United States to their nation's security and believe the relationship is in their interest, as it is in ours.

In coordination with the Office of the Secretary of Defense, we continue to review our Northeast Asian force presence with both Japan and the Republic of Korea. We seek an enduring force posture that takes into account the changing threat, our enhanced capabilities, and the improving contributions of our friends and allies.

As a partner, the ROK has been steadily increasing its regional security role. USPACOM is working with the ROK Joint Staff to ensure our regional security cooperation efforts are in consonance with one another and integrated where appropriate. In particular, the ROK supports USPACOM exercises and seminars aimed at increasing regional cooperation and interoperability among U.S. friends and allies. Korea's contributions to regional peace and stability were clearly demonstrated this past year in Timor-Leste, where ROK Army troops participated in UN peacekeeping efforts to support the region's newest nation. This growing regional role for Korea contributes to the security of the region while not detracting from its peninsular defense responsibilities.

The ROK continues steadfast support to anti-terrorism efforts. The Korean Armed Forces are with us in the GWOT, from Guam to Central Asia and on the ground in Afghanistan, supporting our efforts with transportation and medical support. In the USPACOM area, the ROK Air Force has flown over 2000 hours moving tons of important cargo and passengers throughout the AOR. Similarly, the ROK Navy has provided important sealift to bolster our efforts in South Asia, moving 3500 tons of material. In the aftermath of Typhoon Cha'taan, the ROK Landing Ship Tanks (LSTs) provided emergency sealift of over 350 tons of bottled water and other disaster relief supplies and materials to Guam. The ROK Army deployed a Mobile Surgical Hospital initially to Manas, Kyrgyzstan, and subsequently to Bagram, Afghanistan. A civil engineering battalion will soon join these forces to assist in rebuilding the infrastructure of that emerging nation. Similar contributions have been provided for the reconstruction of Iraq. These contributions have been, and will continue to be, important to the success of OEF and OIF, and we thank the Korean people for their support.

The events of 2002 remind us of the dangers posed by the Kim Jong-Il regime and the threat our ROK-U.S. combined team faces on the peninsula. The conventional threat from the Democratic People's Republic of Korea (DPRK) remains unabated, illustrated by the unprovoked naval attack on 29 June 2002 on an ROK Navy vessel that resulted in the loss of five young ROK sailors. The DPRK maintains more than 60 percent of its forces within 100 kilometers of the Demilitarized Zone (DMZ), and the Kim regime persists in its "military first" policy, providing sufficient resources to keep its large force fed, equipped, and exercised, while its citizens face deprivation and starvation. The DPRK has so far not broken its self-imposed moratorium on conducting ballistic missile test flights, it continues development efforts including static engine tests. Additionally, the DPRK exports missiles and missile technology, posing a grave counter-proliferation concern. Finally, the Kim regime continues to engage in nuclear brinkmanship, with the disclosure of its Highly Enriched Uranium program and recent announcement on the resumption of their plutonium production and reprocessing programs. These actions are in violation of the 1994 Agreed Framework, DPRK pledges to the IAEA, and the 1992 North-South Basic Agreement calling for denuclearization of the Peninsula. The DPRK is not above precipitating a crisis to strengthen its bargaining position. Now more than ever it is critical our ROK-U.S. partnership stand firm.

The Korean people are looking for ways to foster reconciliation with the DPRK. We recognize the importance of these efforts to the Korean people and their government. Moreover, we agree on the crucial role of the Armistice Agreement in maintaining peace on the Korean Peninsula, and we are committed to ensuring that efforts at reconciliation do not increase risk for the security of the ROK or the United States.

In sum, through continuing support to the coalition to combat global terrorism and efforts to participate fully in regional security, the ROK plays a very positive role in the region. U.S. and ROK forces remain prepared, and we are looking for ways to strengthen the alliance to deal with current and future challenges.

Australia. Our strong ally and partner, Australia has demonstrated steadfast commitment and bold leadership in the GWOT and in essentially every other security endeavor in the region. Its military contributions to the coalition against terror are substantial and include Combat Air Patrols (CAP), tankers, Special Air Service (SAS) troops, guided missile frigates and, most recently, support for Sea Swap, our USN initiative to exchange crews of select vessels forward in theater. Additionally, Australia has become a regional leader in pursuing multilateral counter-terrorism initiatives in Southeast Asia by signing counter-terrorism MOUS with Indonesia,

Malaysia, and Thailand while pursuing others. USPACOM remains focused on maintaining strong levels of interoperability with the Australian Defence Forces across the full spectrum of contingency operations including counter-terrorism. Support for legislation to improve the arms export process will improve interoperability with this important ally. Australia continues to lead international support for the struggling nations of the Oceania region, providing humanitarian assistance and training. Australia is the southern anchor of our security architecture in the region, and we will maintain the vibrancy of this strategic relationship.

Republic of the Philippines. Our relationship with the Government and Armed Forces of the Philippines (AFP) developed and matured throughout the last year. Through comprehensive security assistance packages and focused security cooperation, the AFP has improved its ability to fight terrorism on its homeland as demonstrated by the AFP Southern Command's effective neutralizing of the Abu Sayyaf Group (ASG) on Basilan Island and the continuing fight in Jolo. This has not come without cost. Both American citizens and service members have been wounded, or lost their lives to the terrorists in the Southern Philippines.

Despite these losses, Operation ENDURING FREEDOM-Philippines (OEF-P) has produced tremendous successes. The Joint Task Force advised and assisted AFP forces in their mission to rid ASG terrorists from Basilan Island. As a result, the ASG threat declined significantly on Basilan Island. Although the road that circled Basilan was repaired to support AFP/U.S. tactical mobility, it will also help the people of Basilan in their economic livelihood as will the new water wells, repairs to school buildings, critical hospitals, and other medical treatment areas throughout the island. These humanitarian and civic assistance program successes acted as force multipliers for U.S. and AFP operations because the programs separated the citizens of Basilan from supporting the terrorist threat.

To ensure the AFP can successfully respond to the terrorist threat, the U.S developed a Security Assistance (SA) Program that will provide the AFP with additional counter-terrorism training and equipment. This program is well underway, including light infantry battalion, light reaction company, night-vision, intelligence fusion, Non-commissioned Officer, and Civil Military Operations training. These five SA modules, funded through $25 million dollars in FY 2002 supplemental appropriations, are occurring at various locations in the Philippines to benefit the AFP beyond its Southern Command units.

When this first series of SA modules is complete later this year, we will conduct a combined exercise (Balikatan 03-1) to evaluate our progress and to inform of our plans for the next round of assistance modules. This feedback mechanism is crucial to making rapid and efficient progress in the AFP's CT capabilities.

Additionally, USPACOM is implementing a Foreign Military Financing (FMF) Maintenance Assistance Plan that will sustain AFP critical tactical mobility platforms, including UH-1H helicopters, C-130 transport aircraft, two-and-a-half ton trucks, and 78-foot patrol craft. We seek your continued assistance in ensuring funding for this program in the future. through the next 3 years. This will give the AFP an opportunity to address current equipment maintenance shortfalls.

Action has not been limited to the southern Philippines. We have completed various large-scale exercises in Luzon and continue to plan for security cooperation events in 2003. On 21 November 2002, the AFP signed a Mutual Logistics Support Agreement with USPACOM—a positive sign of reciprocity and an improving relationship. We have already used the agreement by leasing 500 pieces of body armor to the AFP. This small gesture will improve the AFP force protection posture and support Philippine efforts to combat terrorism.

The Philippines plays a strategic role in the USPACOM AOR. As training areas for U.S. forces dwindle, excellent training facilities in the Philippines remain available, though repairs are required.

We have accomplished a lot in the GWOT and in securing our strategic objectives with the unwavering support of the Philippine Government. The security situation in the Philippines needs continued improvement to attract investments and promote economic stability. Continued U.S. support through comprehensive, focused and timely SA funding is one way we can influence the situation in the Philippines. Supporting the GRP in their fight against the ASG is another way. A sustained GRP counterterrorism capability is the goal.

Thailand. The Kingdom of Thailand is a treaty ally that continues to have an outstanding military-to-military relationship with the U.S. Exercise COBRA GOLD (CG) is a centerpiece of this relationship. CG-2003 was our 22nd joint/combined bilateral exercise with Thailand, and the 4th of the expanded observer programmaking it USPACOM's premier multilateral event. By adding this multinational exercise dimension in an environment that trains for transnational issues, Thailand is assuming an active role in promoting South East Asia security.

Military-to-military policy with Thailand is managed through annual Thai-American Consultations. Benefits to Thailand include U.S. counterdrug/border security support, demining training, peace operations training and support, and an extensive security assistance program with a robust International Military Education and Training (IMET) component. Thailand's contributions as a regional leader include a peacekeeping troop presence in Timor-Leste, a commitment to providing engineering support in Afghanistan to support the GWOT, and an intent to contribute to the peace process in Aceh, Indonesia.

As a result of our strong relationship with Thailand, we have received access to training facilities, ports, and airfields, and the granting of overflight clearances in support of operational requirements. Our ongoing security cooperation program, including exercises such as COBRA GOLD, helps to address the security interests of both countries and serves as a catalyst for enhancing our regional security posture. Singapore. Our relationship with Singapore is one of the strongest in the region. Following the 11 September terrorist attacks, Singapore provided access to airfields and naval facilities to U.S. forces, detained 31 suspected terrorists, froze terrorist financial assets, increased protection to shipping in the Strait of Malacca, and was the first Asian nation to implement the U.S. Container Security Initiative. Singapore's recently published White Paper on the Jemaah Islamiyah terrorists and announcement to launch a terrorism research center in 2003/2004 testifies to its comprehensive strategy for combating terrorism in Southeast Asia. Our efforts with Singapore focus on reinforcing our already strong foundation through improved interoperability and cooperation.

Malaysia. Some of the most aggressive action against terrorism in Southeast Asia has occurred in Malaysia. To date, Malaysian security forces have arrested more than 70 suspected terrorists and have taken the lead in several initiatives aimed at increasing cooperation in combating terrorism and other areas of mutual interest. The proposed Regional Counter Terrorism Training Center in Kuala Lumpur is one such initiative and represents an important opportunity to enhance regional efforts at combating terrorism. By providing expertise, information, and funding when appropriate, we can assist Malaysia and other nations of Southeast Asia in developing the skills necessary to defeat terrorism. As a moderate Muslim nation with a secular democratic government, Malaysia's influence extends beyond the region. Its January announcement to discontinue funding for private religious schools is an example of a government taking action against the root causes of terrorism by not supporting deviant extremist teachings that breed hatred. Currently, Malaysia holds the chairmanship of the Organization of Islamic Conference and remains influential in the Non-Aligned Movement. Malaysia's Armed Forces are professional and committed. Together, we are cooperating in areas of mutual interest and improving our ability to operate in combined regional efforts.

India. Based on the policy direction provided by the Indo-U.S. Defense Policy Group, USPACOM embarked on an aggressive security cooperation program with India over the past year. To date, our forces have conducted a number of successful exercises-ranging from airborne operations to surface warfare naval exercisesthat have improved the combat effectiveness of U.S. forces. Over the past 10 months, USPÁCOM and its components have met with their Indian counterparts and established a long-range plan outlining mutually beneficial activities. These programs will increase our interoperability with, and access to, Indian forces. Our growing military cooperation supports the transformation of our relationship with India and serves to further this strategic partnership. This partnership was evident in India's strong support for the GWOT, most notably its naval escorts of U.S. ships transiting the Strait of Malacca last summer. As my recent trip to the troubled state of Kashmir confirmed, terrorists also menace India. Our improved relationships with India and Pakistan were invaluable as we helped these rivals step back last year from the brink of war. Recent overtures between the two countries give us renewed optimism.

Indonesia. The government of Indonesia responded admirably to the terrorist bombings in Bali on 12 October 2002, arresting many key operatives and developing information on the domestic and regional terrorist threat. Globally, radical Islam continues to destabilize Muslim countries and threaten the interests of tolerant, democratic nations. Indonesia is a key battleground in the struggle against terrorism and radicalism. In the face of economic turmoil, separatist and communal violence, and political transition, the world's most populous Muslim nation is struggling to maintain its secular, democratic character, and to cooperate with the international community in eliminating transnational security threats. The Indonesian military (TNI) is also going through a difficult transition from protector of an autocratic regime to defender of a popularly elected government. This significant cul

tural and institutional transition will not happen by itself, and is experiencing an immediate test following the breakdown of peace negotiations in Aceh.

Accountability, essential to democratic civil-military relations, must improve. Critical to the success of this effort is Professional Military Education that exposes TNI officers to democratic norms and modern defense management techniques while building personal bonds of trust and goodwill. Particularly important is influencing the younger generation of officers to support the struggle against terrorism. International Military Education and Training (IMET) is another important tool.

East Timor. This past May, Timor-Leste became the world's newest democracy following 20 plus years of occupation and over 200,000 deaths. Though the greatest credit for this achievement goes to the Timorese people, the U.S. military provided significant assistance in Timor-Leste's transition to a democratic state. Our U.S. Support Group East Timor (USGET) and Australia played a vital role in providing a stabilizing military presence during Timor-Leste's transition to independence. We conducted monthly ship visits, built schools and roads, repaired water and electrical systems, and provided medical and dental treatment for thousands of Timorese. We are proud of USGET and our military forces that contributed to Timor-Leste independence.

Although USGET deactivated on 17 December 2002, USPACOM continues to play a positive role in Timor-Leste's development as a democratic state. Through IMET and Foreign Military Sales (FMS), we are funding English language training, helping develop the Timor-Leste Defense Force (ETDF) logistics system, purchasing basic equipment, and designing training programs to help develop Timor's Defense Secretariat and the ETDF. My key goals are to support the development of a civil/ military defense establishment subordinate to civilian authority and the rule of law and help develop the ETDF as a credible self-defense force.

China. We have a modest but constructive military-to-military relationship with China. Our relationship is guided by PL 106-65 (NDAA 2000), which limits us to the areas of Humanitarian Assistance/Disaster Relief (HA/DR) and other nonwarfighting venues. Our activities are part of ongoing DoD efforts to place such contacts with China on a new footing since the April 2001 aircraft collision incident. The USS PAUL FOSTER port visit to Qingdao in November 2002 and my visit to China from 13-17 December 2002 were the first USPACOM bilateral military-tomilitary contacts with China since March 2001. One objective of these exchanges is to demonstrate the quality of our forces and our values by developing personnel exchanges between the younger generation of China's People's Liberation Army (PLA) and U.S. military personnel.

Taiwan. For Taiwan, our actions are guided by the Taiwan Relations Act. We have worked this past year to support self defense improvements that can best meet Taiwan's identified defense needs. We want Taiwan to remain stable, democratic, and economically prosperous while it develops a professional, civilian-controlled defense establishment with a modernized, joint operations-oriented military.

Asia-Pacific Center for Security Studies (APCSS) brings together current and future military and civilian leaders to discuss regional security concerns. The Center provides a unique platform to discuss security issues while promoting USPACOM and OSD regional cooperation policies. Now more than ever, we realize each country must contribute to regional security to assure its continued political, economic, and social stability. Through executive courses and conferences, the APCSS gives AsiaPacific leaders a regional forum to recognize security challenges, not only from a U.S. viewpoint but also from the perspective of 45 participating nations, including Russia, Chile, Canada, and Pakistan.

Center of Excellence (COE). COE's peace operations seminars have improved peace support capabilities in countries such as Thailand, Malaysia, Nepal, Bangladesh, and the Philippines. This improvement is evident in Thai and Filipino participation in peace stability operations in Aceh, Indonesia. These and other COE activities demonstrate our long-term commitment to relationships across the civil-military spectrum in the Asia-Pacific region. The Center's contributions complement other efforts to eliminate immediate terrorist threats. COE continues to prepare our forces to perform effectively in more complex environments with new actors and less predictable behaviors toward civilian victims of conflict. The Center's unique position as a civil-military humanitarian organization allows it to engage authorities from diverse countries in non-intrusive ways that help USPACOM reach out to new and otherwise reluctant partners. Your support for the COE in Disaster Management and Humanitarian Assistance provides valuable assistance in executing USPACOM priorities.

Chiefs of Defense (CHOD) Conference. One of our premier theater security activities, USPACOM annually hosts this regional conference, bringing together Asia-Pacific CHODs (CJCS equivalents) for a series of discussions on regional defense

issues. The November 2002 conference, which was held in Singapore and was cohosted by the Singapore Armed Forces and Chief of Defense Lieutenant General Lim Chuan Poh, gathered senior military leaders from 21 nations, including the Vice Chairman of the U.S. Joint Chiefs of Staff, General Pace. The conference's theme, "Meeting Security Challenges in the 21st Century," provided a forum for candid dialogue among senior leaders. The October 2002 Bali bombings heavily influenced discussions and underscored the ability of terrorists to cut across borders and present a common regional and global threat. The CHOD's conference continues to provide an excellent opportunity to foster understanding, build confidence among participants, strengthen relationships, and promote stability.

Foreign Military Financing (FMF) provides vital support to developing_countries involved in the GWOT. Funds provided in the Foreign Operations, Export Financing and Related Appropriations Act, 2002 and the emergency FMF Supplemental directly supported Security Cooperation priorities in the East Asian Littoral and other regions in USPACOM. FMF delivers the military articles, services, and training required to support the efforts of our friends and allies that promote U.S. security interests. We appreciate your support of SA programs and our efforts to improve their effectiveness and responsiveness.

International Military Education and Training (IMET) is an effective, low-cost component of the SA effort. The program provides U.S. access to foreign governments and influences those governments far out of proportion to its modest cost. Furthermore, it exposes future leaders to U.S. values and commitment to the rule of law and the role of a professional military in a democratic society, and it promotes military professionalism. Commitment of funds for full IMET to Indonesia, pending congressional consultations, is a welcome development. Having a core group of well-trained, professional military and civilian defense leaders with first hand knowledge of our values and democratic institutions will make a difference in achieving our strategic security goals in Indonesia and throughout the theater. Acquisition Cross-Servicing Agreements (ACSA) or Mutual Logistic Support Agreements (MLSA) have enhanced interoperability and readiness and provided a cost effective mechanism for mutual logistics support for U.S. and Allied Forces. USPACOM forces that participated in the FY03 multinational exercise COBRA GOLD greatly reduced their logistics footprint by using an ACSA. Three countries within USPACOM's AOR have deployed forces outside our AOR under ACSA provisions in support of the GWOT-Australia, New Zealand, and the Republic of Korea. Thus far, these countries have benefited from approximately $350,000 worth of logistics support, supplies, and services via reimbursable ACSĂ transactions. Primary logistics support provided includes food, medical services, dental support, force protection, transportation/material handling equipment, billeting, vehicle/equipment maintenance, and fuel. Thailand has deployed support forces to the USCENTCOM AOR in support of the GWOT, and the ACSA has been instrumental in providing Thai forces with cold weather and NBC gear on a reimbursable basis. USPACOM has 10 ACSAs in place (Philippines, Australia, Korea, Japan, Singapore, Malaysia, Thailand, New Zealand, Fiji, and Tonga) with eight other countries within our AOR in DoD's ACSA-Eligible status (India, Indonesia, Bangladesh, Nepal, Brunei, Maldives, Madagascar, and Sri Lanka). We will continue to negotiate with ACSAEligible countries to expand the options we have to integrate coalition capabilities. Promoting "Change" and Improving the Asia-Pacific Defense Posture

Our country is undergoing the most fundamental transformation of its defense strategy and Armed Forces since the Second World War. Guidance for this transformation is clear and starts with the National Security Strategy. At USPACOM, we are putting that guidance into action, operationalizing it with Asia-Pacific emphasis. Our efforts include strengthening command and control constructs, updating plans, improving force posture, diversifying access and enroute logistics, improving capabilities for immediate employment, and developing new operating patterns and concepts.

Our progress toward successful transformation of our force is the result of a deliberate, iterative process of innovation and experimentation. This process requires that we collaborate and stay in close touch with service initiatives-ensuring they are synchronized into the joint team. Likewise, we continue to build a collaborative bridge between our experimental efforts and the experimentation underway in U.S. Joint Forces Command, the lead command for joint experimentation.

Consistent with Secretary Rumsfeld's Transformation Planning Guidance, USPACOM has a multifaceted program covering a broad range of technological, organizational, and conceptual initiatives. It is a focused effort to explore and integrate innovative concepts and mature technologies to address our toughest challenges to effective joint operations.