The fallout from last week's explosive Senate testimony by Adm. Michael G. Mullen, outgoing chairman of the Joint Chiefs of Staff, in which he called the militant Haqqani network "a veritable arm" of Pakistan's Inter-Services Intelligence agency is still causing damage at home and in Pakistan. Both countries will suffer if it leads to a breakdown in relations. In the US, Mullen's testimony added momentum to a Senate bill that would cut off $1 billion in military aid to Pakistan unless it ends its support for Haqqani group. Individual senators have called for further action, including Sen. Dianne Feinstein (D-Calif.), who in the wake of Mullen's remarks repeated her call for Haqqani to be designated a foreign terrorist Organisation. Sen. Lindsey Graham (R-S.C.) went even further in an appearance on "Fox News Sunday," implying that the US should take military action if Pakistan's leaders continue to "embrace terrorism as part of their national strategy." In Pakistan, meanwhile, Mullen's words are a long way from prompting the soul-searching he may have been hoping for. Anti-American protests have intensified, fears that the US plans to deploy troops in the border region controlled by the Haqqani network are rampant, and one of the most moderate Islamic groups is calling for jihad against the US if it attacks Pakistan. The country's feuding political leaders gathered Thursday to discuss a response to Mullen's allegations, emerging after nine hours with a statement rejecting them as "baseless." There is little doubt among Washington's military and intelligence community that the ISI has long provided backing for Haqqani. The nature of that backing is unclear, and Mullen took the accusations a step further by implying that the ISI actually controls Haqqani rather than merely supporting it. He provided little in the way of evidence, although military officials revealed that cellphones recovered after a Haqqani attack on the US Embassy in Kabul last month showed that the insurgents were in contact with ISI operatives. But even that evidence is murky. What's clear is that Haqqani is actively fighting American troops in Afghanistan and is an enemy of the United States. Does that mean that officially declaring it a foreign terrorist Organisation, as Feinstein suggested, would be a good idea? Haqqani appears to richly deserve the designation, which would allow any US financial institutions holding its funds to seize them, but that would be fraught with risks. Primary among them is that it could lead to Pakistan being designated a state sponsor of terrorism, which would end US aid to the country and almost certainly end all cooperation from Islamabad in the fight against insurgents in both Pakistan and Afghanistan. It would also eliminate hopes that Haqqani, a group under the control of an aging mujahedin leader who was backed by the US during the Afghan struggle against the Soviets in the 1980s, could be engaged in negotiations to end the fighting in Afghanistan. Of course, the relationship between Washington and Islamabad is by now so poisonous that it's reasonable to ask whether that still matters. We think it does. Although Pakistan has been unhelpful when it comes to fighting militant groups such as the Haqqani network that threaten American troops but not Pakistanis, it has provided valuable assistance against groups such as the Pakistani Taliban that threaten both countries. A rupture in relations would probably inflame anti-US sentiments in Pakistan. It would greatly complicate the movement of troops and supplies to Afghanistan and cut off valuable intelligence cooperation. It would degrade the ability to carry out drone attacks. Despite his frustration, even Mullen acknowledges that the relationship with Pakistan must be salvaged. A week after Mullen's testimony, top US officials involved in Middle East policy began distancing themselves from his remarks, with unnamed officials telling the Washington Post that the admiral had overstated the case against the ISI. This may reflect a split within the Obama administration about how to deal with a crucial ally. That's an enormous challenge, but it's critical for both sides that they heal the rift. LA Times editorial