"We believe they've been preparing terrorist outrages. They're very close to our border. The indications are not that encouraging. But we've been patient so far and we'll continue to be patient," he said.

"We are trying to avoid a shooting war to the maximum extent possible and therefore, as it were, we are looking the other way," he said.

"They will have to force us to fight. That can come when and if they physically attack us."

Ethiopia views the Mogadishu-based Islamists, who took a swathe of south Somalia in June, as led by terrorists.

The Islamists say Ethiopia wants to control them and has sent thousands of troops across the border to back President Abdullahi Yusuf's government in the town of Baidoa.

Diplomats fear the Somali crisis could spark a regional war as Ethiopia's foe Eritrea, is accused of arming the Islamists.

Meles said Ethiopians in Somalia were only giving "elementary military training" to Yusuf's fledgling security force in line with international support for his government.

"Naturally, they are in a dangerous place so they have to be armed to protect themselves. A few hundred at most would be the number," he said.



ISLAMIST LEADERS "INCORRIGIBLY JIHADIST"

Dressed casually and looking relaxed, Meles denied accusations from the Islamists -- and some eye-witnesses -- that several thousand Ethiopian soldiers had crossed the border.

"If people are seeing these trainers, we are talking about the same thing. If, however, they are imagining large-scale military deployment involving all sorts of military activities, they can only be imagining," he said.

Meles declined to divulge details of how many troops he was massing on the border in case of all-out conflict. "Surely you wouldn't expect me to tell you the truth on that, would you?" he said with a laugh.

Meles said he knew nothing about two Ethiopians the Islamists say they have held as "spies" and may execute in Mogadishu.

The Islamists said on Tuesday they had captured an Ethiopian soldier when fighting militia loyal to Somali Defence Minister Abdikadir Adan Shire Barre Hiraale in the southwest at the week-end and would "parade him to members of the press".

"There might be Ethiopian refugees, but we do not have any Ethiopians in Mogadishu associated with the government," Meles said.

Meles said there were "credible reports" from his and other intelligence services that radicals within the Islamists were preparing attacks around the region.

But he said the problem was the Islamists' "incorrigibly jihadist leadership", not its rank-and-file militia.

"The bulk of the Islamic Court militia are just sub-clan militia whose agenda is extremely parochial and do not pose a threat," he said.

"How to separate the basically healthy base of the movement from the basically jihadist leadership at the top is, as they say, the $64,000 question."

Meles said criticism among some diplomats that Ethiopia's rhetoric and military movements have stirred up the Islamists unnecessarily was unfair.

"We would have thought we are taking a very conciliatory position," he said, noting that Ethiopia -- like others in the international community -- were supporting Somalia's interim government, charter and other institutions.

The Yusuf government is the 14th attempt to restore central government since warlords' 1991 ouster of a dictator prompted a slide into anarchy.

(Additional reporting by Guled Mohamed in Mogadishu)

Source: http://today.reuters.co.uk/news/CrisesArticle.aspx?storyId=L24100064&WTmodLoc=World-R5-Alertnet-4