The United States is to blacklist the Haqqani network as a terror group, founded by a CIA asset turned al-Qaeda ally and probably the most dangerous faction in the Afghan Taliban.
But there are fears that it could drag Pakistan, where its leaders are based, closer towards the pariah-like status of state sponsor of terror and jeopardise the prospect of peace talks with the Taliban and any prospect of a solution to the war in Afghanistan.
So who are the Haqqanis? Why are they being blacklisted? What threat do they represent and what are the implications for Pakistan?
The network's founder is Jalaluddin Haqqani, a disciplined Afghan guerrilla leader bankrolled by the United States to fight Soviet troops in Afghanistan in the 1980s and now based with his family in Pakistan.
In the 1980s Jalaluddin was close to the CIA and Pakistani intelligence.
He allied himself to the Taliban after they took power in Kabul in 1996, serving as a cabinet minister under the militia's supreme leader, Mullah Omar.
When American troops arrived after the 9/11 attacks Haqqani looked up old friends and sought refuge in North Waziristan, becoming one of the first anti-US commanders based in Pakistan's border areas.
He has training bases in eastern Afghanistan, is close to al-Qaeda and his fighters are active across east and southeastern Afghanistan and in the capital Kabul.
Militarily the most capable of the Taliban factions, the network operates independently but remains loyal to Mullah Omar and would probably fall behind any peace deal negotiated by the Taliban leadership.
Now in his late 70s and frail, Jalaluddin's seat on the Afghan Taliban leadership council has passed to his son Sirajuddin, who effectively runs a fighting force of at least 2,000 men.
The United States blames the network for some of the most spectacular attacks in Afghanistan, such as a 2011 siege on the US embassy and, in 2009, the deadliest attack on the CIA in 25 years.
Washington has long since designated Jalaluddin and Sirajuddin "global terrorists" but in July Congress urged the state department to blacklist the entire network.
It comes at a critical juncture, with US President Barack Obama seeking re-election and violence again on the rise in Afghanistan as NATO combat troops prepare to leave in 2014.
Supporters of the designation say the financial sanctions will help disrupt the Haqqani network's fundraising activities in Saudi Arabia and the United Arab Emirates.
According to The New York Times, their business interests include car dealerships, money exchanges, construction companies, import-export operations and smuggling networks.
But Pakistan fears it could further worsen ties between Islamabad and Washington just as cooperation had resumed after a series of major crises in 2011, particularly the killing of Osama bin Laden in Pakistan.
"Any such decision will take the relationship back to square one, ruining the improvement seen in ties between the two countries during the last couple of months," a senior Pakistani security official told AFP.
Last year, the outgoing top US military officer, Admiral Mike Mullen, called the Haqqanis the "veritable arm" of Pakistan's ISI spy agency, although other American officials later distanced themselves from the remarks.
Pakistani analysts argue that the Haqqanis can never be defeated, that sanctions will have little effect because the network moves its money through unofficial channels and that blacklisting the group could jeopardise peace talks with the Taliban.
Saifullah Khan Mahsud, executive director of the FATA Research Center -- a think tank that focuses on the tribal belt -- said it was a contradiction to try to isolate the Haqqanis.
"Now they say they want to talk to Mullah Omar but not to the Haqqanis, that's stupid. Talk to all of them, talk to everybody," he told AFP.
He accused the United States of trying to create a rift among insurgents and put pressure on Pakistan, which has long refused to launch an operation against the network.
Pakistani officials have in the past admitted to contact with the Haqqanis as a hedge for influence when US troops leave Afghanistan, but deny supporting their operations and downplay the group's importance.
Rahimullah Yusufzai, a Pakistani journalist specialising in the tribal areas, said the possibility of "real talks" on peace in Afghanistan -- suspended last March -- would be impossible while the US continued to kill Haqqani fighters.
The CIA has stepped up drone strikes on North Waziristan against Haqqani fighters.
One of Jalaluddin's sons, Badruddin, was rumoured to have been killed last month.
Political analyst Imtiaz Gul also voiced fears about the implications for Pakistan.
"The danger is to designate the Haqqani as a terrorist organization and then to say it might imply sanctions on Pakistan," he said.