The charge against Syed Ghulam Nabi Fai of the Kashmiri American Council alleges he is an unregistered agent of a foreign government. The US Justice Department says he donated millions to a Washington nonprofit group in a secret lobbying effort led by Pakistani intelligence to influence US policy on Kashmir.

The arrest is likely to complicate the already strained ties between India and Pakistan.

Kashmiri separatist leader Syed Ali Shah Geelani on Wednesday insisted Fai was innocent and called the allegation the “result of India’s diplomatic efforts and conspiratorial plans.”

Both Fai and Geelani have openly opposed India’s heavy-handed rule and argued that Kashmiris should vote themselves to decide the territory’s final status. India has refused any such referendum, accusing Pakistan of fomenting conflict by arming and training rebels. Pakistan denies this and says it provides only moral and diplomatic support.

Over decades, stone-throwing Kashmiri youths have held regular street protests, and violent uprisings and crackdowns have left 68,000 people dead, most of them civilians, since 1989. “Fai has been active for last 32 years highlighting the plight of his people,” Geelani said. “Because of his unflinching advocacy of the Kashmir cause at the international level, he had become an eyesore for India.”

Another separatist group, the pro-independence Jammu-Kashmir Liberation Front, also condemned the US charge as going against the democratic path of nonviolence Fai advocated. “His arrest is against ideals of democracy and peaceful reconciliation. This is also against the US government’s approach and thinking.”

India’s police chief in Kashmir said Fai’s arrest followed years of suspicions. “He has been figuring in lots of things in the past, like ... the diversion of ISI funds for anti-national activities in India and particularly in Jammu and Kashmir,” Kuldeep Khoda said.

The US Justice Department says in court documents that Fai — directed by a top member of Pakistan’s Inter-Services Intelligence, or ISI — donated millions of dollars to US political campaigns, wrote newspaper op-eds, organized congressional trips and met with White House and State Department officials. It alleges Pakistan financed similar operations in London and Brussels.

US tax documents show Fai’s Kashmiri American Council had a much smaller budget and told the US government it received no foreign grants.

Though the charges are not related to espionage, the arrest adds strain to the difficult US-Pakistan relationship, tested recently when the US killed Osama Bin Laden inside Pakistan without telling the government there.

Geelani urged Kashmiris to protest on Friday and “foil the Indian designs to weaken the Kashmiri struggle.”

He said that, unless Fai was freed, Kashmiris “will lose their faith in the international community.”

Several of Fai’s colleagues in the US also said they were stunned by Fai’s arrest, calling the soft-spoken 62-year-old a “gentleman” who dedicated his whole life to the Kashmiri cause. Associate Nadim Malik, head of advocacy group Kashmir Mission USA, on Tuesday insisted “Dr. Fai and the Kashmiri freedom movement have nothing to do with the ISI.”

The arrest also sparked debate on social networking site Facebook, with some questioning the timing of Fai’s arrest while US Secretary of State Hillary Clinton was visiting India this week.

One Kashmiri man Shuja Malik said the “US has killed two birds with one stone” in hitting out at both Pakistan’s shadowy intelligence service and Kashmiri separatists.

ISI has a complicated relationship with US intelligence. The agency is a crucial ally against terrorists but also works against the US at times, including running double agents against the CIA.