Testifying before a House Panel on June 18 on nuclear proliferation in India and Pakistan, he said the US had hoped that the economic sanctions required under the Glenn Amendment "would never have to be implemented".

"We had to navigate our way through a wide aray of issues and decisions about how the sanctions apply to different programmes and activities, and are faced with the fact that the sanctions may result in unintended, negative consequences, and that there is no termination or Sunset clause," said Inderfurth.

"While we have yet to see the kinds of concrete steps by either India or Pakistan that will allow us to move forward, I would point out that we are significantly constrainedin our ability to respond to any future progress or positive steps by other country," said Inderfurth, referring to certain limitations of the sanctions procedures.

He also pointed out an anomaly: "We have little flexibility to modify their (the sanctions') application in the event that there is an unintended, negative outcome to their implementation," he said, "already, we are aware that the sanctions require the termination of credits for agricultural sales, which is clearly at odds with the humanitarian provisions of the legislation."

Inderfurth noted "in recent days a cooling of the rhetoric from both Islamabad and New Delhi" and "calls from both capitals to resume direct dialogue."

"India has made positive statements about a willingness to participate in negotiations towards a fissile material cut-off treaty; we hope Pakistan will follow suit," said Inderfurth.

"We cannot simply impose sanctions, step away, and send the signal to India and to Pakistan that our sole intent is to punish. We mustremain engaged, and while sanctions will indeed exact a price, we must also work with both governments to chart a path for the future," said Inderfurth.

"The United States has a strong interest in keeping open the lines of communication with both India and Pakistan", said Inderfurth, "deputy secretary Talbott met lat week at the state department with Jaswant Singh, deputy chairman of the Indian planning commission and a close advisor and confidant to the Indian prime minister Vajpayee."

Inderfurth noted that their meeting was described by the department as "constructive," covering the "entire range of issues of mutual concern."

"In plainer language, after a hiatus of six weeks, the US and India are talking again at a high level to see where we can go," says Inderfurth.

"For our part and for the foreseeable future, we must continue to implement firmly our sanctions policy. At the same time, we must be prepared to help both India and Pakistan reduce tensions if they are prepared to do so," saidInderfurth.

"While we do not accept the rationale given by India and Pakistan for testing or possessing nuclear weapons and believe that the tests have diminished their security, we must continue to recognise that as sovereign nations, both India and Pakistan have legitimate security concerns and interests, and we must bear that in mind as we move forward," Inderfurth reminded the House Panel.