Al Qaeda has more than 18,000 militants ready to strike and the United States-led occupation of Iraq has accelerated recruitment to the ranks of Osama bin Laden's network, says a leading London think tank.
Al Qaeda's finances were in good order, its "middle managers" provided expertise toIslamic militants around the globe and bin Laden's drawing power was as strong as ever, the International Institute for Strategic Studies said.
It warned in its annual Strategic Survey that al Qaeda would keep trying to develop plans for attacks in North America and Europe and that the network ideally wanted to use weapons of mass destruction.
"Meanwhile, soft targets encompassing Americans, Europeans and Israelis, and aiding the insurgency in Iraq, will do," the institute said.
"Galvanised by Iraq, if compromised by Afghanistan, al Qaeda remains a viable and effective network of networks."
The institute said al Qaeda lost its base after Taleban were toppled in Afghanistan in late 2001 but had since adapted to become more decentralised, "virtual" and invisible in more than 60 countries.
"The Afghanistan intervention offensively hobbled but defensively benefited al Qaeda," it said.
The institute said 2000 al Qaeda members and more than half of the group's 30 leaders had been killed or captured.
The 1000 al Qaeda militants estimated to be in Iraq were a minute fraction of its potential strength.
"A rump leadership is still intact and over 18,000 potential terrorists are at large with recruitment accelerating on account of Iraq."
