MANILA, June 19 (Reuters) - Lacking a charismatic leader and short of funds, the threats from the Philippines' most dangerous Islamic militant group had been significantly diminished, a U.S.-based counter terrorism centre said on Thursday.

In its latest report, the Combating Terrorism Center (CTC) at the U.S. Military Academy in West Point said the frequency and lethality of attacks attributed to the al Qaeda-linked Abu Sayyaf had dropped since 2007 after the death of its top leaders.

The Philippine military has also inflicted crippling blows on the Abu Sayyaf since mounting a major offensive, with the help of U.S. technical intelligence, in 2006.

"Fleeing the authorities and short of funds, the Abu Sayyaf is a diminished threat," said the CTC report, written by counter terrorism expert Zachary Abuza.

"Perhaps, the most telling sign of the Abu Sayyaf's current state is their degeneration to kidnappings...effectively jettisoning what little ideological pretensions the group ever had."

The report said there had been a number of kidnappings from 2007 on the southern troubled island of Jolo, including the recent case of three television journalists and a professor.

Most of these abductions had been blamed on the Abu Sayyaf, which has about 350 members and a track record of decapitations.

In all of these cases, the captives were freed after ransoms were paid, described as "board and lodging fees" to skirt the government's no negotiations and no ransom policy.

The Abu Sayyaf has also been blamed for the worst militant attack in the Philippines, the bombing of a ferry near Manila Bay in 2004 that killed more than 100 people.

Since 2002, U.S. military forces have been helping train and advise local troops to fight the group, pouring about $500 million into combat equipment and development projects to help turn Muslim community against hardline Islamists.

But why have the Abu Sayyaf not been finished off despite Washington's huge military and economic assistance on the south?

The CTC report said part of the problem is the failings of the local military due to corruption, low morale and weak law enforcement and prosecution of arrested jihadists.

It also offered a cynical answer on the Philippine army's little intention of finishing the job because it "would end the pipeline of U.S. training and military assistance". (Reporting by Manny Mogato; Editing by David Fox)

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