"The Mumbai case could put Washington and Islamabad on a collision course," veteran journalist Sebastian Rotella said in his latest investigative report, which was released on January 26, on the Mumbai terrorist attacks.
US Attorney General Eric H Holder has vowed to prosecute the killings of the six Americans as required by law, Rotella said, adding that the prosecutions for the Mumbai and Denmark plots are being led by Patrick Fitzgerald, the US Attorney in Chicago.
Rotella said at least half a dozen suspected masterminds of the Mumbai attacks are still at large and it is unlikely that Pakistan would extradite any suspects to the US.
Pakistani courts tend not to convict accused radical Islamists, he said, adding that the Pakistani government denies any official link to the 2008 terrorist attacks.
"Why should there have been involvement of the Pakistani government in the Mumbai attacks at a time when Pakistan and India were dealing seriously with issues between them?" a senior Pakistani official was quoted as saying.
"The Mumbai incident provided a pretext for India to shy away from settling the contentious issues between the two countries," the official alleged.
Rotella said the question of Pakistani government involvement drives a high-stakes debate about whether the ISI participates in terrorist activity.
"For the first time you have an American talking about this agency not just being aware of, but involved in, a terrorist plot," Gohel, a London security consultant was quoted as saying.
"What have the last nine years since 9/11 been about? And all the money from the US taxpayers to fund and stabilize Pakistan? Is that money being used for terrorism?" he asked.
According to the ProPublica report, some Western anti-terrorism officials think that, at most, Pakistani intelligence officers provided limited state support for the Mumbai attacks.
A senior US counter-terrorism official believes a few mid-level Pakistani officials had an inkling of the plot, but that its dimensions surprised them.
"US intelligence officials do not see evidence that ISI chiefs made an 'institutional, top-down decision' to attack Mumbai," another US official said.
"Some feel that Headley's nuanced narrative tends to exonerate the top spymasters," the veteran journalist wrote.
"We should not assume that simply because the ISI policy is to sustain Lashkar that the leadership is aware of every detail in terms of the group's operations," Tankel, the author of the forthcoming book on Lashkar, was quoted as saying.
"The ISI policy is not to allow Lashkar to cross certain red lines, but sometimes the interpretation by ISI handlers of what constitutes an acceptable operation is different than that of the leadership," he said.
"Perhaps it was done by people who didn't like the way the ISI and the army were moving, particularly in Kashmir," another European official was quoted as saying.
"Maybe it was a rogue operation destabilizing the Pakistanis as well as the Indians," he asserted.
"In contrast, other Western and Indian anti-terrorism officials cite the in-depth scouting, amphibious landing and sophisticated communications as signs of Pakistan's involvement.
They say Lashkar's history and Headley's disclosures about its relationship with the ISI make it hard to believe that Pakistani military leaders weren't aware of the plan," Rotella said.
However, Pakistani leaders deny the allegations and say they have gotten tougher on Lashkar, freezing its assets and appointing an administrator at its headquarters.
"The government is working to prevent the preaching of extremism, bring them into the mainstream and implement curriculum changes," a senior Pakistani official said