Pakistan has accused the US of slander against Islamabad over the arrest of a Kashmiri-born man accused of acting as a Pakistani agent in Washington.
Ghulam Nabi Fai, a 62-year-old American citizen, is accused of working in Washington for a Pakistani spy agency to lobby for Kashmiri independence.Mr Fai was arrested on Tuesday and charged with failing to register as a foreign government agent.
Meanwhile, Congress rejected a proposal on Thursday to cut off aid to Pakistan.
Mr Fai and a second man, Zaheer Ahmad, a 63-year-old US citizen and resident of Pakistan, were both charged in the case. Mr Ahmad is believed to be in Pakistan.
The pair are suspected of having connections to an effort by the Pakistani government that allegedly funnelled millions of dollars through a front group, the Kashmiri American Council, to Washington to lobby US politicians on behalf of Kashmir.
The US has said the group contributed money to US election campaigns, helped fund conferences and other efforts, including meetings with White House and state department officials.
The US justice department said Mr Fai - who denies the charges - and Mr Ahmad would face five years in prison if found guilty.
Shabir Shah A senior separatist in Kashmir
India and Pakistan have fought two wars over the territory of Kashmir, which was split in two in 1947 and has been claimed by both nations.
Analysts say Mr Fai's arrest is likely to worsen already strained relations between Washington and Islamabad.The killing in Pakistan of Osama Bin Laden by US forces in May angered many in Pakistan, and left US officials questioning whether Pakistani intelligence had known about the al-Qaeda leader's whereabouts.
'Slander campaign' The allegations against Mr Fai focused primarily on his work with the Kashmiri American Council, a Washington-based group that is suspected of being run by Pakistan's military intelligence service.
Mr Fai's arrest and the allegations against the Pakistani government sparked an angry response from Islamabad.
"A demarche was made to the US embassy in Islamabad today to register our concerns, in particular the slander campaign against Pakistan," the ministry of foreign affairs said in a statement.
But FBI Assistant Director in Charge James McKunkin said foreign nations attempting to "influence the United States by unregistered agents threaten our national security".
The FBI has already accused the government of Pakistan of paying Mr Fai between $500,000 (£306,712) and $700,000 a year.
Officially, the Kashmiri American Council had a much smaller budget and it said that it received no foreign grants.
Kashmiri separatists condemned Mr Fai's arrest on Thursday, calling it a conspiracy.
Shabir Shah, a senior separatist in Kashmir, told AFP news agency: "We strongly condemn his arrest. It is aimed at suppressing the voices who call for Kashmir's freedom from India."
Meanwhile, on Thursday, the House Foreign Affairs Committee blocked an amendment to a spending bill that would have banned any assistance to Pakistan.
The measure was introduced by Republican Representative Dana Rohrabacher, who said aid to Pakistan was "foolishness" at a time when the US is trying to avoid defaulting on its financial obligations.
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