U.S. says Pakistan's ISI supported Kabul embassy attack

WASHINGTON (Reuters) - The Haqqani militant network is a "veritable arm" of Pakistan's powerful ISI intelligence service, which supported the group as it launched a startling attack last week on the U.S. Embassy in Kabul, the top U.S. military officer said on Thursday.

Admiral Mike Mullen, who steps down this month as chairman of the U.S. Joint Chiefs of Staff, made his accusation before a U.S. Senate panel, underscoring the fragility of the strained U.S.-Pakistan alliance.

Mullen, CIA director David Petraeus and Secretary of State Hillary Clinton all have met with their Pakistani counterparts in recent days to demand Islamabad take action against the Haqqani network.

"The Haqqani network ... acts as a veritable arm of Pakistan's Inter-Services Intelligence Agency," Mullen told the Senate panel.

Mullen's charges, which are sure to heighten tensions, come amid mounting exasperation in Washington as the Obama administration struggles to curb militancy in Pakistan and end the long war in Afghanistan.

Before Mullen spoke, Pakistani Interior Minister Rehman Malik told Reuters the ISI had no part in the embassy attack.

"If you say that it is ISI involved in that attack, I categorically deny it," he said. "We have no such policy to attack or aid attack through Pakistani forces or through any Pakistani assistance."

The Haqqani network is perhaps the most feared of three allied insurgent factions fighting U.S.-led NATO and Afghan troops under the Taliban banner in Afghanistan.

"With ISI support, Haqqani operatives planned and conducted (a September 11) truck bomb attack, as well as the assault on our embassy," Mullen said.

"We also have credible intelligence that they were behind the June 28 attack against the Inter-Continental Hotel in Kabul and a host of other smaller but effective operations."

Some U.S. intelligence reporting alleges the ISI specifically directed or urged the Haqqani network to carry out the attack on the embassy and a NATO headquarters in Kabul, two U.S. officials and a source familiar with recent U.S.-Pakistan official contacts told Reuters on Wednesday.

Mullen said the embassy attack and the bombing Tuesday that killed former Afghan president Burhanuddin Rabbani, who personified hopes for brokering peace negotiations with the Taliban, were examples of the Taliban's shift toward high-profile violence.

Such headline-grabbing strikes have been a blow to Washington's hopes to weaken a stubborn militancy and seal a peace deal with the Taliban as it plans to gradually draw down the U.S. force 10 years after the Afghan war began.

But Mullen said they do not indicate NATO strategy in Afghanistan is failing.

"These acts of violence are as much about headlines and playing on the fears of a traumatized people, as they are about inflicting casualties -- maybe even more so," Mullen told the Senate panel.

"We must not misconstrue them. They are serious and significant in shaping perceptions but they do not represent a sea change in the odds of military success."

(Additional reporting by John Chalmers and Michael Georgy; Editing by Bill Trott)