A police shoot-out in Indonesia Wednesday killed one of Southeast Asia's most hunted terrorists, Azhari bin Husin. Following a background report, an expert discusses the significance of the killing.

RAY SUAREZ: A fierce gun battle erupted this afternoon between Indonesian police and militants at the hideout of Southeast Asia's most wanted terrorist. Officials said Malaysian Azhari bin Husin was among seven militants who died in the raid, after he allegedly set off explosives wrapped around his body.

Azhari, an explosives expert who studied engineering in Australia and Britain, has been on the run since 2002. He's accused of plotting at least four deadly attacks in Indonesia, including last month's suicide bombings at three Bali restaurants; 22 people died in those attacks.

A car bomb at two crowded nightclubs in Bali three years ago, killed more than 200 people, most of the victims were foreign tourists. It was the first major terrorist attack on Indonesian soil. Two other bombings in the Indonesian capital Jakarta also targeted westerners, the attacks at the J.W. Marriot Hotel in 2003, and the Australian embassy last year killed about two dozen people. Most of the victims in those attacks were Indonesian.

The Indonesian Archipelago is made up of more than 18,000 islands and is the world's most populous Muslim country. The Jemaah Islamiyah, or JI, the group allegedly responsible for the string of bloody attacks in Indonesia, has sought to establish an Islamic state there. Azhari joined the organization in the late 1990s, and trained in al-Qaida camps in Kandahar, Afghanistan.

Since the 2002 attack, the Indonesian government has cracked down on extremist groups like Jemaah Islamiyah, arresting some 300 alleged terrorists, nearly 200 of them have been convicted.

Today's raids in Indonesia came a day after police in Australia netted nearly 20 Islamic terror suspects who were said to be planning major attacks in Sydney and Melbourne.

RAY SUAREZ: For more, we turn to Sidney Jones, Southeast Asia project director for the International Crisis Group. Was this an important catch, the killing of Azahari Husin?

SIDNEY JONES: It's extremely significant. This man was the master technician. And he was a master teacher. He had the capacity to teach a lot more young recruits how to make these bombs, so taking him out of the picture is actually a very good development.

RAY SUAREZ: He was called by you, among others, one of the country's most wanted men. What's his background?

SIDNEY JONES: He was someone who went to high school in Australia. He grew up in a middle class family in Malaysia. He went back from Australia to actually go to university, to technological school in Malaysia, ended up teaching there and then went on for a doctorate to Britain.

So he's very well educated, has extensive exposure to international life and so on. And he ended up getting drawn in to this radical organization, we think, because of problems in his family in Malaysia in around 1994 and '95.

RAY SUAREZ: Is it unusual -- if you look at the profile of other Jemaah Islamiyah activists, terrorists -- to find someone who is so well traveled and so well educated?

SIDNEY JONES: So well traveled, yes. Well educated, no. Most of the senior leadership of JI actually did get university education. We have veterinarians; we have people who were civil engineers and so on.

So it's a misapprehension to think that it's just the poor, deprived people that go into these organizations.

RAY SUAREZ: How is Jemaah Islamiyah connected, if at all, to al-Qaida?

SIDNEY JONES: There was one part of Jemaah Islamiyah that was very active in going back and forth between Afghanistan and Malaysia in the late 1980s and early 1990s. They developed personal ties to people like Khalid Sheikh Mohammed at that time.

There was ongoing relationship up to the late '90s at the time when the Taliban were there, but then for specific operations people in JI would apply for funding to al-Qaida, much as non-governmental organizations would go to a donor organization with a proposal and ask for funding and they got it.

So all of the major bombings that have taken place in Indonesia have gotten funding from the outside, but Jemaah Islamiyah has never been directed or controlled in any way by al-Qaida.

RAY SUAREZ: Well, this man, Azhari Husin, received training from al-Qaida, didn't he?

SIDNEY JONES: Well, he was sent with Hambali -- a man who is now in U.S. custody -- to Kandahar in 1999 or 2000 to get extensive explosives training so, yes, he trained under people who were working for al-Qaida at that stage but it doesn't mean that there's any kind of direct connection.

It's also important to note that there are many people even within JI that don't agree with bombing western targets and indiscriminate attacks on civilians.

RAY SUAREZ: There are similar groups in the neighboring countries, in Malaysia and Thailand, in the Muslim areas of the Philippines. Are these connected to Jemaah Islamiyah?

SIDNEY JONES: Jemaah Islamiyah used to have a subdivision that covered Malaysia, Singapore, a subdivision that covered the Philippines, and even a subdivision in Australia. Because of the counterterror measures that have been taken in Southeast Asia, all that we really have left is a structure in Indonesia with a significant number, about 30 really hardcore dangerous people in the Philippines, but not all of the Indonesians in the Philippines are members of Jemaah Islamiyah.

RAY SUAREZ: Well, there have been some big trials, terrorist trials in Indonesia and now this latest manhunt, which resulted in this killing and other arrests. Is the group still very active, still able to really be harmful?

SIDNEY JONES: Yeah, unfortunately, Azhari, even though he was extremely important, is not the critical figure in terrorism in Indonesia. His partner also Malaysian, also one of the most wanted people, is the real strategist and the person who could recruit new people into the network.

He's still at large, but I hope that with the arrest made as a result of this raid today that he too may be tracked down and arrested. Even that won't eradicate terrorism but it will be a significant dent.

RAY SUAREZ: Are these kinds of arrests a sign that this government in Indonesia is very serious about rolling up these networks?

SIDNEY JONES: I think it's an indication that this government is serious about trying to track down and roll up the network. The problem is that it's not an issue that can be solved by law enforcement alone. You have to go back and look at why people are getting recruited. You have to address the schools that are drawing some of these people in. And you have to look at why the ideology of what we call Salafi Jihadism has taken root in Indonesia. And it's a much broader problem than just tracking down people who have been involved in violence.

RAY SUAREZ: I ask because outside of Indonesia there have sometimes been questions about just how serious the Indonesian government of the day at any given time is, was, about pursuing these groups.

SIDNEY JONES: And I think that criticism has come in part because the Indonesian government hasn't been willing to acknowledge that the organization called Jemaah Islamiyah is actually responsible for these kinds of actions.

It's willing to go after people who have been involved in violence. It's made these arrests and it's tried these people in reasonably open and transparent trials. But it's not willing to tell the Indonesian public, this is the problem; we've got an organization with this name that's been responsible for these acts and therefore the public needs to be more vigilant in terms of trying to report on suspicious strangers or whoever happens to come into villages.

The public information side of things has been not particularly well handled by the Indonesian government. The law enforcement side has been.

RAY SUAREZ: Where does the Indonesian man and woman on the street come down in all of this?

SIDNEY JONES: I think there's real outrage on the part of much of the Indonesian public that these bombings have taken place. This is not a movement that has widespread spread support in Indonesia. And we're not seeing a radicalization of the body politic in Indonesia, but the fact remains that within the network that does support these people there's an unwillingness even when they don't agree with these kinds of actions to actually then take the next step of reporting to the police.

RAY SUAREZ: Well, what happens now? You mentioned this other co-leader who is still out there. Are there still big fish, so to speak, to be caught?

SIDNEY JONES: Yes. There are big fish. And we also have organizations that are separate from Jemaah Islamiyah with a similar ideology that also believe that you have to attack western civilians because the U.S. and its allies are the number one enemy of Islam and are out to destroy Islam more generally. That kind of ideology is not just restricted to JI. There are four or five other groups in Indonesia that also bear watching unfortunately.

RAY SUAREZ: And does that rise and fall with the amount of ethnic tension in Indonesia itself? For instance, if Christian Muslim tensions rise in specific areas, does that radicalize populations?

SIDNEY JONES: It has radicalized populations in the past. And when we've seen those tensions erupt into outright violence and communal fighting between Christians and Muslims, that becomes one of the best recruiting tools for these groups and often times we see terrorist organizations exploiting that violence as a way of increasing the strength of their own operations.

RAY SUAREZ: Sidney Jones, thanks a lot for being with us.

SIDNEY JONES: Thank you.