Karen Hughes, U.S. Under Secretary of State for Public Diplomacy and Public Affairs, has praised the Philippines for pursuing terrorist groups in the country but says economic development is equally important in creating conditions that can sustain peace. Referring to her earlier stops on an Asian tour, Hughes also called for greater openness in China. Douglas Bakshian reports from Manila.

The Philippine military this month announced that it had killed two leaders of Abu Sayyaf, the most violent Islamic militant group in the country.

Karen Hughes chats with Filipino World War II veterans following wreath-laying ceremony in Manila, 26 Jan. 2007

Karen Hughes, U.S. Under Secretary of State for Public Diplomacy and Public Affairs, congratulated the military for its campaign, saying it makes the world a safer place.

"The Philippine armed forces are very brave, they are on the frontline, they are sacrificing to protect not only the citizens of the Philippines but also Americans and people around the world who are interested in peace and stability and confronting the international threat that terrorism is," she said. " And so I congratulate the Philippine armed forces for their great successes."

Hughes spoke to reporters at an American military cemetery in Manila. On Thursday she visited the southern island of Jolo, where the Philippine military is waging its battle against Abu Sayyaf. The group has been blamed for numerous bloody attacks in the Philippines including the bombing of a ferry in 2004 that killed more than 100 people.

The U.S. military is advising the Philippines in the offensive on Jolo. With U.S. aid agencies, it is also involved in civilian works to improve the lives of impoverished people in the area.

Hughes says the war for hearts and minds is as important as military action in combating terror.

"We are really investing in people, in people's lives, in providing educational opportunity for young people through computers in the classrooms, through sewing machines in the classrooms, through health care clinics," Hugues said. "And by investing in the lives of people, building a road that will help people bring their goods to market and therefore help people become more prosperous. So we are really investing here in peace and prosperity, in the kind of peaceful development that will in the long run be necessary to sustain the progress against terrorism. "

The Philippines is a long-standing U.S. ally. Next month the two nations begin large-scale military exercises involving as many as five thousand U.S. troops.

Hughes also stated her belief that it is important for China to continue to open up and be more transparent as it develops economically.

She had arrived in the Philippines after a tour through China and Hong Kong. Hughes returns to the United States this weekend.