UPDATE 9-U.S. designates Haqqani network a terrorist group
* Designation increases pressure on Pakistan's government
* Haqqani commanders vows "hardship" for U.S. POW
WASHINGTON, Sept 7 (Reuters) - The United States said on Friday it is designating the Pakistan-based Haqqani network a terrorist organization, triggering sanctions against a group American officials blame for high-profile attacks in Afghanistan, and which they say has ties to the Pakistani state.
The decision to blacklist the Haqqani network, announced by U.S. Secretary of State Hillary Clinton during a trip to Russia, could heighten tensions between Washington and Islamabad and have far-reaching implications for any reconciliation process in Afghanistan.
Senior Haqqani commanders warned as much, telling Reuters that it showed the United States was not sincere about peace efforts in Afghanistan. The commanders also said it would bring hardship for America's only prisoner of war, U.S. Sergeant Bowe Bergdahl, who is being held by the militants.
"They are on the one hand claiming to look for a political solution to the Afghan issue while on the other they are declaring us terrorists," said one of the commanders, speaking to Reuters by telephone from an undisclosed location.
"So how can peace talks succeed in bringing peace to Afghanistan?"
The Haqqanis, a Pashtun tribe with strongholds in southeastern Afghanistan and across the border in Pakistan, are the most experienced fighters in Afghanistan and are blamed for some of the boldest attacks, including one on embassies and parliament in Kabul in April that lasted 18 hours.
The United States accuses Pakistan's intelligence agency of supporting the Haqqani network and using it as a proxy in Afghanistan to gain leverage against the growing influence of its arch-rival India in the country. Pakistan denies the allegations.
A senior Pakistani security official said blacklisting the Haqqani network would be counterproductive and would put unnecessary pressure on Islamabad, a strategic U.S. ally.
"If the United States wants to have a constructive relationship with Pakistan, then this is a bad move," the official said. "This will push Pakistan into a corner."
Still, a senior U.S. official, briefing reporters on the decision, said Pakistan's government was informed ahead of time about the decision "and they did not express concern about this designation."
Clinton, facing a congressional deadline this weekend for a decision, said in a statement that she had told the U.S. Congress about her decision to brand the Haqqani network a foreign terrorist organization, subjecting the group and its members to additional sanctions, including an asset freeze.
A U.S. official said the formal designation would be made in the coming days.
Whether to brand the group as a terrorist organization has been the subject of intense debate within the Obama administration, with some officials arguing it will have little real impact on the battlefield but risks setting back Afghan reconciliation efforts.
Most of the Haqqani leaders have already been blacklisted individually.
Still, the Haqqanis run a sophisticated and diverse financial network that has been compared to a mafia group, raising money through kidnapping, extortion and drug trafficking, but through a legitimate business portfolio that included import/export, transport, real estate and construction interests in Afghanistan, Pakistan and the Gulf.
A second U.S. official, also briefing reporters on condition of anonymity, said the designation will trigger U.S. outreach to "a number of different countries where we suspect the Haqqanis have assets, and we will be urging them to freeze their assets and to take action against the group."
Just as the Obama administration was once divided about whether to designate the Haqqani network as a terrorist organization, it has also been split over the extent of the group's ties to Pakistan's ISI spy agency.
Admiral Mike Mullen, speaking to Congress shortly before he retired last year as the top U.S. military officer, described the Haqqani network as a "veritable arm" of the ISI. This was an accusation that some in the Obama administration believed went too far.
But U.S. officials were at pains to emphasize that Friday's action was not directed at the Pakistani government. U.S.-Pakistani ties have only recently begun to stabilize after 16 months of recriminations that began with the U.S. raid to kill Osama bin Laden on Pakistani soil.
The first U.S. official briefing reporters on Friday stressed that there was "absolutely no effort" by the Obama administration to begin a process of designating Pakistan as a state sponsor of terrorism, despite the finding on the Haqqanis.
"If anything, as I just noted, they have been an extremely valuable ally in countering extremism and terrorism," the official said.
A spokesman for Pakistan's embassy in Washington said of the U.S. action: "This is an internal matter for the United States. It is not our business. The Haqqanis are not Pakistani nationals."
The United States has frequently targeted the Haqqanis with military strikes. U.S. and Pakistani officials say they have high confidence that Badruddin Haqqani, a top commander and son of the group's founder, was killed in a U.S. drone strike last month.
"This is a network that has taken a severe beating in recent months," said Pentagon spokesman George Little, without citing the drone strike.
Still, safe havens in Pakistan enjoyed by militants fighting in Afghanistan remain a major U.S. concern and are undermining the NATO-led war effort. Lawmakers in Congress urged Pakistan to do more against the Haqqanis.
On Friday, both Senate Intelligence Committee Chairwoman Dianne Feinstein, a Democrat, and House of Representatives Homeland Security Committee Chairman Peter King, a Republican, applauded Clinton's move.
"This is a terrorist organization and an enemy of the United States, and I urge Pakistan to redouble its efforts - working with U.S. and Afghan partners - to eliminate the Haqqani threat," Feinstein said in a statement.
In Kabul, a government spokesman said any move by Washington against the Haqqanis was welcome.
"This will be a major step by the United States against the Haqqani network who are still plotting for dangerous and destructive attacks against us," said Afghan Interior Ministry spokesman Sediq Sediqqi.
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