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CNN Presents

Seeds of Terror

Aired June 15, 2003 - 20:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Attack after attack, the plots and perpetrators all linked to one unexpected place.

UNIDENTIFIED MALE: Southeast Asia has the largest number of al Qaeda and associate members.

UNIDENTIFIED FEMALE: I think they go over. They can train in peace.

UNIDENTIFIED MALE: They will attack when you think that they will be successful.

UNIDENTIFIED MALE: Building terror from the ground up.

(END VIDEOTAPE)

AARON BROWN, HOST: 9/11 launched the United States into the war on terror. It was less than a month later that American troops attacked al Qaeda bases in Afghanistan. And then last March came the U.S. led invasion of Iraq.

But the real frontlines in the fight against terrorism may in fact lie elsewhere. Welcome to CNN PRESENTS. I'm Aaron Brown.

When CNN's Jakarta bureau chief, Maria Ressa, saw the planes crash into the World Trade Center, it triggered a memory, a memory of a terrorist plot she first reported on six years ago in Southeast Asia. Putting the pieces together, she now reveals how al Qaeda has spread its network across the region, from the remote islands of Indonesia, through the glistening city-state of Singapore, to the jungles of the southern Philippines.

It is a network that existed long before September 11, and one that now appears to be growing, both in its influence and its ambitions. The presence of al Qaeda and its supporters has set off a war for the hearts and minds of the Muslims of Southeast Asia. And at this point, it is unclear who was winning.

So here now, Maria Ressa and a CNN PRESENTS special investigation, "Seeds of Terror."

(BEGIN VIDEOTAPE)

MARIA RESSA, CNN CORRESPONDENT (voice-over): Indonesia, a string of 17,000 islands, stretching twice the distance from London to Moscow. In eight years, I've traveled throughout much of this country from remote areas that belonged to the Stone Age to its 21st century cities.

Here, there are at least 300 ethnic groups, speaking nearly 600 languages and dialects. The uniting force, Islam. Home to 200 million Muslims, Indonesia has the largest Muslim population in the world, a population at the heart of a struggle that is the ideological battle of our generation.

TONY TAN, DEPUTY PRIME MINISTER, SINGAPORE: That is a battle that is going on now for the hearts and minds of the Muslim community.

RESSA: Neighboring Indonesia, Malaysia, one of the world's most progressive, moderate Muslim nations. Sandwiched between the tiny city-state of Singapore, an oasis of order in an often chaotic region. And Asia's largest Catholic nation, the Philippines, which has been fighting Muslim rebels for more than three decades.

Together, these countries make up nearly 25 percent of the world's Muslims. They are the prize in a battle for the future of Islam. Here, the terrorist network, al Qaeda, has found fertile soil and taken root.

ROHAN GUNARATNA, AUTHOR, "INSIDE AL QAEDA": Southeast Asia has the largest number of al Qaeda and associate members. These groups have grown in size and in strength in the past six months. And we can expect these groups to grow.

RESSA: With fledgling democracies and struggling economies, Southeast Asia has been an easy target for al Qaeda. Its goal, to overthrow secular government and convert the entire region and even part of Australia to Shariat law, the same strict code the Taliban imposed on Afghanistan.

This is the true frontline of the war on terror, replicated in Muslim communities around the world. It is not a fight between Islam and the West, but a battle for the soul of Islam between a radical minority and a moderate majority.

TAN: Here, it is not possible for governments to win the battles. It is not possible for non-Muslims to win the battle. The Muslims must resolve this issue by themselves.

RESSA: Thirty-nine year old Casman (ph) lives on the fault line of the Muslim world. He calls himself a moderate Muslim. He likes Americans and sympathizes with the victims of 9/11. But he also believes Osama bin Laden is not a terrorist.

UNIDENTIFIED MALE: (through translator) Osama bin Laden is a Muslim. Because he's a fellow Muslim, we must defend him. He is innocent.

RESSA: Casman (ph) makes less than $3 a day driving his Bajai (ph), not enough to feed his four children. His wife works as a domestic helper in Saudi Arabia, forced to find a job overseas after the collapse of Asian economies in 1997, an economic meltdown which triggered widespread violence, much of which regional officials now say was fueled and used by al Qaeda to recruits for its global jihad.

UNIDENTIFIED MALE (through translator): I don't believe that. There is no al Qaeda in Indonesia.

RESSA: Casman (ph), like many Muslims, thinks the West is guilty of a double standard.

UNIDENTIFIED MALE (through translator): The Muslims are always blamed. In Indonesia and in Iraq, it is the Muslim people they say and do nothing about Israel.

UNIDENTIFIED FEMALE: You only have to turn around. MTV's back.

RESSA: The distrust here is not confined to the poor. Dewi Pertuna Anwar is a middle class, former government official who lived and studied in England for 10 years. She is a Muslim who embraces many Western values, but she fears the influence of Western culture on her two teenagers, 19 year old Donig (ph) and 13-year old Becca.

She makes sure her children are grounded in their culture and religion. And she sends Donig (ph) to a well known Islamic school.

DEWI PERTUNA ANWAR: I want them to be able to have values and not to be lost later on. We always want to believe that our life is meaningful. And usually, you know, religion gives them that sense of purpose.

RESSA: Dewi fosters lively debate in her family, also a lot of laughter. There's an easy camaraderie between her teenagers, also the usual sibling banter.

UNIDENTIFIED FEMALE: Well, he's a brother. So I'm not going to say that he's nice, he's kind, he's annoying, basically. All little brothers like that.

UNIDENTIFIED MALE: (through translator) I don't listen to her. I ignore here. I don't have to care about her, so I don't talk to her.

RESSA: But there is also a divide between them that mirrors the split in Indonesian society. Donig (ph), like her mother, has lived in the West. She spent a year as an exchange student in the United States. Although there are days when she must wear the jailbob (ph), the Muslim headdress to school, Donig (ph) says she chooses not to wear it every day for very practical reasons.

UNIDENTIFIED FEMALE: Indonesia is hot. So I feel the jailbob (ph) is very constrict to me. And I choose not to, because if you wear the jailbob (ph), you can't wear the short sleeved T-shirts or anything -- that dress.

RESSA: Dekha takes a more fundamentalist view.

UNIDENTIFIED MALE (through translator): She says she follows the ways of Islam, but she doesn't do it. You can't just say it. You have to live it. And you can't wear those kinds of clothes. I want to be a person who sets limits and follows the teachings of Islam. So I don't sin and I can get into heaven.

RESSA: Although Dekha sets limits, he has also been influenced by the West. He listens to Western music, goes out to parties, and loves to break dance.

To go back to a more conservative fundamentalist past or to embrace modernity, that is the central question for the future of Islam. And it is at the center of the war on terror.

Osama bin Laden has come to represent one extreme interpretation of Islam. His message is gaining ground. Dewi says he's seen here as the underdog.

DEWI ANWAR: Well, you know, the U.S. has been able to carry out its policy with impunity all around the world, you know. And no one dares to say anything. Then Osama is the only one, you know, the man who dares to fight -- to declare war in America.

RESSA: Is it fair to say that at some level, every Muslim empathizes with part of bin Laden's cause?

MAHATHIR MOHAMAD, PRIME MINISTER, MALAYSIA: They empathize with him, but they -- I don't think they agree with the methods.

RESSA: Malaysia's prime minister, Mahathir Mohamad, long distrust full of American media granted us a rare interview. Considered a moderate voice in the Muslim world, nonetheless, he is harshly critical of the United States for policies like its attack on Iraq, which he says play right into al Qaeda's hands.

MOHAMAD: I think the world begins to fear the power of America. We will have a problem dealing with our own terrorists. If we appear at all to be working with this country, which is so much against Muslims.

RESSA (on camera): That growing distrust of America has become one of al Qaeda's strongest weapons now used to win new recruits. And yet, until today, countries in the region remain cautious about publicly admitting al Qaeda's presence within their borders. Their internal reports are more honest.

I've read hundreds of intelligence documents from the region, as well as classified documents from the FBI, the CIA, and other Western intelligence agencies. They show an extensive deep-rooted al Qaeda network in Southeast Asia. And it all began here in Manila, 15 years ago.

(voice-over): From the Philippines, it spread to Malaysia, Singapore and Indonesia. Although more than 150 suspected terrorists have been arrested, intelligence officials say the network remained strong. Its cells still waiting to be activated.

Coming up... UNIDENTIFIED MALE: There are real terrorists in this world. That is America and Jews.

RESSA: The man some call the Asian Osama bin Laden.

(COMMERCIAL BREAK)

RESSA: October 12, 2002, the worst terrorist attack since September 11. Three bombs, the largest planted outside the Sari Club in Bali. The explosions designed, investigators say, to funnel people closer to the last and deadliest blast. So fierce, it ruptured the internal organs of many in the club.

More than 200 people died, hundreds more injured. Indonesian officials say the attack was the world of Jemaah Islamiya, al Qaeda's network in Southeast Asia. The man who controls that network, officials across the region say, is Indonesian cleric Abu Bakar Ba'asyir, dubbed the "Asian Osama bin Laden."

ABU BAKAR BA'ASYIR (through translator): The one truth is Islam. The one thing that can save us is Islam, but we must commit to it. That is what I teach. If Islamic law is disturbed, there is no compromise.

RESSA: In some circles in Indonesia, Ba'Asyir is a revered figure. He befriended well connected politicians like Indonesia's vice president, even though officials in Singapore and Malaysia linked him to terrorism and issued warrants for his arrest.

BA'ASYIR (through translator): If Islam is attacked, there are only two responses. We are victorious or we die. That is what it means to rise up and defend Islam. That is what the infidels and Jews call "violence." But if you're going to defend Islam, you either win or you die. You can't sit on the sidelines.

RESSA: Officials across Southeast Asia name Abu Bakar Ba'Asyir as the head of al Qaeda's network in the region, Jemaah Islamiya, an organization he claims does not even exist. Days after the Bali attacks, Ba'Asyir was arrested and eventually charged with treason.

Just before going to jail, he gave an interview to CNN. He denies any links to terrorism and emphasizes the message many Indonesians have come to believe.

BA'ASYIR (through translator): All of the violence in Indonesia has been engineered by America and Israel. Israel is Islam's strongest enemy, most radical. America is being used by Israel in order to attack Islam.

RESSA: Why you? If you're innocent, why are you being targeted then?

BA'ASYIR (through translator): I uphold Islam. I fight for Shariat law. Israel does not like this. Because of that, I've become a target. RESSA: Yet hundreds of intelligence documents obtained by CNN from Singapore, the Philippines and Indonesia tell how Ba'Asyir helped plot attacks on U.S. and Western interests in Singapore and carried out bomb attacks in Indonesia and the Philippines.

This document says Ba'Asyir commissioned a plan to assassinate Indonesia's president Megawati Sukarnoputri.

BA'ASYIR (through translator): That's a lie engineered by America and Israel. Assassinating Megawati has never crossed my mind, especially because Megawati is a Muslim woman.

RESSA: Yet Ba'Asyir thinks because Megawati is a woman, she cannot lead Indonesia.

Radical voices like Ba'Asyir's divide the nation and set up Indonesians in a no-win situation. Either you advocate revolt, fanaticism and violence, or you're a bad Muslim. Yet enough agree with him to virtually paralyze Indonesian politicians.

Ba'Asyir operated out in the open for years, because some say officials of the fragile new democracy, including President Megawati, feared a political backlash if they arrested him.

GUNARATNA: She had compromised national security objectives. And she did these because she wanted to politically survive. So Bali was simply the failure of the Indonesian government to act against the terrorist network. When the whole world told them that there was a terrorist network in Indonesia.

RESSA: An al Qaeda linked terrorist network?

GUNARATNA: Absolutely.

RESSA: Ba'Asyir believes that democracy and Islam are fundamentally opposed, that Islam is now under attack worldwide, and Muslims must fight back like Osama bin Laden.

BA'ASYIR (through translator): The so-called terrorists America is pursuing are actually Islamic heroes, but there are real terrorists in this world. That is America and Jews.

RESSA: Although those words find support in the streets, intellectuals like Dewi dismiss the political threat of what she calls Ba'Asyir's French groups.

UNIDENTIFIED FEMALE: Thinking of really dreaming of establishing an Islamic state in Indonesia let alone a pan Islamic state in Southeast Asia seems a bit crazy, you know.

RESSA: Do you believe Ba'Asyir created a network based on this ideology that he's preaching?

UNIDENTIFIED FEMALE: I don't know. You know, we don't have enough proof yet even over the Bali one. RESSA: But there's more than enough proof. According to intelligence officials, nearly every terrorism suspect arrested in the region over the past year has pinpointed Ba'Asyir as the network's leader.

When we return, discovering the blueprint for September 11.

UNIDENTIFIED MALE: I have this feeling that I should have done more.

RESSA: And the terrorist plot yet to be executed.

(COMMERCIAL BREAK)

RESSA: In the early 1990s, al Qaeda's operatives sent by Osama bin Laden, arrive here, Manila's red light district. A classified intelligence report obtained by CNN says Khalid Shaikh Mohammed, who would later become a bin Laden lieutenant and the mastermind of the September 11 attacks, visited a low class bar here in 1994.

According to this report, he walked out with a woman who he asked to secretly deposit money in a bank, which she did. It was the beginning of Osama bin Laden's attempt to export his global jihad. Southeast Asia made the perfect target. The region had armed Muslim groups full of thousands of veterans of the Afghan war. Lax law enforcement and often divided governments.

Long before the U.S. was aware of it, al Qaeda had established a base here, co-opting home grown Muslim groups to wage war against Americans.

CNN obtained this intelligence document, which describes al Qaeda's moves as part of a wider strategy of shifting the base for Osama bin Laden's terrorist operations from the sub continent to Southeast Asia. Since 1993, every single major al Qaeda plot around the world has been linked to Southeast Asia.

GUNARATNA: Southeast Asia will continue to remain the high threat area for the United States until the al Qaeda and its associate members are captured or destroyed.

RESSA: In fact, the blueprint for the 9/11 plot was discovered in Manila six years before it happened.

RUDOLPHO MENDOZA, HEAD OF INTELLIGENCE: Looking back in 1995, I have this feeling that I should have done more.

RESSA: Colonel Rudolpho Mendoza was the head of the intelligence team that tracked the movements of Khalid Sheikh Mohammed, who had become 9/11's main plotter.

For a time, Mendoza says, Mohammed lived in this apartment building, moving out only after two others moved in, including his nephew, Ramzi Yousef, who had fled to the Philippines after he bombed the World Trade Center in 1993. The two new tenants were making a bomb when they accidentally set off a fire late one night. This was the tape police made as they searched the apartment. What they found was shocking. Bottles of chemicals, timers, detonators, a photo of the pope and two remote control pipe bombs under the sink.

And on Yousef's laptop computer, police found a file of U.S. airline schedules under the title "Bojinga" or big bang. A plot to blow up 11 U.S. airplanes in 48 hours of terror that might have killed 4,000.

Over three months of interrogating one of the plotters, Mendoza discovered other plans, including a plot that seemed far-fetched back then, to hijack commercial planes and crash them into buildings in the United States.

MENDOZA: He told me specifically the CIA headquarters. He told me about the possibility that Pentagon might be included.

RESSA: Another target, the World Trade Center. That report was dated January 20th, 1995.

The terrorist cell had other plots: to assassinate the U.S. president and to attack nuclear power plants in the U.S. Mendoza believes these plans are still active.

MENDOZA: All this plan, old plan are supposed to be executed. They will have to stop if they cannot successfully execute all these plans they have in mind.

RESSA: Three members of that terror cell are now serving life sentences in a U.S. prison, including Ramzi Yousef.

Philippine immigration commissioner Andrea D'Amingo says although that was a set-back for al Qaeda, it's operatives continued recruiting.

UNIDENTIFIED FEMALE: So you broke one cell. Since you've broken that, you've already -- it's off, you know. But actually, they were just going on and using that time, that lull in our vigilance to promote and to have the sleepers entrenched all over the world.

RESSA: Two key leaders escaped the dragnet in 1995. If officials had arrested them then, September 11th might have been prevented. They rose up al Qaeda's command chain and quietly built up the terror network in Southeast Asia.

The two men investigators say Khalid Sheikh Mohammed, who would fine tune and carry out the 9/11 plot, and an Indonesian cleric known as Hambali (ph).

UNIDENTIFIED MALE: Hambali (ph) is al Qaeda's point man in Southeast Asia. He is the senior most non-Arab person in al Qaeda.

RESSA: Officials say Hambali (ph) is the operations chief for JI, Jemaah Islamiya, al Qaeda's arm in Southeast Asia. He worked for Abubacar Ba'Asyir.

The two Indonesians met in Malaysia, where they set up JI's first base of operations here in this quiet neighborhood. 54-year old Miyorm bin Yuhana (ph) was their landlord for more than seven years. When I met him, he had just picked up his gun from the police station, confiscated after he was arrested, and held for two months by the Malaysian police.

UNIDENTIFIED FEMALE: I allowed them to stay. And it seemed that I'm part of their membership. I'm a member to them -- and I deny totally.

RESSA: For years, JI's core leaders walked by his house to reach their homes. Miyorm (ph) knew them as model tenants and good friends.

While they were here...

UNIDENTIFIED MALE: Yes.

RESSA: You had no suspicions?

UNIDENTIFIED MALE: Nothing at all. They practice according to what Koran says (unintelligible) very much, their children. And we eat together, we talk together.

RESSA: Miyorm (ph) says Abubacar Ba'Asyir was the group's leader who performed religious services, which Miyorm (ph) attended.

So the police told you that this was the center, the headquarters of JI.

UNIDENTIFIED MALE: Yes, yes.

RESSA: Were you shocked?

UNIDENTIFIED MALE: Feeling disgusted.

RESSA: An hour's drive from the (unintelligible) neighborhood in this condominium complex on the outskirts of Malaysia's capital, investigators say Hambali (ph) organized a key planning session for al Qaeda in 2000, attended by about a dozen of Osama bin Laden's trusted followers.

Among them, the chairman, Khalid Sheikh Mohammed, and his deputies who would be responsible for plotting a wave of attacks against the U.S. in the next three years, including two of the 9/11 hijackers and Zacarias Moussaoui, now on trial in the U.S. on September 11 related charges.

Intelligence sources say Malaysia is also now the hub of al Qaeda's financial network in Southeast Asia, and that it traces its roots to a network established back in the late 1980s by bin Laden's brother-in-law in the Philippines.

(on camera): With networks like these, al Qaeda has franchised terrorism around the world. What I had pieced together from intelligence documents show how al Qaeda spread. When Osama bin Laden gave the word, his key lieutenants sent their agents to Southeast Asia. They were assigned to infiltrate homegrown Muslim groups and co-opt their domestic agendas into al Qaeda's global war against America.

(voice-over): Al Qaeda promised money and training. In exchange, the groups extended al Qaeda's reach, and their members became the foot soldiers for al Qaeda's plots as it spread its seeds of terror.

When we come back, al Qaeda takes its holy war to Southeast Asia.

(COMMERCIAL BREAK)

(NEWSBREAK)

(BEGIN VIDEOTAPE)

RESSA: Across Southeast Asia, investigators say al Qaeda's network, the Jemaah Islamiya, uses Islamic boarding schools, known as madrasahs, and religious study groups to try to recruit and indoctrinate thousands of young boys.

The hub, authorities in the region say, is in a small village near Solo, Indonesia, at this school established by Abu Bakar Ba'asyir. The school is still in operation, even with Ba'asyir imprisoned and on trial for treason.

LUTFI, STUDENT IN INDONESIA (through translator): Those charges are slander. They were made by infidels. When we preach, there are obstacles in our way, and this is one of them.

RESSA: Eighteen-year-old Lutfi chose to come to this school, he says, to learn about the real Islam. On the edges of the pages of his Quran, one word stenciled in -- "jihad."

LUTFI (through translator): Islam is also about wanting to have more knowledge. What do we want to become? It's probably different from what infidels thinks or believe in.

RESSA: One of Lutfi's teachers was Ba'asyir himself.

Among the books recommended by Ba'asyir's group, this on guerrilla strategies and techniques, or this one written by Osama bin Laden's mentor, Abdullah Azzam.

Lutfi responds vaguely to questions about what he is learning in the school.

LUTFI (through translator): I just study the Quran. That's it.

RESSA: But officials say, schools like this are fertile recruiting grounds with a long list of alumni and staff implicated in terror plots across the region, like Father Rohman al-Ghozi, Ba'asyir's former student, convicted in the Philippines of possessing explosives and sentenced to 12 years in prison.

Investigators say, he helped activate sleeper cells in Singapore which shot this surveillance tape of a potential target -- a bus stop used by American servicemen who would then walk by these motorcycles, where the bomb would be placed.

UNIDENTIFIED MALE: They were not easy, that found the boxes, but a case on motorcycles. These are the same type of boxes which we intend to use.

RESSA: The Singaporean voice on the tape is pitching the plot to al Qaeda's leaders, who, intelligence officials say, greenlighted the plot.

This videotape was found in Afghanistan in the home of al Qaeda's military chief, Mohammed Atta, shortly after he was killed.

TAN: We had not expected that we would find in house of al Qaeda -- one of the al Qaeda leaders in Afghanistan -- a videotape of a Singapore air (ph) mounting (ph) station, and handwritten briefing notes about this being a possible target.

RESSA: Al-Ghozi and two other al Qaeda operatives were arrested soon after, along with the Singaporeans working with them, foiling their plans to launch suicide bomb attacks against U.S. embassies and Western interests across the region.

Al Qaeda switched to Plan B, outlined in a classified FBI document, to conduct small bombings in bars, cafes or nightclubs frequented by westerners in Thailand, Malaysia, Singapore, the Philippines and Indonesia.

Plan B became the Bali bombing.

Investigators say the operations chief for the Bali attacks was this Indonesian, Mukhlas, an alumnus of Ba'asyir's school.

NAJIB ABDUL RAZAK, DEFENSE MINISTER, MALAYSIA: They are not teaching religion, but they are exploiting religion. They are inculcating a culture of hatred.

RESSA: That's only the first step. Once this student believes in the cause, it's time to get training outside the classroom.

At first, many went to Afghanistan. But after 1997, officials say, al Qaeda set up their own training camps in the Philippines, inside the sprawling base camp of Filipino guerrilla fighters like these.

Later, the training moved to Malaysia and Indonesia.

ANDREA DOMINGO, IMMIGRATION COMMISSIONER, PHILIPPINES: I think they go where they can train in peace, or where they can train with enough resources.

RESSA: The final step for the students, baptism by fire in the field. Case in point, Ambon, a strife-torn province in Indonesia.

This is where officials say al Qaeda has been the most successful. Their plan, to fuel ethnic, racial and religious conflicts to ignite the overthrow of governments in the region.

The goal -- to create one Islamic state covering most of Southeast Asia and the northern part of Australia.

This is how it began. In 1999, two Muslim bus passengers refused to pay the Christian driver. That ended in a village lamented by local politics.

The battles continued through the next three years with the largely Muslim army taking sides against the Christian police.

This woman's brother was riding his motorcycle through a Muslim neighborhood when his throat was slit.

When the violence didn't stop, tens of thousands fled. The ports packed, as men fought to get passage for their families. Over three years, the death toll climbed to nearly 10,000.

In my trips there, I couldn't understand why, because everyone we spoke with on both sides said they wanted the violence to end. Later, I found out through the confessions of terrorists linked with al Qaeda, that the conflict was kept alive by an infusion of outsiders -- Muslim fighters like themselves.

MOHAMAD: Al Qaeda made use of it. And they found an important fear. There were Muslims there who had been killed. And, obviously, Muslim tempers had gone up there. And al Qaeda, of course, fueled that kind of situation.

RESSA: In Ambon, the final outcome is uncertain. Foreign journalists have been banned from the area. What we do know is that the violence continues.

This is the future al Qaeda says it wants to create. To use Islam to agitate and trigger a jihad so devastating, it creates a power vacuum.

Power then goes to the group ready and waiting to take over -- al Qaeda.

If it can replicate hundreds of Ambons in the region and around the world, al Qaeda will have succeeded.

Up next, a deadly state of denial.

Could Bali have been averted?

RALPH BOYCE, U.S. AMBASSADOR TO INDONESIA: I wonder.

(COMMERCIAL BREAK)

RESSA: About a year before September 11, agents working for al Qaeda put the U.S. embassy in Jakarta under heavy surveillance. Their plan was simple.

ROBERT GELBARD, FORMER U.S. AMBASSADOR TO INDONESIA: Oh, we knew very well that when the al Qaeda hit team came in, the idea was to blow up the embassy. Our information was absolutely crystal clear from multiple sources.

RESSA: Robert Gelbard had just arrived in Indonesia as the new ambassador. A former counter-terrorism specialist, he was shocked by the Indonesian officials' reaction to the threat.

GELBARD: I went to different parts of the Indonesian government at high levels to ask for added police protection. The police refused to provide the additional security that we needed.

RESSA: Eight months later, the CIA found a detailed map of the embassy in al Qaeda hands. The U.S. asked the Indonesians to arrest a group of al Qaeda operatives from Yemen, who had arrived to carry out the embassy bombing.

No action was taken, and the group escaped, according to U.S. officials who tracked them.

GELBARD: This was the kind of problem I experienced throughout the Indonesian government, as part of either denial, or a profound distrust of the United States -- or a combination of both.

RESSA: Eventually, Gelbard's blunt diplomatic style took its toll.

GELBARD: I am known as somebody who is very direct in how I speak. And perhaps that was not the best way to deal with the Indonesian government.

RESSA: A year before his term was over, Gelbard was replaced.

RALPH BOYCE, U.S. AMBASSADOR TO INDONESIA: We're friends. We've been friends a long time.

RESSA: Enter his polar opposite, Ralph Boyce.

BOYCE: Public confrontation is not always in the best interests. I think the velvet glove approach probably works a little better.

RESSA: But a softer touch did nothing to change the Indonesian government's denial of al Qaeda's presence.

In the weeks before the Bali blast, as intelligence officials gathered evidence about the terror network in Indonesia, Boyce worked frantically behind the scenes, struggling to convince Indonesian officials of the danger.

BOYCE: I think they felt, we can handle it. We don't need to be told about it by outsiders. If it comes up, we can deal with it.

RESSA: In retrospect, could Bali have been prevented, given the information we know now? BOYCE: I wonder. I don't like to go back and try to make those judgments after the fact. I think we did pretty much everything right along the way.

RESSA: The Bali blast ended Indonesia's denial, but not the deep-rooted distrust of the United States in the Muslim world.

It's a familiar issue for Dewi Anwar. In 1998, she was the spokeswoman for Indonesia's President Habibie. Even then, she often spoke about an American double standard on a conflict that unites the Muslim world.

DEWI ANWAR: I would argue, the only meeting point for many Islamic countries, which are extremely diverse, is the Israeli- Palestinian issue. There is a lot of anger at what is seen as a double standard of the U.S. in regard to Israel, on the one hand, and Palestinian on the other.

DEKHA ANWAR: Many Europeans like to dance. That's the ...

RESSA: The distrust has grown with the U.S. war on terror.

Dewi's son, Dekha, is learning English in school, but in his native language, his resentment comes through.

DEKHA ANWAR (through translator): I don't really support the United States. If someone is against them, they take them out because they have the power. If other countries challenge them, and they don't want to be friends with them.

For example, Iraq. They attacked them when they haven't done anything.

DEWI ANWAR: The U.S. doesn't seem to meet the rest of the world. You know, it is so powerful. It's such a hyper power. You know, the attitude is, you know, if you want to come along with us, you know, fine. Otherwise, you can go to hell.

RESSA: The distrust and resentment exploiting by Islamic radicals is feeding a sense of paranoia in the Muslim world, even among moderates like Dewi.

DEWI ANWAR: The fear is that, you know, if a major power can remove a government at will because it doesn't like it, the implication is that we are going to see similar happenings in the future.

RESSA: While most moderates do not join al Qaeda's ranks, it is harder now for Muslim nations to openly ally with the U.S. in the global war on terror.

MOHAMAD: Well, there is a credibility gap. Yes, we've got the U.S. and I'm in the Muslim community. They don't believe in the U.S. any more.

RESSA: It's a perilous political balancing act for the United States. Hunt down a Muslim terrorist network, invade the Muslim country of Iraq, while trying to convince moderate Muslims to ignore the radical voices shouting that the U.S. is against Muslims.

DEWI ANWAR: Islam has been put very much on the defensive. And if that is done too much, I'm afraid that it could also be a backlash.

If you push too far, even I, as a moderate, you know, will not be able to stand it.

RESSA: The appeal from the moderate Muslim world to the United States -- don't help the radicals win.

When we return, is U.S. military might undermining the war on terror?

MOHAMAD: It is enhancing the difficulties of fighting those, the terrorists.

(COMMERCIAL BREAK)

RESSA: The frontline of the global war on terror is not in Iraq nor Afghanistan. It's here in Southeast Asia, where nearly a quarter of the world's Muslims live.

The war here is against Islam -- radical Islam.

In every Muslim community around the world, the battle lines are drawn between radicals like Osama bin Laden and the moderates who want to take Islam into the modern world.

GUNARATNA: The only way the U.S. can win this fight is to work with the moderate Muslims, the progressive Muslims, and to strengthen their capacity to ideologically fight, to heal (ph) the appeal of these radical interpretations.

RESSA: On that rests the global war on terror.

The campaign against Iraq has widened the chasm between the Muslim world and the west. To Muslims, this was a unilateral attack on a sovereign Muslim nation.

MOHAMAD: It has turned attention away from the war on terror. It is not doing anything good at all to reduce the anger and the causes of terror.

It is enhancing the difficulties of fighting these terrorists.

RESSA: And pushing moderates like Dewi Anwar and her family a step closer to the radicals.

Dewi now compares George Bush to Osama bin Laden.

DEWI ANWAR: I think the language used is the language of the pulpit, not the language of statesmanship.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You're either with us or against us. You're either evil or you're good.

DEWI ANWAR: You know, they're both fundamentalists.

RESSA: Al Qaeda is waiting to take advantage of the anger it has so often exploited in the past, rebuilding its network until the next attack.

TAN: They learn from their past mistakes. The adapt, they change. They will attack when they think that they will be successful.

RESSA: If there is any hope for a peaceful future, it lies in understanding the view from here. It is a battle that cannot be won with weapons -- the battle to prevent the seeds of terror from taking root.

(END VIDEOTAPE)

BROWN: Indonesian police have arrested more than 30 suspects in the Bali bombings, and the first trials are under way.

But experts warn, much work still needs to be done. Investigators across Asia are discovering terrorist cells in Australia, Thailand, Cambodia. And while terrorist plots have so far been foiled, al Qaeda's network is firmly entrenched.

And that's this edition of CNN PRESENTS. I'm Aaron Brown. We'll see you next week.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired June 15, 2003 - 20:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Attack after attack, the plots and perpetrators all linked to one unexpected place.

UNIDENTIFIED MALE: Southeast Asia has the largest number of al Qaeda and associate members.

UNIDENTIFIED FEMALE: I think they go over. They can train in peace.

UNIDENTIFIED MALE: They will attack when you think that they will be successful.

UNIDENTIFIED MALE: Building terror from the ground up.

(END VIDEOTAPE)

AARON BROWN, HOST: 9/11 launched the United States into the war on terror. It was less than a month later that American troops attacked al Qaeda bases in Afghanistan. And then last March came the U.S. led invasion of Iraq.

But the real frontlines in the fight against terrorism may in fact lie elsewhere. Welcome to CNN PRESENTS. I'm Aaron Brown.

When CNN's Jakarta bureau chief, Maria Ressa, saw the planes crash into the World Trade Center, it triggered a memory, a memory of a terrorist plot she first reported on six years ago in Southeast Asia. Putting the pieces together, she now reveals how al Qaeda has spread its network across the region, from the remote islands of Indonesia, through the glistening city-state of Singapore, to the jungles of the southern Philippines.

It is a network that existed long before September 11, and one that now appears to be growing, both in its influence and its ambitions. The presence of al Qaeda and its supporters has set off a war for the hearts and minds of the Muslims of Southeast Asia. And at this point, it is unclear who was winning.

So here now, Maria Ressa and a CNN PRESENTS special investigation, "Seeds of Terror."

(BEGIN VIDEOTAPE)

MARIA RESSA, CNN CORRESPONDENT (voice-over): Indonesia, a string of 17,000 islands, stretching twice the distance from London to Moscow. In eight years, I've traveled throughout much of this country from remote areas that belonged to the Stone Age to its 21st century cities.

Here, there are at least 300 ethnic groups, speaking nearly 600 languages and dialects. The uniting force, Islam. Home to 200 million Muslims, Indonesia has the largest Muslim population in the world, a population at the heart of a struggle that is the ideological battle of our generation.

TONY TAN, DEPUTY PRIME MINISTER, SINGAPORE: That is a battle that is going on now for the hearts and minds of the Muslim community.

RESSA: Neighboring Indonesia, Malaysia, one of the world's most progressive, moderate Muslim nations. Sandwiched between the tiny city-state of Singapore, an oasis of order in an often chaotic region. And Asia's largest Catholic nation, the Philippines, which has been fighting Muslim rebels for more than three decades.

Together, these countries make up nearly 25 percent of the world's Muslims. They are the prize in a battle for the future of Islam. Here, the terrorist network, al Qaeda, has found fertile soil and taken root.

ROHAN GUNARATNA, AUTHOR, "INSIDE AL QAEDA": Southeast Asia has the largest number of al Qaeda and associate members. These groups have grown in size and in strength in the past six months. And we can expect these groups to grow.

RESSA: With fledgling democracies and struggling economies, Southeast Asia has been an easy target for al Qaeda. Its goal, to overthrow secular government and convert the entire region and even part of Australia to Shariat law, the same strict code the Taliban imposed on Afghanistan.

This is the true frontline of the war on terror, replicated in Muslim communities around the world. It is not a fight between Islam and the West, but a battle for the soul of Islam between a radical minority and a moderate majority.

TAN: Here, it is not possible for governments to win the battles. It is not possible for non-Muslims to win the battle. The Muslims must resolve this issue by themselves.

RESSA: Thirty-nine year old Casman (ph) lives on the fault line of the Muslim world. He calls himself a moderate Muslim. He likes Americans and sympathizes with the victims of 9/11. But he also believes Osama bin Laden is not a terrorist.

UNIDENTIFIED MALE: (through translator) Osama bin Laden is a Muslim. Because he's a fellow Muslim, we must defend him. He is innocent.

RESSA: Casman (ph) makes less than $3 a day driving his Bajai (ph), not enough to feed his four children. His wife works as a domestic helper in Saudi Arabia, forced to find a job overseas after the collapse of Asian economies in 1997, an economic meltdown which triggered widespread violence, much of which regional officials now say was fueled and used by al Qaeda to recruits for its global jihad.

UNIDENTIFIED MALE (through translator): I don't believe that. There is no al Qaeda in Indonesia.

RESSA: Casman (ph), like many Muslims, thinks the West is guilty of a double standard.

UNIDENTIFIED MALE (through translator): The Muslims are always blamed. In Indonesia and in Iraq, it is the Muslim people they say and do nothing about Israel.

UNIDENTIFIED FEMALE: You only have to turn around. MTV's back.

RESSA: The distrust here is not confined to the poor. Dewi Pertuna Anwar is a middle class, former government official who lived and studied in England for 10 years. She is a Muslim who embraces many Western values, but she fears the influence of Western culture on her two teenagers, 19 year old Donig (ph) and 13-year old Becca.

She makes sure her children are grounded in their culture and religion. And she sends Donig (ph) to a well known Islamic school.

DEWI PERTUNA ANWAR: I want them to be able to have values and not to be lost later on. We always want to believe that our life is meaningful. And usually, you know, religion gives them that sense of purpose.

RESSA: Dewi fosters lively debate in her family, also a lot of laughter. There's an easy camaraderie between her teenagers, also the usual sibling banter.

UNIDENTIFIED FEMALE: Well, he's a brother. So I'm not going to say that he's nice, he's kind, he's annoying, basically. All little brothers like that.

UNIDENTIFIED MALE: (through translator) I don't listen to her. I ignore here. I don't have to care about her, so I don't talk to her.

RESSA: But there is also a divide between them that mirrors the split in Indonesian society. Donig (ph), like her mother, has lived in the West. She spent a year as an exchange student in the United States. Although there are days when she must wear the jailbob (ph), the Muslim headdress to school, Donig (ph) says she chooses not to wear it every day for very practical reasons.

UNIDENTIFIED FEMALE: Indonesia is hot. So I feel the jailbob (ph) is very constrict to me. And I choose not to, because if you wear the jailbob (ph), you can't wear the short sleeved T-shirts or anything -- that dress.

RESSA: Dekha takes a more fundamentalist view.

UNIDENTIFIED MALE (through translator): She says she follows the ways of Islam, but she doesn't do it. You can't just say it. You have to live it. And you can't wear those kinds of clothes. I want to be a person who sets limits and follows the teachings of Islam. So I don't sin and I can get into heaven.

RESSA: Although Dekha sets limits, he has also been influenced by the West. He listens to Western music, goes out to parties, and loves to break dance.

To go back to a more conservative fundamentalist past or to embrace modernity, that is the central question for the future of Islam. And it is at the center of the war on terror.

Osama bin Laden has come to represent one extreme interpretation of Islam. His message is gaining ground. Dewi says he's seen here as the underdog.

DEWI ANWAR: Well, you know, the U.S. has been able to carry out its policy with impunity all around the world, you know. And no one dares to say anything. Then Osama is the only one, you know, the man who dares to fight -- to declare war in America.

RESSA: Is it fair to say that at some level, every Muslim empathizes with part of bin Laden's cause?

MAHATHIR MOHAMAD, PRIME MINISTER, MALAYSIA: They empathize with him, but they -- I don't think they agree with the methods.

RESSA: Malaysia's prime minister, Mahathir Mohamad, long distrust full of American media granted us a rare interview. Considered a moderate voice in the Muslim world, nonetheless, he is harshly critical of the United States for policies like its attack on Iraq, which he says play right into al Qaeda's hands.

MOHAMAD: I think the world begins to fear the power of America. We will have a problem dealing with our own terrorists. If we appear at all to be working with this country, which is so much against Muslims.

RESSA (on camera): That growing distrust of America has become one of al Qaeda's strongest weapons now used to win new recruits. And yet, until today, countries in the region remain cautious about publicly admitting al Qaeda's presence within their borders. Their internal reports are more honest.

I've read hundreds of intelligence documents from the region, as well as classified documents from the FBI, the CIA, and other Western intelligence agencies. They show an extensive deep-rooted al Qaeda network in Southeast Asia. And it all began here in Manila, 15 years ago.

(voice-over): From the Philippines, it spread to Malaysia, Singapore and Indonesia. Although more than 150 suspected terrorists have been arrested, intelligence officials say the network remained strong. Its cells still waiting to be activated.

Coming up... UNIDENTIFIED MALE: There are real terrorists in this world. That is America and Jews.

RESSA: The man some call the Asian Osama bin Laden.

(COMMERCIAL BREAK)

RESSA: October 12, 2002, the worst terrorist attack since September 11. Three bombs, the largest planted outside the Sari Club in Bali. The explosions designed, investigators say, to funnel people closer to the last and deadliest blast. So fierce, it ruptured the internal organs of many in the club.

More than 200 people died, hundreds more injured. Indonesian officials say the attack was the world of Jemaah Islamiya, al Qaeda's network in Southeast Asia. The man who controls that network, officials across the region say, is Indonesian cleric Abu Bakar Ba'asyir, dubbed the "Asian Osama bin Laden."

ABU BAKAR BA'ASYIR (through translator): The one truth is Islam. The one thing that can save us is Islam, but we must commit to it. That is what I teach. If Islamic law is disturbed, there is no compromise.

RESSA: In some circles in Indonesia, Ba'Asyir is a revered figure. He befriended well connected politicians like Indonesia's vice president, even though officials in Singapore and Malaysia linked him to terrorism and issued warrants for his arrest.

BA'ASYIR (through translator): If Islam is attacked, there are only two responses. We are victorious or we die. That is what it means to rise up and defend Islam. That is what the infidels and Jews call "violence." But if you're going to defend Islam, you either win or you die. You can't sit on the sidelines.

RESSA: Officials across Southeast Asia name Abu Bakar Ba'Asyir as the head of al Qaeda's network in the region, Jemaah Islamiya, an organization he claims does not even exist. Days after the Bali attacks, Ba'Asyir was arrested and eventually charged with treason.

Just before going to jail, he gave an interview to CNN. He denies any links to terrorism and emphasizes the message many Indonesians have come to believe.

BA'ASYIR (through translator): All of the violence in Indonesia has been engineered by America and Israel. Israel is Islam's strongest enemy, most radical. America is being used by Israel in order to attack Islam.

RESSA: Why you? If you're innocent, why are you being targeted then?

BA'ASYIR (through translator): I uphold Islam. I fight for Shariat law. Israel does not like this. Because of that, I've become a target. RESSA: Yet hundreds of intelligence documents obtained by CNN from Singapore, the Philippines and Indonesia tell how Ba'Asyir helped plot attacks on U.S. and Western interests in Singapore and carried out bomb attacks in Indonesia and the Philippines.

This document says Ba'Asyir commissioned a plan to assassinate Indonesia's president Megawati Sukarnoputri.

BA'ASYIR (through translator): That's a lie engineered by America and Israel. Assassinating Megawati has never crossed my mind, especially because Megawati is a Muslim woman.

RESSA: Yet Ba'Asyir thinks because Megawati is a woman, she cannot lead Indonesia.

Radical voices like Ba'Asyir's divide the nation and set up Indonesians in a no-win situation. Either you advocate revolt, fanaticism and violence, or you're a bad Muslim. Yet enough agree with him to virtually paralyze Indonesian politicians.

Ba'Asyir operated out in the open for years, because some say officials of the fragile new democracy, including President Megawati, feared a political backlash if they arrested him.

GUNARATNA: She had compromised national security objectives. And she did these because she wanted to politically survive. So Bali was simply the failure of the Indonesian government to act against the terrorist network. When the whole world told them that there was a terrorist network in Indonesia.

RESSA: An al Qaeda linked terrorist network?

GUNARATNA: Absolutely.

RESSA: Ba'Asyir believes that democracy and Islam are fundamentally opposed, that Islam is now under attack worldwide, and Muslims must fight back like Osama bin Laden.

BA'ASYIR (through translator): The so-called terrorists America is pursuing are actually Islamic heroes, but there are real terrorists in this world. That is America and Jews.

RESSA: Although those words find support in the streets, intellectuals like Dewi dismiss the political threat of what she calls Ba'Asyir's French groups.

UNIDENTIFIED FEMALE: Thinking of really dreaming of establishing an Islamic state in Indonesia let alone a pan Islamic state in Southeast Asia seems a bit crazy, you know.

RESSA: Do you believe Ba'Asyir created a network based on this ideology that he's preaching?

UNIDENTIFIED FEMALE: I don't know. You know, we don't have enough proof yet even over the Bali one. RESSA: But there's more than enough proof. According to intelligence officials, nearly every terrorism suspect arrested in the region over the past year has pinpointed Ba'Asyir as the network's leader.

When we return, discovering the blueprint for September 11.

UNIDENTIFIED MALE: I have this feeling that I should have done more.

RESSA: And the terrorist plot yet to be executed.

(COMMERCIAL BREAK)

RESSA: In the early 1990s, al Qaeda's operatives sent by Osama bin Laden, arrive here, Manila's red light district. A classified intelligence report obtained by CNN says Khalid Shaikh Mohammed, who would later become a bin Laden lieutenant and the mastermind of the September 11 attacks, visited a low class bar here in 1994.

According to this report, he walked out with a woman who he asked to secretly deposit money in a bank, which she did. It was the beginning of Osama bin Laden's attempt to export his global jihad. Southeast Asia made the perfect target. The region had armed Muslim groups full of thousands of veterans of the Afghan war. Lax law enforcement and often divided governments.

Long before the U.S. was aware of it, al Qaeda had established a base here, co-opting home grown Muslim groups to wage war against Americans.

CNN obtained this intelligence document, which describes al Qaeda's moves as part of a wider strategy of shifting the base for Osama bin Laden's terrorist operations from the sub continent to Southeast Asia. Since 1993, every single major al Qaeda plot around the world has been linked to Southeast Asia.

GUNARATNA: Southeast Asia will continue to remain the high threat area for the United States until the al Qaeda and its associate members are captured or destroyed.

RESSA: In fact, the blueprint for the 9/11 plot was discovered in Manila six years before it happened.

RUDOLPHO MENDOZA, HEAD OF INTELLIGENCE: Looking back in 1995, I have this feeling that I should have done more.

RESSA: Colonel Rudolpho Mendoza was the head of the intelligence team that tracked the movements of Khalid Sheikh Mohammed, who had become 9/11's main plotter.

For a time, Mendoza says, Mohammed lived in this apartment building, moving out only after two others moved in, including his nephew, Ramzi Yousef, who had fled to the Philippines after he bombed the World Trade Center in 1993. The two new tenants were making a bomb when they accidentally set off a fire late one night. This was the tape police made as they searched the apartment. What they found was shocking. Bottles of chemicals, timers, detonators, a photo of the pope and two remote control pipe bombs under the sink.

And on Yousef's laptop computer, police found a file of U.S. airline schedules under the title "Bojinga" or big bang. A plot to blow up 11 U.S. airplanes in 48 hours of terror that might have killed 4,000.

Over three months of interrogating one of the plotters, Mendoza discovered other plans, including a plot that seemed far-fetched back then, to hijack commercial planes and crash them into buildings in the United States.

MENDOZA: He told me specifically the CIA headquarters. He told me about the possibility that Pentagon might be included.

RESSA: Another target, the World Trade Center. That report was dated January 20th, 1995.

The terrorist cell had other plots: to assassinate the U.S. president and to attack nuclear power plants in the U.S. Mendoza believes these plans are still active.

MENDOZA: All this plan, old plan are supposed to be executed. They will have to stop if they cannot successfully execute all these plans they have in mind.

RESSA: Three members of that terror cell are now serving life sentences in a U.S. prison, including Ramzi Yousef.

Philippine immigration commissioner Andrea D'Amingo says although that was a set-back for al Qaeda, it's operatives continued recruiting.

UNIDENTIFIED FEMALE: So you broke one cell. Since you've broken that, you've already -- it's off, you know. But actually, they were just going on and using that time, that lull in our vigilance to promote and to have the sleepers entrenched all over the world.

RESSA: Two key leaders escaped the dragnet in 1995. If officials had arrested them then, September 11th might have been prevented. They rose up al Qaeda's command chain and quietly built up the terror network in Southeast Asia.

The two men investigators say Khalid Sheikh Mohammed, who would fine tune and carry out the 9/11 plot, and an Indonesian cleric known as Hambali (ph).

UNIDENTIFIED MALE: Hambali (ph) is al Qaeda's point man in Southeast Asia. He is the senior most non-Arab person in al Qaeda.

RESSA: Officials say Hambali (ph) is the operations chief for JI, Jemaah Islamiya, al Qaeda's arm in Southeast Asia. He worked for Abubacar Ba'Asyir.

The two Indonesians met in Malaysia, where they set up JI's first base of operations here in this quiet neighborhood. 54-year old Miyorm bin Yuhana (ph) was their landlord for more than seven years. When I met him, he had just picked up his gun from the police station, confiscated after he was arrested, and held for two months by the Malaysian police.

UNIDENTIFIED FEMALE: I allowed them to stay. And it seemed that I'm part of their membership. I'm a member to them -- and I deny totally.

RESSA: For years, JI's core leaders walked by his house to reach their homes. Miyorm (ph) knew them as model tenants and good friends.

While they were here...

UNIDENTIFIED MALE: Yes.

RESSA: You had no suspicions?

UNIDENTIFIED MALE: Nothing at all. They practice according to what Koran says (unintelligible) very much, their children. And we eat together, we talk together.

RESSA: Miyorm (ph) says Abubacar Ba'Asyir was the group's leader who performed religious services, which Miyorm (ph) attended.

So the police told you that this was the center, the headquarters of JI.

UNIDENTIFIED MALE: Yes, yes.

RESSA: Were you shocked?

UNIDENTIFIED MALE: Feeling disgusted.

RESSA: An hour's drive from the (unintelligible) neighborhood in this condominium complex on the outskirts of Malaysia's capital, investigators say Hambali (ph) organized a key planning session for al Qaeda in 2000, attended by about a dozen of Osama bin Laden's trusted followers.

Among them, the chairman, Khalid Sheikh Mohammed, and his deputies who would be responsible for plotting a wave of attacks against the U.S. in the next three years, including two of the 9/11 hijackers and Zacarias Moussaoui, now on trial in the U.S. on September 11 related charges.

Intelligence sources say Malaysia is also now the hub of al Qaeda's financial network in Southeast Asia, and that it traces its roots to a network established back in the late 1980s by bin Laden's brother-in-law in the Philippines.

(on camera): With networks like these, al Qaeda has franchised terrorism around the world. What I had pieced together from intelligence documents show how al Qaeda spread. When Osama bin Laden gave the word, his key lieutenants sent their agents to Southeast Asia. They were assigned to infiltrate homegrown Muslim groups and co-opt their domestic agendas into al Qaeda's global war against America.

(voice-over): Al Qaeda promised money and training. In exchange, the groups extended al Qaeda's reach, and their members became the foot soldiers for al Qaeda's plots as it spread its seeds of terror.

When we come back, al Qaeda takes its holy war to Southeast Asia.

(COMMERCIAL BREAK)

(NEWSBREAK)

(BEGIN VIDEOTAPE)

RESSA: Across Southeast Asia, investigators say al Qaeda's network, the Jemaah Islamiya, uses Islamic boarding schools, known as madrasahs, and religious study groups to try to recruit and indoctrinate thousands of young boys.

The hub, authorities in the region say, is in a small village near Solo, Indonesia, at this school established by Abu Bakar Ba'asyir. The school is still in operation, even with Ba'asyir imprisoned and on trial for treason.

LUTFI, STUDENT IN INDONESIA (through translator): Those charges are slander. They were made by infidels. When we preach, there are obstacles in our way, and this is one of them.

RESSA: Eighteen-year-old Lutfi chose to come to this school, he says, to learn about the real Islam. On the edges of the pages of his Quran, one word stenciled in -- "jihad."

LUTFI (through translator): Islam is also about wanting to have more knowledge. What do we want to become? It's probably different from what infidels thinks or believe in.

RESSA: One of Lutfi's teachers was Ba'asyir himself.

Among the books recommended by Ba'asyir's group, this on guerrilla strategies and techniques, or this one written by Osama bin Laden's mentor, Abdullah Azzam.

Lutfi responds vaguely to questions about what he is learning in the school.

LUTFI (through translator): I just study the Quran. That's it.

RESSA: But officials say, schools like this are fertile recruiting grounds with a long list of alumni and staff implicated in terror plots across the region, like Father Rohman al-Ghozi, Ba'asyir's former student, convicted in the Philippines of possessing explosives and sentenced to 12 years in prison.

Investigators say, he helped activate sleeper cells in Singapore which shot this surveillance tape of a potential target -- a bus stop used by American servicemen who would then walk by these motorcycles, where the bomb would be placed.

UNIDENTIFIED MALE: They were not easy, that found the boxes, but a case on motorcycles. These are the same type of boxes which we intend to use.

RESSA: The Singaporean voice on the tape is pitching the plot to al Qaeda's leaders, who, intelligence officials say, greenlighted the plot.

This videotape was found in Afghanistan in the home of al Qaeda's military chief, Mohammed Atta, shortly after he was killed.

TAN: We had not expected that we would find in house of al Qaeda -- one of the al Qaeda leaders in Afghanistan -- a videotape of a Singapore air (ph) mounting (ph) station, and handwritten briefing notes about this being a possible target.

RESSA: Al-Ghozi and two other al Qaeda operatives were arrested soon after, along with the Singaporeans working with them, foiling their plans to launch suicide bomb attacks against U.S. embassies and Western interests across the region.

Al Qaeda switched to Plan B, outlined in a classified FBI document, to conduct small bombings in bars, cafes or nightclubs frequented by westerners in Thailand, Malaysia, Singapore, the Philippines and Indonesia.

Plan B became the Bali bombing.

Investigators say the operations chief for the Bali attacks was this Indonesian, Mukhlas, an alumnus of Ba'asyir's school.

NAJIB ABDUL RAZAK, DEFENSE MINISTER, MALAYSIA: They are not teaching religion, but they are exploiting religion. They are inculcating a culture of hatred.

RESSA: That's only the first step. Once this student believes in the cause, it's time to get training outside the classroom.

At first, many went to Afghanistan. But after 1997, officials say, al Qaeda set up their own training camps in the Philippines, inside the sprawling base camp of Filipino guerrilla fighters like these.

Later, the training moved to Malaysia and Indonesia.

ANDREA DOMINGO, IMMIGRATION COMMISSIONER, PHILIPPINES: I think they go where they can train in peace, or where they can train with enough resources.

RESSA: The final step for the students, baptism by fire in the field. Case in point, Ambon, a strife-torn province in Indonesia.

This is where officials say al Qaeda has been the most successful. Their plan, to fuel ethnic, racial and religious conflicts to ignite the overthrow of governments in the region.

The goal -- to create one Islamic state covering most of Southeast Asia and the northern part of Australia.

This is how it began. In 1999, two Muslim bus passengers refused to pay the Christian driver. That ended in a village lamented by local politics.

The battles continued through the next three years with the largely Muslim army taking sides against the Christian police.

This woman's brother was riding his motorcycle through a Muslim neighborhood when his throat was slit.

When the violence didn't stop, tens of thousands fled. The ports packed, as men fought to get passage for their families. Over three years, the death toll climbed to nearly 10,000.

In my trips there, I couldn't understand why, because everyone we spoke with on both sides said they wanted the violence to end. Later, I found out through the confessions of terrorists linked with al Qaeda, that the conflict was kept alive by an infusion of outsiders -- Muslim fighters like themselves.

MOHAMAD: Al Qaeda made use of it. And they found an important fear. There were Muslims there who had been killed. And, obviously, Muslim tempers had gone up there. And al Qaeda, of course, fueled that kind of situation.

RESSA: In Ambon, the final outcome is uncertain. Foreign journalists have been banned from the area. What we do know is that the violence continues.

This is the future al Qaeda says it wants to create. To use Islam to agitate and trigger a jihad so devastating, it creates a power vacuum.

Power then goes to the group ready and waiting to take over -- al Qaeda.

If it can replicate hundreds of Ambons in the region and around the world, al Qaeda will have succeeded.

Up next, a deadly state of denial.

Could Bali have been averted?

RALPH BOYCE, U.S. AMBASSADOR TO INDONESIA: I wonder.

(COMMERCIAL BREAK)

RESSA: About a year before September 11, agents working for al Qaeda put the U.S. embassy in Jakarta under heavy surveillance. Their plan was simple.

ROBERT GELBARD, FORMER U.S. AMBASSADOR TO INDONESIA: Oh, we knew very well that when the al Qaeda hit team came in, the idea was to blow up the embassy. Our information was absolutely crystal clear from multiple sources.

RESSA: Robert Gelbard had just arrived in Indonesia as the new ambassador. A former counter-terrorism specialist, he was shocked by the Indonesian officials' reaction to the threat.

GELBARD: I went to different parts of the Indonesian government at high levels to ask for added police protection. The police refused to provide the additional security that we needed.

RESSA: Eight months later, the CIA found a detailed map of the embassy in al Qaeda hands. The U.S. asked the Indonesians to arrest a group of al Qaeda operatives from Yemen, who had arrived to carry out the embassy bombing.

No action was taken, and the group escaped, according to U.S. officials who tracked them.

GELBARD: This was the kind of problem I experienced throughout the Indonesian government, as part of either denial, or a profound distrust of the United States -- or a combination of both.

RESSA: Eventually, Gelbard's blunt diplomatic style took its toll.

GELBARD: I am known as somebody who is very direct in how I speak. And perhaps that was not the best way to deal with the Indonesian government.

RESSA: A year before his term was over, Gelbard was replaced.

RALPH BOYCE, U.S. AMBASSADOR TO INDONESIA: We're friends. We've been friends a long time.

RESSA: Enter his polar opposite, Ralph Boyce.

BOYCE: Public confrontation is not always in the best interests. I think the velvet glove approach probably works a little better.

RESSA: But a softer touch did nothing to change the Indonesian government's denial of al Qaeda's presence.

In the weeks before the Bali blast, as intelligence officials gathered evidence about the terror network in Indonesia, Boyce worked frantically behind the scenes, struggling to convince Indonesian officials of the danger.

BOYCE: I think they felt, we can handle it. We don't need to be told about it by outsiders. If it comes up, we can deal with it.

RESSA: In retrospect, could Bali have been prevented, given the information we know now? BOYCE: I wonder. I don't like to go back and try to make those judgments after the fact. I think we did pretty much everything right along the way.

RESSA: The Bali blast ended Indonesia's denial, but not the deep-rooted distrust of the United States in the Muslim world.

It's a familiar issue for Dewi Anwar. In 1998, she was the spokeswoman for Indonesia's President Habibie. Even then, she often spoke about an American double standard on a conflict that unites the Muslim world.

DEWI ANWAR: I would argue, the only meeting point for many Islamic countries, which are extremely diverse, is the Israeli- Palestinian issue. There is a lot of anger at what is seen as a double standard of the U.S. in regard to Israel, on the one hand, and Palestinian on the other.

DEKHA ANWAR: Many Europeans like to dance. That's the ...

RESSA: The distrust has grown with the U.S. war on terror.

Dewi's son, Dekha, is learning English in school, but in his native language, his resentment comes through.

DEKHA ANWAR (through translator): I don't really support the United States. If someone is against them, they take them out because they have the power. If other countries challenge them, and they don't want to be friends with them.

For example, Iraq. They attacked them when they haven't done anything.

DEWI ANWAR: The U.S. doesn't seem to meet the rest of the world. You know, it is so powerful. It's such a hyper power. You know, the attitude is, you know, if you want to come along with us, you know, fine. Otherwise, you can go to hell.

RESSA: The distrust and resentment exploiting by Islamic radicals is feeding a sense of paranoia in the Muslim world, even among moderates like Dewi.

DEWI ANWAR: The fear is that, you know, if a major power can remove a government at will because it doesn't like it, the implication is that we are going to see similar happenings in the future.

RESSA: While most moderates do not join al Qaeda's ranks, it is harder now for Muslim nations to openly ally with the U.S. in the global war on terror.

MOHAMAD: Well, there is a credibility gap. Yes, we've got the U.S. and I'm in the Muslim community. They don't believe in the U.S. any more.

RESSA: It's a perilous political balancing act for the United States. Hunt down a Muslim terrorist network, invade the Muslim country of Iraq, while trying to convince moderate Muslims to ignore the radical voices shouting that the U.S. is against Muslims.

DEWI ANWAR: Islam has been put very much on the defensive. And if that is done too much, I'm afraid that it could also be a backlash.

If you push too far, even I, as a moderate, you know, will not be able to stand it.

RESSA: The appeal from the moderate Muslim world to the United States -- don't help the radicals win.

When we return, is U.S. military might undermining the war on terror?

MOHAMAD: It is enhancing the difficulties of fighting those, the terrorists.

(COMMERCIAL BREAK)

RESSA: The frontline of the global war on terror is not in Iraq nor Afghanistan. It's here in Southeast Asia, where nearly a quarter of the world's Muslims live.

The war here is against Islam -- radical Islam.

In every Muslim community around the world, the battle lines are drawn between radicals like Osama bin Laden and the moderates who want to take Islam into the modern world.

GUNARATNA: The only way the U.S. can win this fight is to work with the moderate Muslims, the progressive Muslims, and to strengthen their capacity to ideologically fight, to heal (ph) the appeal of these radical interpretations.

RESSA: On that rests the global war on terror.

The campaign against Iraq has widened the chasm between the Muslim world and the west. To Muslims, this was a unilateral attack on a sovereign Muslim nation.

MOHAMAD: It has turned attention away from the war on terror. It is not doing anything good at all to reduce the anger and the causes of terror.

It is enhancing the difficulties of fighting these terrorists.

RESSA: And pushing moderates like Dewi Anwar and her family a step closer to the radicals.

Dewi now compares George Bush to Osama bin Laden.

DEWI ANWAR: I think the language used is the language of the pulpit, not the language of statesmanship.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You're either with us or against us. You're either evil or you're good.

DEWI ANWAR: You know, they're both fundamentalists.

RESSA: Al Qaeda is waiting to take advantage of the anger it has so often exploited in the past, rebuilding its network until the next attack.

TAN: They learn from their past mistakes. The adapt, they change. They will attack when they think that they will be successful.

RESSA: If there is any hope for a peaceful future, it lies in understanding the view from here. It is a battle that cannot be won with weapons -- the battle to prevent the seeds of terror from taking root.

(END VIDEOTAPE)

BROWN: Indonesian police have arrested more than 30 suspects in the Bali bombings, and the first trials are under way.

But experts warn, much work still needs to be done. Investigators across Asia are discovering terrorist cells in Australia, Thailand, Cambodia. And while terrorist plots have so far been foiled, al Qaeda's network is firmly entrenched.

And that's this edition of CNN PRESENTS. I'm Aaron Brown. We'll see you next week.

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