I'm not sure I'd agree that the attacks are a "setback to Indonesia's counter-terrorism efforts"... they seem to me less a setback than an indication that the job is not finished.

JI and other jihadi groups have been substantially alienated from the Indonesian public. The deaths of Indonesians and Muslims in terror attacks have not been well received, and the jihadi agenda lacks popular appeal. The general quiet in sectarian violence in Maluku and Sulawesi has removed a powerful recruitment driver. Many JI leaders and members have been arrested and the group has splintered to a large extent.

It must be remembered, though, that JI is not an insurgency, it's a terrorist group. In many ways the group is most dangerous when it is pared down to a small core network of committed extremists. Even with very limited manpower and resources, a group like Top's can still generate very dangerous attacks.

ICG's recommendations make sense, though I would emphasize the need to achieve a permanent resolution to the sectarian conflicts that have provided extremists with their raison d'etre in the past. The Indonesians are on the right track and need to stay on it, but that does not and cannot assure that there will not be more such attacks as the process goes on. Unfortunately the nature of modern terrorism allows even a largely defeated group to make an enormous mess.