One issue needs to stand out from all others for Indonesia's new president when he takes office today -- terrorism. To be sure, it's far from the only problem that Susilo Bambang Yudhoyono will have to contend with -- everything from corruption to the lack of foreign investment is also crying out for attention.

But Indonesia's first popular elected president cannot put his nation on the path toward prosperity, and encourage nervous foreign investors to return, unless he takes decisive action to tackle the terrorist menace so recently seen in the Sept. 9 bomb blast that killed nine people outside the Australian embassy in Jakarta. That means getting on the same page as the United States. The two countries share the same goal of destroying terrorism. But when it comes to determining who is a terrorist, critical differences need to be resolved.

That means Mr. Yudhoyono must move quickly to declare Jemaah Islamiyah (JI), the al Qaeda linked group believed responsible for this and other attacks, a terrorist group and treat the organization accordingly. But it also requires Washington to act, by placing the Free Aceh Movement (called GAM for its Indonesian name: Gerakan Aceh Merdeka).

In the first year after 9/11, Indonesian politicians not only failed to support the American war on terrorism, they even denied the existence of JI. In 2002, Indonesian Vice President Hamzah Haz, had dinner with the leaders of the country's most notorious terrorist groups, including Abu Bakar Baasyir, JI's now-jailed spiritual leader. Afterwards, the vice president announced there were no terrorists in Indonesia.

Indonesia also strongly opposed American anti-terrorist military operations, wrongly characterizing them as anti-Muslim. For example, in 2002, in front of a cheering parliament, outgoing President Megawati Sukarnoputri demanded the United States not bomb Afghanistan during Ramadan, the Muslim holy month. She failed to mention, of course, that Ramadan wasn't stopping the predominantly Muslim Indonesian army from continuing its offensive against GAM in Aceh. Indonesian authorities also failed to prevent a radical Islamic group, Darul Islam, from recruiting 300 volunteers to fight against the Americans in Afghanistan.

It was only after JI blew up two bars in Bali on Oct. 12, 2002, killing 202 people, that the Indonesian government finally acknowledged the existence of terrorists intent on wiping out secular government in the archipelago and creating a Muslim state. As other attacks followed in Jakarta and other cities, Indonesian police suddenly found themselves working closely with American, Australian and other international law enforcement organizations to track down the Bali bombers and other terrorists.

All too often, the trail leads back to JI. But although Indonesia's law-enforcement agencies now expend great energy in pursuing individual JI terrorists suspected of committing specific crimes, the organization as a whole still seems to get something like a hometown discount when it comes to taking any concerted action against the organization behind the attacks. Ms. Megawati refused even to declare JI a terrorist organization. This despite the fact that the United States and the United Nations -- which rarely agree about anything related to the war on terrorism -- have both done so.

Ask Indonesian officials about this inconsistency, and they point to another -- that of the United States regarding GAM. To the U.S. State Department and other American policymakers, GAM is classified as a "separatist group," not a terror group. This even though State's own 2003 Human Rights Country Report says GAM rebels carried out, "grave abuses, including murder, kidnapping and extortion" and that GAM meets all three criteria for making State's list of Foreign Terrorist Organizations (FTOs). These are that the organization be foreign, that it engage in terrorist activities and that its activities threaten the security of the United States and/or its citizens.

Thousands of people, mostly civilians, have perished in Aceh since the struggle began in 1976. In 2000, GAM began a program of ethnic cleansing in Aceh, targeting civilians that it did not consider to be true Acehnese with murder, arson and intimidation. Between 2000 and 2002, GAM forced an estimated 50,000 civilians from their homes. It also is notorious for burning schools; since 1989, it has burned more than 1,000 schools and killed more than 60 teachers. In 2002, its members were linked to a series of bomb attacks against shopping malls and discotheques in Jakarta.

GAM's threats to American citizens and interests in the region are substantial. GAM has targeted Exxon-Mobil's natural-gas facilities in Aceh and has been blamed for hijacking trucks, shooting at airplanes, burning buses and planting landmines along roads leading to Exxon-Mobil facilities. GAM also has been linked to maritime piracy against international shipping in the Straits of Malacca, through which 50,000 ships sail each year, carrying 30% of the world's trade goods and 80% of the oil on which Japan relies.

GAM's political aims may be domestic, but its reach is world-wide. Some 5,000 of its fighters trained in terrorist camps in Libya between 1986 and 1989. Its leaders consult with the leaders of al Qaeda and JI, although they do not support JI's goal of creating a pan-Islamic state. They cooperate closely with the region's terrorist groups, including training recruits with other terrorist groups in Moro Islamic Liberation Front camps in the Philippines. Southeast Asia's terrorists have found that training, weapons smuggling, money laundering and creating escape routes all work better when they cooperate across national boundaries.

The best way for the United States and Indonesia to become better security partners is for both countries to recognize each other's terrorist problem. Indonesia's failure to stand up to JI and formally declare it a terrorist organization frustrates many in Washington. American ambivalence toward GAM is not lost on the Indonesians and may account for some of Indonesia's reluctance to be a reliable ally in the war on terror.

With a new leader taking charge in Indonesia, this is a good time for both countries to overcome these problems and get together in the fight against terrorism.

Dana Dillon is a senior policy analyst in the Asian Studies Center at the Heritage Foundation.