After extensive dialogue and discussion within the Obama Administration, the State Department has formally placed the Haqqani network on its list of foreign terrorist organizations.

Secretary of State Hillary Clinton said Friday that the Haqqani network “meets the statutory criteria of the Immigration and Nationality Act for designation as a foreign terrorist organization.” The decision was reportedly made just two days before Clinton submitted her opinion to the Congress, illustrating how long it took the administration to wrap up the process.

On the face of it, designating the Haqqanis as a terrorist organization should have been an easy decision to make. The group is, according to American military officials in Afghanistan, the most sophisticated branch of the Afghan Taliban insurgency, responsible for the deaths of perhaps hundreds of servicemen and -women. Thousands of Afghan civilians have been killed in bombings that Haqqani fighters planned and carried out. Many of them, including the July 2008 suicide attack on the Indian embassy in Kabul, have targeted Afghan government installations.

NATO central command headquarters, the United States embassy and Afghan ministries have all been targeted by Haqqani militants over the past three years, all of which have been embarrassing for the coalition as it attempts to secure the capital from insurgent violence.

Nevertheless, officials worried that a formal designation of the group would rankle the feathers of the Pakistani government which has maintained contacts with the Haqqanis for decades. Pakistan is now the closest it has ever been to the “state sponsor of terrorism” category.

The United States are loath to make the connection but the connection is there. The Obama Administration will now have to justify why Pakistan is not on the list of state sponsors of terrorism. Given the damning remarks that former American military officials have made on the Pakistan-Haqqani link, it will have to make that case quickly and effectively.

Will the label hurt the Haqqani group in any substantial way? The answer is debatable, for most of the group’s senior leaders are already designated as individual terrorists. The likelihood that the Haqqani business empire will now be targeted in the Persian Gulf, where most of the organization’s profits are made, has increased. Those who were previously working with the Haqqanis on financial matters may think twice about engaging in similar business transactions. But the ruling may not do much to stop the many businesses that Haqqani leaders conduct illegally, including extortion, illegal tax collection, kidnapping and smuggling.

Time will tell on whether the terrorist organization label will make it more difficult for the group to mount attacks in Afghanistan and shelter other militants in Pakistan. But if the past record is any indication, the Haqqanis will still remain a powerful force inside of Pakistan’s tribal regions, secluded from American and NATO ground forces.