WASHINGTON — Two years before terrorists struck the Indian port city of Mumbai, a Pakistani-American man named David Coleman Headley began laying the groundwork for the attack, financed, he claims, by $25,000 from an officer in Pakistan’s powerful intelligence service.
Mr. Headley told Indian investigators that the officer, known only as Major Iqbal, “listened to my entire plan to attack India.” Another officer with the intelligence service, the Inter-Services Intelligence Directorate, “assured me of the financial help,” Mr. Headley said.
As the United States presses Pakistan for answers about whether the ISI played a role in harboring Osama bin Laden, Mr. Headley is set to recount his story of the Mumbai attack in a federal courthouse in Chicago. What he discloses could deepen suspicions that Pakistani spies are connected to terrorists and could potentially worsen relations between Washington and Islamabad.
India, the site of the November 2008 attacks, will be closely monitoring the trial for evidence of the ISI’s duplicity. Pakistan will also be listening to — and is likely to deny — Mr. Headley’s every word. So far, Islamabad has dismissed Mr. Headley’s accusations against the ISI as little more than a desperate performance by a man hoping to avoid the death penalty.
An American official who spoke on the condition of anonymity said that the United States government’s view of Mr. Headley — like so much else surrounding the ISI — was murky. No agreement exists in Washington on whether the ISI guided Mr. Headley and the attacks on Mumbai.
“It’s not very clear,” the official said. “A lot of this is going to come out of the trial. His claim could just be his claim.”
Still, the very fact that the government is presenting Mr. Headley as a prosecution witness suggests that at least some in the government believe he is telling the truth. And the authorities said they expected the government to present e-mails and tapes of telephone conversations to support his story.
Any new evidence of ISI malfeasance that emerges from the trial will reverberate in Washington, with the relationship between the United States and Pakistan at its most tenuous in years.
A growing chorus on Capitol Hill argues that the discovery of Bin Laden’s hideout and the evidence in Mr. Headley’s case leave no doubt that the ISI and its Pakistani military overseers have played a cynical double game with the United States. Pakistan has received $20 billion in military and development assistance since 2001, and its military, they say, has sheltered Bin Laden, supported Afghan Taliban who kill American troops and guided the militants who attacked Mumbai.
Mr. Headley himself is not on trial. But he will be the main witness against Tahawwur Hussain Rana, a Chicago businessman who is accused of providing financial and logistical support for the 2008 siege in Mumbai. The attack, a barrage of gunfire and grenades, killed at least 163 people, including six Americans. Mr. Rana’s defense is that he agreed to support Mr. Headley’s activities in India because he was led to believe he was working for the ISI, and therefore the Pakistani government.
Bruce O. Riedel, a terrorism expert at the Brookings Institution, a former Central Intelligence Agency officer and a critic of the ISI, predicted that the trial would be “the next nail in the coffin of U.S.-Pakistan relations, as the ISI’s role in the murder of six Americans is revealed in graphic detail.”
With precisely that possibility in mind, the American authorities have kept much of the evidence secret. Citing national security concerns, they have successfully moved to quash the defense lawyers’ subpoenas for State Department cables and records held by the F.B.I. that discuss Pakistan’s links with militants.
And though the government has charged four other men with aiding and abetting the murder of American citizens, including the officer known as Major Iqbal, the indictment refers to them either as commanders or associates of the militant group Lashkar-e-Taiba, not as having links to the ISI.
In interviews in recent days, American military and intelligence officials who have served in Pakistan argued that the ISI’s story is complex. Some of them portray it as an unwieldy third-world bureaucracy that even Pakistani generals struggle to control. The United States should try to reform the ISI, they argue, not abandon it.
“I think we’re at an extremely critical juncture,” said James Helmly, a retired general who served as the senior American military representative in Pakistan from 2006-8. “We need to mature the relationship.”
Arguably the most feared institution in Pakistan, the ISI has a mythic reputation among Pakistanis as a shadow government with a hand in virtually every major development in the country. Human rights and democracy activists say the agency is out of control and accuse it of carrying out hundreds of disappearances, systematically rigging elections and harassing civilians who support peace with India.
They say the American raid that killed Bin Laden has created a rare moment when the ISI’s judgment and effectiveness is being challenged. Whether the ISI was sheltering Bin Laden or was unaware of his presence, the agency must be revamped, they say.
In a series of unusual developments in a country long dominated by its powerful military, the ISI chief twice offered to resign last week. News commentators are criticizing the agency, and political parties are demanding that the ISI be reined in.
“It depends on the caliber and the grit of the political leadership,” Rasul Baksh Rais, a leading Pakistani political scientist, said in an interview. “How they can use this opportunity to restructure the civilian-military relationship and bring the military under civilian control.”
American and Pakistani officials said the ISI was still dominated by military officers wedded to an outdated, paranoid and dangerous mindset that the C.I.A. helped create during the 1980s anti-Soviet conflict in Afghanistan. More ultranationalists than jihadists, the ISI’s officers consider themselves to be Pakistan’s true guardians. They see the United States as a feckless and immoral power that is in deep decline, India as Pakistan’s main threat, and militants as proxies they can control.
A former American intelligence official said the C.I.A. funneled vast amounts of covert aid to more cooperative sections of the ISI in an effort to strengthen them. Former American officials said they did the same with the Pakistani Army. But progress has been slow.
American critics of the ISI say it will never be reformed or weakened by Pakistan’s civilian leadership. They say that proponents of continued American aid to the ISI are naive and “apologists” for an agency that has repeatedly double-crossed the United States.
The man who is suddenly an important figure in the relationship between Pakistan and the United States, Mr. Headley, may not be the most reliable witness, despite evidence that he has worked closely with intelligence and drug agencies here and abroad. His adult life is a blur of deceit, involving multiple marriages, illegal business deals and numerous turns in and out of jail.
Mr. Rana’s defense will succeed or fail on his lawyers’ ability to discredit Mr. Headley, who, according to court records, has a history of alcohol and drug abuse. Under threat of prosecution for drug trafficking, he became an informant in Pakistan for the Drug Enforcement Agency.
The defense lawyers are expected to show that Mr. Headley has a long history of deceiving American law enforcement authorities. One anticipated piece of evidence is an informant agreement that would provide the most conclusive evidence yet that Mr. Headley was under contract with the D.E.A. when he began training with terrorists.
Authorities with knowledge of the case say the lawyers are also considering summoning one of Mr. Headley’s ex-wives, a New York woman who works at a department store make-up counter. The lawyers may want the woman to describe how she warned the F.B.I. that her husband was plotting with terrorists, and how the government failed to thoroughly investigate her accusations because Mr. Headley persuaded them that she was lying.
The case is a microcosm of the missteps, distrust and confusion that has marked the American efforts in Pakistan since 2001, according to current and former American officials. But whatever evidence the trial produces, current and former American officials said, it would be a mistake to cut off all American aid to the ISI or the Pakistani military.
Marty Martin, a retired C.I.A. official who oversaw the hunt for Bin Laden from 2002 to 2004, said cutting assistance would further isolate Pakistani officers who cooperated with the United States and embolden the powerful militant groups that span Pakistan.
“There is no option except to continue working with them,” Mr. Martin said. “Why? This is not over.”