THE HAGUE, Sept 27: President Pervez Musharraf has said the killing of top Al Qaeda militant Amjad Farooqi is a serious blow to the terrorist network. "We've eliminated one of the very major sources of terrorist threat.

Not only was he involved in the attacks on me but also in attacks elsewhere in the country," the president told reporters after meeting Dutch acting premier and Finance Minister Gerrit Zalm during a visit to the Netherlands.

He said there had been some arrests and "we will get a lot of useful information leading to further arrests and eliminations". Mr Zalm also welcomed the militant's death, saying: "We were extremely happy to hear that a top terrorist has been eliminated. We congratulated the president for this success."

In reply to a question, Gen Musharraf said interrogations and technological intelligence suggested Osama bin Laden was still alive. "The evidence is interrogation of people that we have apprehended and also technological evidence."

He said Osama's whereabouts remained unknown. "I don't know where he is. I wish I knew." About the military operation going on in South Waziristan, he said the government was pursuing both political and military means to flush out foreign terrorists from the area.

He said tribesmen were supporting the government in its efforts to curb terrorism and had even formed a lashkar to arrest terrorists holed up in the region. He rejected an observation that civilian people were targeted in the operation.

The president vowed that no foreign terrorists would be allowed to operate from the Pakistani soil. Asked about Dr Abdul Qadeer Khan, he admitted that the nuclear proliferation case "brought us a bad name."

"It compromised our sincerity," he said. About the uniform issue, he said: "I am concerned about many things. I am concerned about the continuity of our policy, about the continuity of our foreign policy, about the continuity of our anti-terrorist campaign, the continuity of our rapprochement with India." He said democracy was fully functional in Pakistan with all democratic institutions in place.

PEACE PROCESS: Meanwhile, in an interview published in the International Herald Tribune, Paris, the president said Pakistan had started a confidence building process with India, calling the current situation between the two countries 'encouraging'.

"I would say the current situation is encouraging in that we have started a dialogue process and confidence-building measures," he said. It was not clear when the interview was given.

"Both sides have to move forward in harmony, but we cannot rush ahead without resolving our disputes," he said, adding that the Kashmir dispute was the most important one.

Gen Musharraf reiterated that Pakistan would not send troops to help restore stability in Iraq, saying "the domestic environment does not allow the participation of Pakistani troops in Iraq".

He said in order to fight terrorism, the international community had to help resolve political disputes and deal with the problem of poverty and lack of education. "Basically, it is the Palestinian dispute which gave rise to the suicide bombing phenomena and the car bomb phenomena, which has now spread all over the world.

"Failing to resolve the Palestinian dispute is no longer an option for us. We cannot fail, we have to succeed and, therefore, I would say that both sides, Israel and the Palestinians, ought even to be coerced - a harsh word maybe - to resolve the dispute with justice," he said.

Turning to the economy, he said a cooperation agreement with the European Union had helped the Paris Club to reschedule Pakistan's foreign debt of $12.5 billion, causing a positive snowball effect on the economy. -Agencies