I was delighted to learn, as I prepared for this address, that Dato' Rabi attended several of our military schools, including the Naval War College, Defense Intelligence College, and Naval Post Graduate School. I also know that many of you have participated in various courses in the U.S. as well.

It is indeed an honor to address an element of the Malaysian Armed Forces, for yours is a military with a long and distinguished history of service in good causes around the world. I noticed in late March that the United Nations awarded medals to the families of Malaysian soldiers and police who had perished over the years in UN peacekeeping operations around the world, including the UN operation in Somalia. I can assure you that my Government recognizes and appreciates the role of Malaysian peacekeepers, even if Hollywood does not!

You have invited me here today to speak on "U.S. Foreign and Defense Policy, Political and Economic Trends." I would like to make some comments about how the U.S. government sees the world here in the Spring of 2002, and then I would be pleased to address any questions you may have.

TERRORISM

I must first turn our attention to the global challenge of terrorism. Obviously, the events of September 11 have transformed almost every aspect of U.S. foreign policy. Indeed, it is difficult to overstate the effect of the September 11 attacks on America's national psyche, as well as the determination shared by all Americans to combat this deadly menace.

The U.S. government is firmly focused on a worldwide struggle against terrorism. Our military campaign in Afghanistan is still under way, albeit on a scaled-back basis, and will continue as long as is necessary. We see this effort as absolutely essential to prevent further tragedies. Bin Laden and al Qaeda have made clear that they intend to strike at us again. There is every reason to believe they are planning to use weapons of mass destruction, including biological and even nuclear agents, if at all possible. This would be a disaster for whatever region of the world they hit - and it would not necessarily be in the United States.

We have been encouraged by the responses of governments around the world to this common challenge we all face. And that certainly includes the government of Malaysia. Indeed, we were impressed with Prime Minister Mahathir's initiative in organizing the OIC Conference on Terrorism here in KL earlier this month, which undertook the important task of trying to achieve an accepted definition of terrorism.

As President Bush has stated repeatedly, the struggle against terrorism is multi-faceted. Military action is not the only arrow in our counterterrorism quiver. We are also using tools such as law enforcement cooperation, intelligence exchanges, financial controls and diplomatic efforts. As our President has said, we welcome whatever level of support in any or all of these areas that various countries are able to provide.

Malaysia is a brilliant example of this. As I have often stated, in the struggle against terrorism, Malaysia is part of the solution, not part of the problem. Since September 11, our bilateral cooperation against terrorism has been superb, beginning with Prime Minister Mahathir's deeply appreciated visit to our Embassy to sign our condolence book. Our own efforts against terrorism have been greatly enhanced by the cooperation we have received from your government. FBI Director Robert Mueller made exactly this point to your leaders and public during his highly successful visit to Malaysia last month. As you no doubt noticed, he also refuted the assertion that the U.S. considers Malaysia to have been some sort of "launch pad" for the September 11 attacks.

To date, the many "non-military" weapons against terrorism have yielded tremendous results. At least 142 countries have issued orders freezing the assets of suspected terrorists and terrorist organizations. Over $104 million in suspected terrorist funds has been blocked around the world (just over $34 million in the U.S.; just over $70 million abroad). Nearly 1000 al Qaeda operatives have been arrested in more than sixty countries since September 11. Our efforts continue in all of these areas, in close cooperation with countries all over the world.

AFGHANISTAN

Let me turn back to Afghanistan for a moment. While the military campaign there against al-Qaeda is still ongoing, our involvement in that country goes beyond exclusively military actions. Over the past decade the U.S. has been the largest provider of food aid to the Afghan people. Our efforts continue in this regard. We are providing educational and health assistance to the women and children of Afghanistan. We are supporting UNHCR's efforts to help exiled Afghans return to their homeland in peace and dignity. And, at the Afghan Reconstruction Conference in Tokyo last January, the U.S. pledged almost $300 million in additional assistance over the coming year. I believe Secretary of State Colin Powell best summed up our commitment to the people of Afghanistan when he visited Kabul in January: "We are committed to doing everything we can to assist you in this time of transition to a new Afghanistan, an Afghanistan where people will be able to live in peace and security, raise their children, and dream of a better future." We also recognize and salute Malaysia's humanitarian efforts in Afghanistan, which are considerable.

FOREIGN AID

As my government has made clear on numerous occasions since September 11, we do not accept the notion that there is are "root causes" which lead inevitably to terrorism. People around the world have very serious grievances that need to be addressed, but those can never justify the taking of innocent lives. The United States does recognize, however, that poverty and injustice can create climates where terrorists thrive. As we wage war today to keep the world safe from terror, we must also work to make the world a better place for all its citizens, which is where foreign aid comes in.

Over the last century the spread of free markets, democracy and the rule of law have brought prosperity to an ever-widening circle of people in this world. In our lifetime, per capita income in the poorest countries has almost doubled. Illiteracy and child mortality rates have been significantly reduced. Nations throughout the developing world have made tremendous strides in recent decades.

Yet in too many nations, as President Bush has said, "poverty is broad and seemingly inescapable, leaving a dark shadow across a world that is increasingly illuminated by opportunity." We cannot escape the fact that half the world's people still live on less than $2 a day. For billions of our fellow human beings, especially in Africa, poverty is spreading and per capita income is falling. In 2000, the U.S. provided over $3 billion in humanitarian assistance and food aid. That same year, the U.S. led the developed world as the top importer of goods from developing countries, importing over $450 billion worth of goods, which was eight times greater than all official development assistance to developing countries from all donors.

Clearly, however, more must be done. To that end, President Bush recently announced a substantial increase in our foreign aid levels. At the same time, we believe strongly that increased aid money will be useless unless it is combined with appropriate economic reforms and responsible governance in recipient countries. Moreover, as Malaysia's own development illustrates so well, the path to economic growth lies with trade, not aid. The development of a strong, vibrant private sector is key to overcoming poverty.

President Bush has called for a "new compact for global development, defined by new accountability for both rich and poor nations alike." He pledged the U.S. to increasing development assistance by $5 billion over the next three budget cycles, from $10 billion to $15 billion - a 50 percent increase. This money will go into a Millennium Challenge Account to be used for such purposes as expanding the fight against AIDS, helping small business take off in Africa and expanding computer literacy in the developing world. President Bush was quite clear about who will receive expanded U.S. assistance: "Countries that live by these three broad standards - ruling justly, investing in the people, and encouraging economic freedom - will receive more aid from America."

THE WORLD ECONOMY

Of course, one of the most important contributors to economic development is a healthy world economy. Malaysia, like many other countries in the region, realizes that markets are even more important than economic assistance. It is the private sector that is the engine for poverty reduction and economic growth. In that sense, we know how important the U.S. recovery -- and a Japanese recovery, as well -- is for our Asian partners, and we are working hard to sustain and strengthen the U.S. economy.

A few points demonstrate how closely our two economies are intertwined:

-- The United States is Malaysia's largest export market. We absorb at least one-quarter of all Malaysian exports.

-- You are our 11th largest trading partner, a formidable ranking given Malaysia's relatively small population. In 2001, the U.S. imported $22.2 billion worth of goods from Malaysia. Malaysia imported $8.55 billion worth from the United States.

-- The United States is Malaysia's largest foreign investor. Between 55,000 and 70,000 Malaysians are employed by American companies, most of them electronics manufacturers based in Penang, Johor, and the Klang Valley. These figures are of course highly sensitive to U.S. economic fluctuations.

There are hopeful signs that the U.S. economy is slowly starting to pick up. Many analysts expect a moderate recovery to be underway by the second half of this year.

Low interest rates -- the lowest they have been in 40 years -- have been helpful in promoting U.S. consumer spending, as has the tax relief plan that came into effect in July 2001. There are signs that businesses are beginning to spend again, too, particularly on replenishing inventories.

Employment numbers improved in February, with fewer persons applying for unemployment insurance. Productivity growth has held up well, and increased over each quarter of 2001. That is particularly impressive, given the historical tendency of productivity growth to turn negative whenever the economy enters recession.

Our Secretary of the Treasury, Paul O'Neill, predicts that we will approach 3 to 3.5 percent annual growth by the end of 2002. The consensus of the Federal Reserve members is 2.5 to 3 percent.

Even a relatively subdued recovery, however, will constitute a remarkable performance for the American, and world, economy in the face of the unprecedented blow from terrorists to the foundations of our market systems. In August of 2001, even though our economy had slowed, it appeared to be on track for an uptick in the fourth quarter. The terrorist attacks of September 11 stopped that rebound in its tracks, at least temporarily. Financial markets were closed for almost a week, air transportation came to a standstill, and consumer activities froze as families faced new uncertainties about the future. We should not underestimate, nor should we forget, the damage the terrorist attacks inflicted on the entire world economy, not only that of the United States.

One of the ways all of us can work together to ensure that terrorism does not thwart our attempts to reach common economic goals is to continue productive discussions in the Development Round of the World Trade Organization talks. Open trade boosts economies and opens markets for farmers, businesses and workers, thereby creating jobs and providing consumers with more choices, lower costs, and better quality goods and services. It also strengthens relationships between countries and highlights how much we have in common.

U.S. UNILATERALISM?

These days we see fairly frequent, and simplistic, opinion pieces in the media about how the U.S. is becoming increasingly unilateral in its foreign policy. Let me make clear that the U.S. recognizes the importance of and fully participates in multilateral activities and organizations all over the world. Indeed, in the recent State Department budget request, Secretary of State Powell asked for almost $900 million to fund U.S. assessments to 43 international organizations and over $700 million to pay our projected United Nations peacekeeping assessments. We also meet frequently with our friends and allies around the world to coordinate our strategies on the important issues of the day. It is simply wrong to say the U.S. is unilateralist - especially when we are simultaneously being urged to assume a leadership role on any number of thorny issues!

WEAPONS OF MASS DESTRUCTION

What are the next steps in the war against terrorism? Does the United States plan military action elsewhere, perhaps against President Bush's "axis of evil?" For the moment, no decisions have been made. Let me make clear that the United States is not looking for fights, and we never undertake military action lightly. It is clear to us, however, and to any objective observer as well, that the world faces a significant threat from weapons of mass destruction in countries such as Iraq, Iran and North Korea. North Korea may already have a multiple stage rocket capable of carrying a nuclear-weapon sized payload as far as the U.S. Iran's missile inventory is among the largest in the Middle East with some 1,300 missiles.

And then there is the case of Iraq. The United States has no grievance against the people of Iraq. Indeed, we have worked with others at the UN to ensure that UN sanctions allow for adequate purchases of food and medicine for all the people of Iraq. Unfortunately, however, the government of Iraq will not let that happen, preferring to spend money from the UN "oil for food" program on palaces and weapons while the Iraqi people suffer and die. I cannot accept the conventional but erroneous wisdom that UN sanctions are killing Iraqi civilians. Their suffering is caused by the Iraqi government. Those who would tell you otherwise are, in my view, culpable of complicity with a brutal, genocidal regime.

Another truth frequently lost sight of is that the world community is not asking Baghdad to meet new conditions. Indeed, we are asking Saddam to honor commitments that he agreed to over a decade ago. There is nothing new here. The United Nations expects Saddam to live up to the UN resolutions calling for admission of weapons inspectors and disclosure of weapons of mass destruction.

The potential consequences of Iraqi non-compliance are severe. There is strong reason to suspect that Iraq has been using the period since the departure of weapons inspectors to accelerate production of chemical and biological weapons. Iraqi denials are unconvincing, since, if they had nothing to hide, why wouldn't they let in weapons inspectors? Let us remind ourselves that Saddam Hussein is the only world leader who has used biological weapons on his own people. Let us also remind ourselves that probably no world leader is responsible for the deaths of more Muslims over the past decade than Saddam Hussein.

In the cases of Iraq, Iran and North Korea, we call on all states which share our concern to join us in pursuing a wide variety of tools to stop the threat of weapons proliferation. These include the maintenance of strong export controls, the strengthening of various nonproliferation regimes like the Missile Technology Control Regime and the thwarting of nations willing to assist others in obtaining weapons of mass destruction and ballistic missile programs.

THE U.S. AND ISLAM

In the past fifteen years, the U.S. has put the lives of its soldiers on the line for Muslims in Somalia, Bosnia, Kosovo, Kuwait and northern Iraq. Would this have happened if the U.S. were anti-Muslim? Far from being anti-Muslim, the U.S. is anti-dictator, anti-genocide and anti-aggression.

HUMAN RIGHTS AND DEMOCRACY

In fact, the protection and promotion of religious freedom is one of our foremost human rights objectives. Let me take this opportunity to say a few words about human rights and democracy, two of our longstanding foreign policy objectives.