WASHINGTON – In a startling admission, Secretary of State Condoleezza Rice said today that American officials had bungled the Maher Arar case but she didn't apologize or offer to remove him from the U.S. no-fly list.

Fielding questions on Capitol Hill, Rice carefully conceded that U.S. officials had mishandled the case and said they didn't properly communicate with Canada before Arar, a Canadian citizen, was sent to Syria where he was tortured as a suspected terrorist in 2002.

"We do not think that this case was handled as it should have been," Rice said.

"We do absolutely not wish to transfer anyone to any place in which they might be tortured."

Rice pledged to improve the way the U.S. government deals with Canada.

"Our communication with the Canadian government about this was by no means perfect; in fact, it was quite imperfect," Rice told the Foreign Affairs Committee of the House of Representatives.

"We have told the Canadian government that we did not think this was handled particularly well in terms of our own relationship and that we will try to do better in the future."

In Canada, Arar and Prime Minister Stephen Harper welcomed the remarks, calling them "encouraging."

Rice's comments came as a surprise because the U.S. administration had long resisted public admissions of shortcomings in the Arar affair. But she offered no explanation for why Arar was sent to Syria by U.S. officials – whom Arar is suing – and didn't acknowledge that he was mistreated there.

Rice also suggested Arar will continue to be considered a security threat by the United States.

"We and the Canadians do not have exactly the same understanding of what is possible in the future for Mr. Arar in terms of travel and the like."

Asked by Democrat William Delahunt whether U.S. authorities relied on diplomatic assurances from Syria that Arar wouldn't be tortured, Rice said she had forgotten some of the details but would provide a "full accounting" later.

Syria is routinely cited by the State Department in annual reports as employing 38 torture techniques during interrogations.

"You're aware of the fact that he was tortured for a year?" asked Delahunt.

"I am aware of claims that were made, congressman," replied Rice.

Arar, a telecommunications engineer, was arrested during a stopover in New York on his way home to Canada. U.S. authorities sent him to Syria after the RCMP said he was a suspected Islamic extremist.

A commission of inquiry in Canada last year said the Mounties followed up with their U.S. counterparts by admitting they had no proof Arar was aligned with terrorists. Justice Dennis O'Connor said the Americans didn't keep Canadians in the loop or tell them Arar was going to be deported.

The commission cleared Arar of any links to terrorism and Ottawa gave him a $10.5 million in compensation.

Harper has called for a similar apology from American officials and wants Arar to be allowed to travel to the United States.

"We are encouraged by the comments issued by (Rice) regarding the Arar case," Harper told the Commons on Wednesday. "We have raised this issue on many occasions with the Americans and we hope that the U.S. government will act to fully address this matter."

For his part, Arar also called it an "encouraging step."

"I fully support the very important work of the congressional committees which are trying to get to the bottom of the extraordinary rendition program."

But Montreal Liberal MP Irwin Cotler, a former justice minister, said Rice's comments are too little, too late.

"For the Americans to say they're acting improperly is an understatement. They in fact breached both international law and their own domestic law in sending Maher Arar to Syria," he said in Ottawa.

"There's no way you can keep somebody on a no-fly list when the person was not only an innocent person but was the innocent victim of the actions of three governments."

Rice's comments are "by no means adequate," said NDP Leader Jack Layton, calling it "outrageous" that Arar still can't travel to the United States with his family.

"Obviously our government hasn't done its job. Thank goodness we have some members of Congress who have been standing up for Maher Arar."

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U.S. officials have promised to collaborate with Canada on any future terrorism cases involving Canadians.

David Wilkins, the U.S. ambassador to Canada, pointed out that in January 2004, the two governments exchanged letters pledging they would "notify each other when a citizen of one country is subject to involuntary removal from the other country to a third country."

The U.S. government has always maintained that Arar was merely deported, not rendered to a third country to be tortured. American officials have said they have their own reasons for keeping Arar out of the United States.

But U.S. legislators and Canadian officials, including Public Safety Minister Stockwell Day, who have seen all the intelligence on Arar say that's nonsense.

A report last week suggested the United States still considers Arar a security threat based on an allegation that he was seen in Afghanistan in the mid-1990s by a man who led training at a terrorist camp – a charge Arar has denied.

Arar's U.S. lawyer, Maria LaHood, said Rice's comments are a step in the right direction.

"It's certainly not an apology, but it is something," she said in an interview from New York. "She's admitting some wrongdoing, some mishandling."

LaHood said it's unlikely there will be a direct impact on Arar's lawsuit against U.S. officials.

The suit has been blocked so far by government lawyers. Arguments are scheduled for Nov. 9 in New York at a U.S. Court of Appeals.

The case was dismissed by a lower court that agreed with the government's position that there's a great need for secrecy for national security reasons and to maintain good relations with Canada.

"How can it be that squelching justice can improve our relations with Canada?" asked LaHood.

"`I'm hopeful the congressional pressure will keep up ... and this will continue to unravel the U.S. position."

Republicans joined with Democrats last week to apologize to Arar at a congressional committee hearing where he appeared by video link from Ottawa.

New York Democrat Jerrold Nadler, who has seen the secret dossier on Arar, said there's nothing to justify "this campaign of vilification against you or to deny you entry into this country."

"This was a kidnapping," he told the hearing, called to put pressure on U.S. officials to end the practice of rendition.

Arar was the first to challenge the policy and has become the most visible victim of the program in which terror suspects are transferred to third countries without court approval.

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