Hillary Clinton testifies before Congress on October 27, 2011, following a trip to Pakistan.
AFP/Getty Images
Hillary Clinton testifies before Congress on October 27, 2011, following a trip to Pakistan.

Story highlights

The Haqqanis have legitimate and "illicit business interests" in the Afghanistan region

A report outlining Clinton's decision is being delivered to Congress, an official says

The designation makes it easier for the United States to go after those who support the group

The Haqqani network operates from Pakistan's volatile North Waziristan region

(CNN) —  

An al-Qaeda linked network that for decades has been responsible for kidnappings and suicide bombings against the United States and its allies will be formally designated a terrorist organization by the Obama administration.

The group, the Haqqani network, also has extensive real estate and commercial interests. Its broad ties to the Taliban and its base in Pakistan had held out the possibility that the Haqqani network could be the key to a peace deal in Afghanistan.

The designations of the network as a foreign terrorist organization and a specially designated global terrorist entity shows that the Obama administration has decided the fight against militants outweighs the possibility of political reconciliation.

Secretary of State Hillary Clinton notified Congress on Friday of her intent to make the designations, the State Department said.

The move will make it easier to pursue those who support the al Qaeda- and Taliban-linked movement. But it could further deteriorate relations with Pakistan.

“The consequences of these designations include a prohibition against knowingly providing material support or resources to, or engaging in other transactions with, the Haqqani Network, and the freezing of all property and interests in property of the organization that are in the United States, or come within the United States, or the control of U.S. persons,” Clinton said in a statement.

Clinton signed the report to Congress in Brunei during her trip to Asia, a senior State Department official said.

Both houses of Congress have taken up the issue, calling for the Obama administration to add the Haqqani network to the State Department’s terror organization list.

The Haqqani network, a family and a terror group

The group has been tied to the deaths of American and NATO troops, as well as multiple attacks on embassies and other government infrastructure in Afghanistan.

From its base in Pakistan’s North Waziristan region, the Haqqani network has drawn the ire of the U.S. government with members of its top leadership already being designated as terrorists – which freezes any of their personal assets held in U.S. banks.

But the Obama administration had resisted designating the entire group, and that was a debated stance.

There had been concern that a foreign terrorist organization label would drive the Haqqanis away from a possible peace deal in Afghanistan and undermine ties with the Pakistani government. The group, with its links to other Taliban entities, was considered integral to the political reconciliation the United States was seeking, senior U.S. officials have told CNN.

But other officials say the label would be an important step in the fight against militants in Afghanistan and Pakistan.

In commending Clinton’s move, U.S. Rep. Peter T. King, the New York Republican who is chairman of the Committee on Homeland Security, called the decision “belated.”

U.S. Sen. Dianne Feinstein, chairwoman of the Senate Intelligence Committee, also hailed the designation. The California Democrat urged Clinton to make the move in May and introduced legislation in July instructing the secretary of state to designate the network as a foreign terrorist organization.

As for Pakistan, Nadeem Hotiana, a media attache at the Pakistani Embassy in Washington, said the decision was “not (Pakistan’s) business.”

“This is an internal matter for the United States,” Hotiana said. “The Haqqanis are not Pakistani nationals. We will continue to work with all international partners including the U.S. in combating extremism and terrorism.”

The Haqqanis are Zadran tribesman from Afghanistan’s Paktia and Khost provinces but have been in and out of Pakistan for the past 30 years, said Jeffrey Dressler, an analyst with the Washington-based Institute for the Study of War.

Dressler said designating the group as a terror entity “could meaningfully impair the international fund-raising and business efforts that allow the Haqqanis to fund their terrorist attacks, foreign fighter training, and radicalization programs.”

The Haqqanis maintain legitimate and “illicit business interests stretching from Afghanistan and Pakistan to the Persian Gulf, and possibly beyond,” he said in a report this week.

Haqqani network militant killed, Afghanistan says

They own car dealerships, money exchanges and construction companies. The group has commercial and residential real-estate holdings and import-export operations, Dressler said. But he cites a report that the group also profits from “kidnapping, extortion and protection rackets” on the Afghan-Pakistani border.

“The Haqqanis also maintain lucrative smuggling networks to strip timber, minerals and other precious goods from Afghanistan and smuggle them out of the country for sale,” he said.

The Haqqani network receives funding from the Taliban, though a significant portion of its money is said to come from deep-pocketed donors in the United Arab Emirates, Qatar, Kuwait and Saudi Arabia, according to a recent report by the Combating Terrorism Center at West Point, New York.

Haqqani Network a ‘killing machine,’ intelligence officials say

The designation as a foreign terrorist organization “could reduce a critical capability of the Haqqani Network by increasing the cost of doing business, reducing access to capital, and constraining the network’s financial resources, thereby limiting their freedom to operate in a local, regional, and international context,” Dressler said.

Founded by Jalaluddin Haqqani after the 1979 Soviet invasion of Afghanistan, the group initially worked with the United States and its allies to expel the Soviets. Since suffering a stroke in 2005, Jalaluddin Haqqani has essentially retired and his son, Sirajuddin, has taken command.

Since 2001, global security experts have said the Haqqani network’s calling card has been bold and complex suicide bombing attacks.

A drone strike last month killed Badruddin Haqqani, a son of Jalaluddin and a leader in the network, said Shafiquallh Tahriri, a spokesman for Afghanistan’s National Directorate of Security.

TIME: Why U.S. will struggle to defeat Haqqani in Afghanistan

U.S. officials also have said the group has ties to Pakistan’s Inter-Services Intelligence, the country’s main intelligence agency. The former chairman of the U.S. Joint Chiefs of Staff, Adm. Mike Mullen, described the Haqqani network as a “veritable arm” of the Pakistani intelligence agency.

“Pakistan’s military relies on Pashtun proxies, such as the Haqqanis, to strike Indian targets in Afghanistan; to pressure the Kabul government to align their regional interests with the Pakistanis; and ultimately to expel foreign military forces,” Dressler said.

Pakistan has vehemently denied ties to the group, though the Pentagon has repeatedly said it has not done enough to combat the militant network.

The designation by the State Department comes at a critical time for the United States, as combat operations in Afghanistan come to a close in 2014 and it looks to withdraw, in some cases through Pakistan.

The move also raises questions about the fate of suspected Haqqani captives, including U.S. Army Sgt. Bowe Bergdahl, who was believed to have been captured in June 2009 by Haqqani loyalists in eastern Afghanistan.

CNN’s Arielle Hawkins, Tim Lister, Jill Dougherty, Joe Sterling and Carl Lavin contributed to this report.