military ties following violence in East Timor in 1999 which accompanied the territory's vote to break from Jakarta's rule.

Powell met most of Indonesia's top leaders, including Megawati and her senior security officials. Protests planned by radical Muslims fizzled, with the biggest involving 50 people.

PLENTY OF EYES ON INDONESIA

Fears militant strains of Islam may take hold in the region have fueled calls in Washington for more help for the vast archipelago, which has struggled to manage its chaotic transition to democracy after decades of authoritarianism.

Indonesia is regarded as Southeast Asia's weakest link in the U.S.-led war on terror, although diplomats and security analysts say Jakarta has stepped up its anti-terror cooperation since the start of the year, despite fears of a Muslim backlash.

Powell arrived in Jakarta overnight and leaves on Friday for the Philippines, the last stop on his trip.

PHOTO CAPTION

U.S. Secretary of State Colin Powell (L) confers with Assistant Secretary of State James Kelly before an ASEAN meeting in Brunei on August 1. REUTERS/Jonathan Drake