EXCLUSIVE: State Department Mulls Terror Designation for Gaza 'Aid' Ship Funder

The State Department is investigating whether to designate the Turkish Muslim charity that funded and operated a Gaza-bound "aid" ship as a foreign terrorist organization, after nine people were killed aboard one of its ships in a bloody confrontation with Israeli commandos, Fox News has learned.

State Department spokesman Mark Toner told Fox News at a briefing on Wednesday that the government is looking into whether The Foundation for Human Rights and Humanitarian Relief (IHH), a nongovernmental organization, should be listed as a terror group.

"I believe we are looking at the IHH, but it's a long process to designate something a foreign terrorist organization and ...there's nothing to announce on that," Toner said.

Sources also said that sections of the Treasury Department are actively investigating IHH with the intent to designate it as a terrorist organization, despite some opposition from within the administration. While the department declined to comment on any current or pending investigations into IHH, it is known that Treasury has raised concerns about the IHH with Turkish officials in the past.

IHH funded and ran the Mavi Marmara, the ship aboard which nine people were killed when Israeli commandos boarded it as it sailed toward Gaza as part of a "humanitarian aid" flotilla last month. The group is documented as having ties to terrorists and was named in federal court papers as playing a role in the failed Millennium bomb plot 10 years ago. It also was named in a 1996 CIA report as having links to terrorist groups.

Formed in 1992 with the goal of assisting Muslims in Bosnia, IHH has branched out to many places, including Lebanon, Pakistan, Sudan, Somalia and the Palestinian territories.

The State and Treasury investigations follow a letter sent to President Obama late last month from a bipartisan group of 87 U.S. senators in which they called on the president to keep firm his administration's support of Israel. That same letter called on the president to investigate the Turkish group.

"We are deeply concerned about the IHH's role in this incident and have additional questions about Turkey and any connections to Hamas," the letter read. "The IHH is a member of a group of Muslim charities, the Union of Good, which was designated by the U.S. Treasury Department as a terrorist organization. The Union of Good was created by, and strongly supports Hamas, which has been designated as a foreign terrorist organization by the U.S. State Department. We recommend that your administration consider whether the IHH should be put on the list of foreign terrorist organizations, after an examination by the intelligence community, the State Department, and the Treasury Department."

If IHH is placed on the terror list, the Turkish government "will be between a rock and a hard place," said Dr. Soner Cagaptay, senior fellow and director of the Turkish research program at the Washington Institute for Near East Policy in Washington.

"Will it ban IHH, to which it has close ties? Or will it choose to ignore the U.S. designation, doing something quite unfitting a NATO ally, therefore creating a serious rift in bilateral ties?"

A spokesman at the Turkish Embassy in Washington, asked to comment about a possible terror listing, requested that Fox News email questions to two separate addresses within the Turkish Embassy. Two weeks later, Fox News has not received a response.

Fox News reported last month that IHH has links to terrorist groups including Hamas and Al Qaeda. The organization was described in federal court documents as playing a role in the Millennium terrorist plot to bomb Los Angeles International Airport. Additionally, the Turkish charity was described in a recent report by the Israeli-based Intelligence and Terrorism Information Center as being a "radical Islamic organization with an anti-Western orientation," and that "besides its legitimate philanthropic activities, it supports radical Islamic networks, including Hamas, and that at least in the past, even global jihad networks.

The State Department and Department of Treasury can designate persons, groups and foreign countries as sponsoring or being terrorists. The State Department has a list of Foreign Terrorist Organizations, including Hamas, Hezbollah and Al Qaeda, that are designated by the secretary of state. It also has a similar list for State Sponsors of Terrorism, which currently has four countries on it: Syria, Iran, Cuba and Sudan.