LOS ANGELES, Oct 10: In the drive to cut off funding for terrorist groups, the US Treasury Department is expected to release a second list of various Islamic charity organizations, including Pakistan’s Rabita Trust, later this week, whose assets are to be frozen on evidences of funding terrorist groups.

But the hard part is how best the US will handle diplomatic implications of its action as some organizations enjoy very close ties with its Islamic allies.

Several Islamic charities with operations in Saudi Arabia, Pakistan and Kuwait are under investigation for possible ties to terrorist groups. But because of diplomatic pressures, almost certainly, some of the groups under scrutiny will be left off the list.

With the US military campaign heating up, the Bush administration considers it imperative to maintain friendly relations with Middle Eastern and Southwest Asian governments.

During the past, the US has raised concerns privately about groups alleged to be financing terrorists in order to avoid embarrassing allies.

Amongst the hardest hits are likely to be the Saudi-backed foundations. Being examined include, the Mowafaq Charitable Foundation, the Al-Haramain Foundation, the World Assembly of Muslim Youth, and the International Islamic Relief Organization.

Besides, two Kuwaiti groups, Kuwait Joint Relief Committee and Islamic Heritage Restoration Society, also are under scrutiny.

In Pakistan, US officials are also probing a number of groups including the Rabita Trust, while in Sudan they have focused on the Islamic Relief Agency.

Nevertheless, all these groups claim they give aid to refugees and other victims of conflict in places with large Muslim populations such as Afghanistan, Chechnya and Bosnia, and have generally denied funding terrorist organizations. One group, Mowafaq, is no longer in operation.

Meanwhile, according to Wall Street Journal, lawyers for the prominent Saudi citizens, who backed this Jeddah-based organization, say it has no connections to terrorists.

“We’re not aware of any investigation,” said Guy Martin, the lawyer for Mowafaq’s former Saudi trustees. “They have never had any involvement in terrorism or any extremist activities.”

The lawyers filed a libel suit against Africa Confidential, a London newsletter, after it linked the group to an assassination attempt in Africa. The case ended this year with a statement of apology by Africa Confidential.

One of the Saudis on the board of Mowafaq, investor Yassin Kadi, also provided funding to a US group in 1992 that the Federal Bureau of Investigation alleges in an affidavit funnelled money to the Palestinian group Hamas in the West Bank. Mr Kadi’s lawyers say the money was a loan to an old family friend to help his Islamic education group.

So far, the administration’s desire to quickly cut off terrorists’ funds is winning over diplomatic considerations.

The US appears likely to include Pakistan’s popular Rabita Trust, which says it helps Pakistani refugees, on the assets- freeze list.

The Journal, quoting a Pakistani diplomat, says it was partly at the behest of US officials that the government there expelled 89 workers affiliated with the Kuwait Joint Relief Committee, the World Assembly of Muslim Youth, and the Islamic International Relief Organization, among others.

However, one group that may be left off the list is the International Islamic Relief Organization, one official said, despite Philippine government allegations and a public court filing in Canada suggesting links to Osama bin Laden. The organization is sponsored by the Saudi government, a pivotal US ally in the Middle East.

In addition, groups allegedly connected to Palestinian organization Hamas, and the Iranian-backed Hezbollah, haven’t been considered yet.

US officials said they are not a top priority and already have been the subject of asset-freeze orders before Sept. 11. Still, some critics complain that the Bush administration is reluctant to be seen as tilting toward Israel.

On the other hand, within the Bush administration, there are divisions over tactics. The Central Intelligence Agency (CIA) wants to keep off names that will compromise its sources and methods.

But the FBI wants to avoid spoiling criminal cases. Hard-liners, including Treasury officials and counter-terrorism experts, want to sweep up the assets of as many alleged terror-related groups as possible. But in some cases, evidence may be lacking, or of poor quality.

Meanwhile, another roadblock, one intelligence official said, when it comes to charities that have a presence in the US.

Among other groups that may remain off the assets-freeze list for that reason — at least for the time being — is Al-Haramain. An African chapter of the Jeddah-based group was identified in a 1999 State Department report as one of the “suspect terrorist groups” operating in Nairobi, Kenya, before the bombing of the US Embassy there in 1998. But the group has a chapter in Ashland, Oregon, and an account at Bank of America.

The group’s headquarters in Jeddah directed requests for comment to its Web site, which denounces the Sept. 11 attacks. Pete Seda, head of the Oregon chapter, said Osama bin Laden “is absolutely 100 per cent against Islam.” Last year, under threat of a lawsuit, the Public Broadcasting Service programme “Frontline” was forced to state that it “did not intend to suggest that the Al-Haramain Foundation participated in a bomb plot against the US Embassy in Nairobi, Kenya.”

The US could face similar problems with the Islamic Relief Agency, which appears to be connected to a US-based group called the Islamic American Relief Agency. The US branch, which denies any connection to extremists, lost its State Department funding last year out of concerns it is connected to the Sudan agency.