AKARTA, Indonesia, Sept. 26 — A group of Indonesian Muslims, handpicked by the United States Embassy here for their moderate views, this week told an expert panel from Washington in unvarnished terms why America is unloved in the Islamic world.

The basic problem is policy, not public relations, said Yenni Zannuba Wahid, 28, who is the daughter of the nation's former president, Abdurrahman Wahid, and who has just returned from a year of graduate study at Harvard.

"There is no point in saying this is a problem of communication, blah blah blah," said Ms. Wahid after a videoconference on Thursday night with the advisory group on public diplomacy in the Arab and Muslim world. The panel is to report to the White House and Congress on Wednesday. "The perception in the Muslim world is that the problem is the policy towards the Israeli-Palestinian conflict and Iraq."

That said, Ms. Wahid added, it would help alleviate, but not close, the distance between the Muslim world and the United States, if Washington would "explain the policy."

"Just talk to us," she said.

Another panelist criticized the United States' preoccupation with Islamic fundamentalists. "Every country has fundamentalists," said Zaki M. Mansoer, the director of a Muslim magazine, Panjimas. "I think Billy Graham Jr. is a fundamentalist," he said, referring to the Rev. Franklin Graham, who has called Islam "a very evil and wicked religion."

Ms. Wahid, whose father was president from 1999 to 2001, joined a group of a dozen Muslims, including leaders of the largest Muslim organizations, in a hotel conference room on Thursday night. The head of the advisory group, Edward P. Djerejian, who is a former United States ambassador to Syria, was on the screen in front of them with several of his colleagues.

Mr. Djerejian's 12-member panel, which includes John Zogby, the president of the polling company, Zogby International, and Shibley Telhami, a professor at the University of Maryland, was asked this summer by Congress to come up with some rapid solutions to anti-Americanism in the Muslim world.

Angered by a series of opinion surveys that showed a sudden slump in the United States' standing in the world, particularly in Muslim countries, Congress froze the administration's budget for public diplomacy — the efforts by the State Department and others to explain the United States abroad — until the Djerejian panel released its findings.

Among the issues panel members say they are considering is whether there should be an increase in the number of exchange students from the Muslim world who travel to the United States for yearlong stays with American families and for other kinds of programs. One member of the panel said the exchanges were an excellent way to build "constituents across the world."

Another question was whether the Bush administration should establish a new position, a "public diplomacy adviser," as recommended in a recent study by the Council on Foreign Relations. That report concluded that anti-Americanism was so severe it was "endangering our national security and compromising the effectiveness of our diplomacy."

The Djerejian group traveled to Cairo; Damascus, Syria; and Istanbul; where its members met face to face with Muslim intellectuals and opinion leaders.

In Cairo, they peered through a two-way mirror into two focus groups of Egyptians who discussed their attitudes toward the United States, particularly what they saw as American support for Israel at the expense of the Palestinians.

One of the panel members, Stephen P. Cohen, who is the senior scholar with the Israel Policy Forum and is well traveled across the Middle East, said many of the Muslims interviewed held "a great deal of regard for American values, especially American education."

In some ways, he said, this only makes things worse. "We wouldn't be so upsetting to people if they didn't believe we had these universal values for our own society, and completely ignored them internationally."

The panel was supposed to visit Pakistan and Indonesia, but faced with a tight budget and a scramble to write the report by Wednesday, it made do with videoconferences.

The dialogue with Indonesia was intended to give the panel a sample of opinion in the world's most populous Muslim country, a place that is considered moderate in its overall religious views but where there are increasing calls for Shariah, or Islamic law.

Mr. Mansoer, the director of Panjimas, said he and his colleagues took the videoconference as a chance to "let off steam." Hot-button issues, he said, included the overarching one of the Israeli-Palestinian conflict, followed by concerns specific to Indonesian Muslims.

Most damaging to America's standing in Indonesia, Mr. Mansoer said he told the panel, is the perception that the Indonesians that the United States "picked on" were fundamentalist believers of Islam. These people have a right to practice that form of their religion, just as fundamentalist Christians do in America, he said.

Mr. Mansoer was referring in particular to the elderly Islamic preacher Abu Bakar Bashir, who the United States believes heads a terrorist organization, Jemaah Islamiyah. At his trial earlier this month, Mr. Bashir was found not guilty of the charge that he leads the group.

Ms. Wahid, whose father was the head of Nahdlatul Ulama, the largest Muslim organization in Indonesia, and is considered the personification of Indonesia's moderate Islam, said that as the panel grappled with solutions it should consider the following: "How come what the extremists say has currency with the larger mass in the Muslim world? How is it the radicals manage to use the political situation to advance what they are preaching?"

The United States needs to be more sensitive, even about small things, she said.

At the invitation of the American Embassy, the Indonesians gathered for dinner at a hotel here before the videoconference. They were invited to eat at 6 p.m., the time when many Muslims go to the mosque for prayers, she said. "My more conservative friends were asking: `Why at 6 p.m.? Are they doing this on purpose?' "

In the end, Mr. Mansoer said, the United States faces a long haul. "It will take time to build trust again. You can't make a quick fix. This is the equivalent of nation-building."