Canada's intelligence service has warned police that members of one of the deadliest terrorist groups in the Middle East may try to infiltrate Canada to set up a support base, a newly released report reveals.

The report says the discovery of a Palestinian Islamic Jihad (PIJ) fundraising network in Florida "raises the possibility of PIJ elements crossing the border to develop a similar infrastructure in Canada." It also claims Iran and Syria have provided money, training and safe haven to the radical Palestinian group, responsible for a wave of suicide bombings in Israel.

Marked "For Police and Security Officials' Use Only," the Canadian Security Intelligence Service document was released to the National Post under Access to Information. The report is dated May, 2003, three months after the Post reported that Islamic Jihad had tried to obtain a fraudulent visa so its treasurer, Muhammed Tasir Hassan Al-Khatib, could come to Canada.

The Islamic Jihad has long collected and laundered money in Canada to finance Palestinian violence.

However, the report suggests there are concerns that, under pressure in the United States, the group might go the next step and try to build a network north of the border.

The PIJ would hardly be the first terror group to do so.

An estimated 50 terror outfits already have a presence in the country, which they use as a hideout and a base for fundraising, propaganda and planning attacks.

Islamic Jihad agreed to a ceasefire last summer but has since resumed attacks against Israelis. On Monday, an Israeli F-16 fighter jet fired missiles at the home of a senior leader of the organization but missed its target.

The CSIS report described Islamic Jihad as a Gaza-based Muslim fundamentalist organization that has been killing Israeli civilians and security forces since September, 1986.

"PIJ attacks have included, but are not limited to, assaults with knives, axes, grenades, car bombs, and, particularly after 1994, the use of suicide bombers," the CSIS report says.

Islamic Jihad directs its violence at Israelis, but has also conducted an attack in Egypt and threatened to target South Korea over the country's participation in the Iraq war. It also said it would kill Norwegian observers monitoring the failed Oslo peace accords.

During a recent visit to Canada, Amr Moussa, Secretary-General of the Arab League, denied that Middle Eastern countries were providing any support whatsoever to Palestinian terrorist groups.

But the CSIS report shows that while the Islamic Jihad hard-core membership consists of no more than 200 fighters in the West Bank and Gaza Strip, it depends on an international support structure for money, weapons and training.

One of the group's founders, Fathi Shaqaqi, admitted the PIJ "received Iranian funds and that money and equipment had been transferred to the occupied territories to finance terror operations and to support the families of PIJ activists."

The group also gets "limited logistical support from Syria," CSIS said. "In 1997, it was assessed that Syria provided various terrorist organizations, including the PIJ, with safe haven in Lebanon's Bekaa Valley."

In addition, Islamic Jihad built a North American support network that, until recently, was based in Florida, where university professor Ramadan Shallah ran a front organization called the World and Islamic Studies Institute (WISE).

Sami al-Arian, another Florida professor involved in WISE, was arrested this year. Court documents filed by U.S. investigators at the time alleged that an unnamed Canadian-based Islamic Jihad operative moved thousands of dollars from accounts here to fund the PIJ.

The Islamic Jihad is one of 31 terrorist groups outlawed by Cabinet order. Critics argue the Liberal government is not doing enough to stop terrorists from using Canada as base for supporting worldwide violence.

Some former intelligence officials want Ottawa set up a foreign intelligence service like the CIA. Last Friday, Ward Elcock, the CSIS Director, revealed that CSIS was already heavily involved in covert foreign spy missions, which he said had become "an integral part of the service's operations."

sbell@nationalpost.com