The U.S.-led war on terror has greatly diminished the regional Islamic militant group Jemaah Islamiyah but it remains capable of attacks, the American military commander for the Pacific said Friday.

Adm. Thomas Fargo said 140 Jemaah Islamiyah members, including some key leaders, have been arrested during the past 18 months in Southeast Asia, including in the Philippines, Singapore, Malaysia and Indonesia.

"We've made a great deal of progress on terrorism in Southeast Asia," he said.

The arrests have allowed the United States and its allies to better understand the group, its operational planning and its ability to conduct terrorist acts, Fargo said.

But, he warned, "We haven't completely solved the problem of the JI and they do have the ability to conduct further attacks."

Fargo also said the global war on terror has frozen more than $160 million belonging to such terror groups as Osama bin Laden's al-Qaida network.

Fargo and Philippine Armed Forces chief of staff Gen. Narciso Abaya spoke after the annual bilateral security meeting of the Mutual Defense Board that steers activities under the two countries' 1951 Mutual Defense Treaty.

Meeting topics included U.S. military assistance to the Philippines, combined military exercises and security cooperation.

The board decided that a planned joint military exercise in the southern Philippines stronghold of another Muslim extremist group, the Abu Sayyaf, will be held later this year after an ongoing training program, Fargo said.

Fargo said the exercise would assess the effectiveness of U.S. training for Filipino troops.

"The objective is, again, to meet our long-term effort to deal with terrorism, very specifically the Abu Sayyaf group," Fargo said.

A similar training exercise last year was credited with breaking up the main Abu Sayyaf faction and led to the killing and capture of several commanders and guerrillas.

The Abu Sayyaf, an al-Qaida-linked group suspected of having ties to Jemaah Islamiyah, is notorious for kidnappings and killings. It is on the U.S. list of foreign terrorist groups.

The terms of the future exercise still are being discussed, Fargo said.

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