Pakistan warned it could sever its alliance with America following U.S. allegations that its premier spy agency was helping militants attack U.S. targets inside Afghanistan, ramping up a dispute that has exposed the rot in ties between the two nations.

The allegations by Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, were the most serious yet against a nuclear-armed nation that Washington has invested billions in civilian and military aid over the last 10 years to try and secure its cooperation inside Afghanistan.

Pakistani Foreign Minister Hina Rabbani Khar dismissed his remarks, saying they were unproven.

"You cannot afford to alienate Pakistan," she said in comments broadcast Friday from New York City, where she is attending a U.N. General Assembly meeting. "Anything which is said about an ally, about a partner publicly to recriminate it, to humiliate it, is not acceptable. We have conveyed (to America) that you will lose an ally."

Pakistani Prime Minister Yousuf Raza Gilani alluded to both countries' mutual need for each other -- Pakistan's for U.S. financial assistance and international support, and Washington's need for Islamabad's cooperation in the anti-terror fight and in helping negotiate a peace deal in Afghanistan.

More On This...

"They can't live with us. They can't live without us," Gilani told reporters. "So, I would say to them that if they can't live without us, they should increase contacts with us to remove misunderstandings."

Adm. Mullen accused Pakistan's Inter-Services Intelligence agency Thursday of supporting the Haqqani insurgent network in planning and executing a 22-hour assault on the U.S. Embassy in Afghanistan last week and a truck bomb that wounded 77 American soldiers days earlier.

He also said the U.S. had credible information that Haqqani extremists, with help from the ISI, were responsible for the June 28 attack on the Inter-Continental Hotel in Kabul and other small but effective assaults.

The Haqqani insurgent network is widely believed to be based in Pakistan's North Waziristan tribal area along the Afghan border. The group has historical ties to Pakistani intelligence, dating back to the war against the Soviets in Afghanistan in the 1980s.

Pakistan has denied any links between it and the Haqqanis, and officials Friday reiterated claims that the United States was seeking to make Pakistan a scapegoat for its failings in Afghanistan. The U.S. army also says militants are using Afghan soil to attack targets inside Pakistan.

Mullen's words marked the first time an American official had tied Pakistan's intelligence agency directly to the attacks and signaled a significant shift in the U.S. approach to Islamabad. In the past, U.S. criticism of Pakistan largely had been relayed in private conversations with the countries' leaders while American officials publicly offered encouraging words for Islamabad's participation in the terror fight.

Mullen did not provide specific evidence backing up his accusations or indicate what the U.S. would do if Pakistan refuses to cut ties to the Haqqani network. The U.S. has repeatedly demanded that Pakistan attack the insurgents and prevent them from using the country's territory.

Pakistan has said it cannot attack them because its troops are stretched too thin fighting other militants in the country's semiautonomous tribal region. Many analysts believe, however, that Pakistan wants to remain on good terms with the militants because they could be useful allies in Afghanistan after foreign forces withdraw.

Mullen's comments carry particular weight since the Joint Chiefs chairman has nurtured ties with the Pakistanis during his tenure, meeting with officials more than two dozen times. His congressional testimony was his last before he retires next week.

Mullen reaffirmed his support for continued U.S. engagement with the nuclear-armed Pakistan and warned of the consequences if the relationship should break down. But his comments could make that engagement harder and continue a recent downward trend in ties between the two countries.

The relationship took one of its hardest hits when U.S. commandos sneaked into Pakistan on May 2 and killed al-Qaida chief Osama bin Laden in a garrison town not far from Islamabad.

The covert raid outraged the Pakistani government because it was not told about it beforehand, while bin Laden's presence in Abbottabad raised further suspicions among U.S. officials about the country's duplicity in the anti-terror fight.

--------