The military said Khaled Abdul Fatah Al Mashhadani was detained in an operation in Mosul on July 4 that was deemed a key achievement by the U.S.-led coalition in Iraq. Al Mashhadani was identified as the highest-ranking Iraqi operative in the Al Qaida network, Middle East Newsline reported.

"Al Mashhadani is believed to be the most senior Iraqi in the Al Qaida in Iraq network," U.S. military spokesman Brig. Gen. Kevin Bergner said on Wednesday.

Bergner said Al Mashhadani served as an intermediary between Al Masri and Al Qaida leader Osama Bin Laden as well as his deputy Ayman Zawahri. The U.S. military spokesman said Al Mashhadani established a virtual insurgency group on the Internet entitled "the Islamic State of Iraq" in 2006.

"Along with Al Masri, Al Mashhadani co-founded a virtual organization in cyberspace called the Islamic State of Iraq in 2006," Bergner said. "The Islamic State of Iraq is the latest efforts by Al Qaida to market itself and its goal of imposing a Taliban-like state on the Iraqi people."

Under interrogation, Al Mashhadani outlined his role in the Islamic State of Iraq. He said he created an alias, Abu Omar Al Baghdadi, to serve as leader of the fictitious group, with Al Masri as minister of war. Al Mashhadani said an actor, identified as Abu Abdullah Al Naima, was employed for speeches posted on the Internet.

"In his words, the Islamic State of Iraq is a front organization that masks the foreign influence and leadership within Al Qaida in Iraq in an attempt to put an Iraqi face on the leadership of Al Qaida in Iraq," Bergner said. "To make Al Baghdadi appear credible, Al Masri swore allegiance to Al Baghdadi and pledged to obey him, which was essentially swearing allegiance to himself, since he knew Baghdadi was fictitious."

Officials said Al Mashhadani began as an operative in Ansar Al Sunna, regarded as an Al Qaida-aligned group. They said he joined the Al Qaida network in early 2005 and eventually became propaganda chief.

Bergner said the Al Qaida network has been led by foreigners, who coordinate the influx of volunteers into Iraq through neighboring Syria. He quoted Al Mashhadani as saying that Al Masri controls the finances, operations and propaganda of Al Qaida in Iraq and has brought in other foreigners to ensure domination of the network.

"Al Qaida is run by foreigners, not Iraqis," Bergner said. "He [Al Masri ] does not trust and seek the advice of Iraqis. He has become increasingly isolated and paranoid."

Earlier, the U.S. military reported the death of a leading Al Qaida operative in the Baghdad area. The operative was identified as Abu Jurah, responsible for operations in the Baghdad suburb of Arab Jabour, and killed by a precision-guided munition on July 14.

"Abu Jurah was an AQI cell leader and was responsible for improvised explosive devices, vehicle-borne IED and indirect fire attacks on coalition forces in Arab Jabour," the military said.

The military said the U.S. Army fired two Excalibur precision-guided artillery shells, one of which killed Abu Jurah. The operation also included unmanned aerial vehicles, an AH-64 Apache attack helicopter and a U.S. Air Force F-16 multi-role aircraft.