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WASHINGTON (Reuters)- U.S. officials said there was mounting evidence that Pakistan's powerful intelligence agency had encouraged a guerrilla network to attack U.S. targets, while a Senate committee voted to make aid to Islamabad conditional on fighting the militants.
The decision by the Senate Appropriations Committee, which did not specify any amount of aid for Pakistan in fiscal 2012, reflects growing anger in Washington over militants operating out of Pakistan and battling U.S. troops in Afghanistan.
Some U.S. intelligence reporting alleges that Pakistan's Inter Services Intelligence directorate (ISI) specifically directed, or urged, the Haqqani network to carry out an attack last week on the U.S. Embassy and a NATO headquarters in Kabul, according to two U.S. officials and a source familiar with recent U.S.-Pakistan official contacts.
The Haqqani network is one of three, and perhaps the most feared, allied insurgent factions fighting U.S.-led NATO and Afghan troops under the Taliban banner in Afghanistan.
However, U.S. officials cautioned that the information that Pakistan's spy agency was encouraging the militants was uncorroborated.
Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, said he had pressed Pakistan's army chief for Islamabad to break its links with the militant group.
"We covered ... the need for the Haqqani Network to disengage, specifically the need for the ISI to disconnect from Haqqani and from this proxy war that they're fighting," he said in a speech to the Carnegie Endowment for International Peace on Tuesday.
"The ISI has been doing this - working for - supporting proxies for an extended period of time. It is a strategy in the country and I think that strategic approach has to shift in the future."
A Pakistani official sought to play down the differences.
"Pakistan values its relationship with the U.S. and is committed to eliminating terrorism in Afghanistan and from our soil," said the official. "We will look at all evidence shared by the U.S. side and deal harshly with anyone and everyone responsible for terrorism."
The Senate committee approved $1 billion in aid to support counter-insurgency operations by Pakistan's military, but voted to make this and any economic aid conditional on Islamabad cooperating with Washington against militant groups including the Haqqanis.
Washington has allocated about $20 billion for Pakistan over the last decade. In fiscal 2010, Congress approved $1.7 billion for economic aid for Pakistan, and $2.7 billion in security aid, the Congressional Research Service says.
U.S. aid could be crucial for Pakistan next year as it has decided not to seek a new International Monetary Fund (IMF) loan when its current program ends at the end of this month.
Pakistan has been struggling since 2008 to keep its economy afloat with an $11 billion IMF loan. About $3 billion is left to be disbursed.
The simmering tension between Washington and Islamabad came to a head last week with the attack on the Kabul embassy. It was a major blow as the United States hopes to nudge Afghanistan toward stability and gradually bring home U.S. forces after a decade of war.
Since then, American officials, including the ambassador in Islamabad and Mullen have issued unusually blunt criticism of Pakistan's failure to curb the Haqqani group.
But the U.S. administration appears to have few options.
One option -- another cross-border raid, like the Navy SEAL mission that killed al Qaeda leader Osama bin Laden in May -- may be tempting in some quarters. But the risks are high and the backlash from Pakistan would be fierce, almost certainly harming what counter-terrorism cooperation exists.
"The administration has thrown everything at this -- high-level meetings, tons of money, all of these overtures, and it hasn't gotten us anywhere," said Caroline Wadhams, a security analyst in Washington.
"This can't go on forever," she said, "but the problem is that we have so little leverage."
Pakistan denies that it still has ties to the Haqqanis but U.S. frustration seems to be mounting.
"Look at the language, it's clear the Americans are very frustrated with the Pakistanis. I think they are preparing the ground for more action against the Haqqanis," said Rahimullah Yusufzai, editor of the Peshawar edition of the News daily and an expert on Afghanistan.
Vali Nasr, who until this spring was a senior official in the U.S. State Department's Afghanistan-Pakistan office, said efforts to prompt Pakistani action against militants with increased public pressure had no worked.
"They are not blinking," he said.
Additional reporting by Zeeshan Haider in Islamabad; Writing by Raju Gopalakrishnan; Editing by Robert Birsel