The al-Qaeda terrorist network is a "viable and effective" organisation that may be able to call on as many as 18,000 potential operatives worldwide, a UK think-tank said yesterday.

In its annual strategic survey, the International Institute for Strategic Studies (IISS) says al-Qaeda's financial network has survived largely intact, and that the war in Iraq has brought new recruits to its ranks.

The network's "middle managers" provide expertise to Islamic militants worldwide, the IISS adds, warning that al-Qaeda can be expected to plan further attacks in North America and Europe, and has the intention of using weapons of mass destruction. Basing its assessment on intelligence reports, the IISS's figure of 18,000 potential operatives is calculated by deducting the 2,000 suspects killed or captured since the September 11 2001 attacks from the estimated 20,000 recruits thought to have passed through al-Qaeda training camps in Afghanistan between 1996 and 2001.

The IISS estimates that around 1,000 foreign Islamists are in Iraq and have established links with former members of the ousted Ba'athist regime to fight the US-led coalition.

The report says al-Qaeda is thought be providing planning, logistical advice, material and financing to smaller groups in Saudi Arabia and Morocco, and probably Indonesia and Kenya.

IISS interprets the Madrid train bombings as evidence that al-Qaeda has "fully reconstituted, set its sights firmly on the US and its closest Western allies in Europe, and established a new and effective modus operandi".

The report goes on to say that America's global image has "hit rock bottom" since its intervention in Iraq, and can only be salvaged with "an efficiently executed plan for the full handover of sovereignty" to an Iraqi government.

The US was having to realise "the awful truth that the first law of peacekeeping is the same as the first law of forensics: 'every contact leaves a trace'," John Chipman, IISS director, said yesterday. "Unfortunately, too many bad traces have been left recently, and many good ones will be needed for the US to recover its reputation, its prestige and therefore effective power."

The report says the main problem facing Iraq's forthcoming interim government is the proliferation of armed Iraqi militia groups. While these private armies may not be that strong or popular among Iraqis, the US-led forces cannot crush them, and these militias are likely to "develop increasing influence on, and a potential veto over, any decisions made by a transitional government that threatens their interests", Mr Chipman said.

Wasn't it the Basques with al-qaeda support who initiated the madrid bombings?

Although from what i'd heard the mission would have been AQ instigated, with the basques being only too happy to comply. The basques have rarely been big hitters on their own...