Suspicion that Khan was trying to peddle nuclear know-how to the Iraqis was roused by an October 1990 memorandum from Iraq's intelligence service to its nuclear weapons directorate in which his name cropped up. The documents, mostly in Arabic, are among the thousands turned over by Iraq after Saddam Hussein's son-in-law Lt Gen Hussein Kamel defected and blew the whistle on Baghdad's nuclear pursuit.

Khan reportedly offered to help Iraq ``manufacture a nuclear weapon,'' but Baghdad was leery of the overture suspecting it may be an American sting operation, Newsweek magazine reported in its latest issue.

In Vienna, IAEA spokesman David Kydconfirmed on Monday that the agency is looking into a secret Iraqi memorandum naming Dr Abdul Qadeer Khan as offering to sell designs for a nuclear bomb. ``We are pursuing leads concerning individuals that were contactable in the pre-Gulf War period regarding Iraq's clandestine nuclear programme,'' Kyd was quoted by AP as saying, adding that it was too early to draw conclusions.

Baghdad has since authenticated the memorandum, which is from Section B.15 of Iraq's intelligence service to Section S.15 of its nuclear-weapons directorate.

Western analysts are not surprised at the latest development. Despite successive US administrations winking at Pakistan's nuclear and ballistic missile programme, intelligence accounts here say Islamabad has often dangled the nuclear carrot before Iraq and Iran to win financial and diplomatic backing.

Unlike India, which has been scrupulous in its nuclear dealings (rather, non-dealings) despite the excellent relations it has with Islamic and Arab nations, Pakistan has usedthe threat of spilling the nuclear beans to the Islamic world to soften up Washington.

``The matter has come up before the administration before, although I don't think the cooperation has been extensive,'' says Gary Milholin of the Wisconsin Project, a centre that monitors nuclear proliferation.

According to one account, Pakistan may have passed on to Iraq classified blue prints relating to the manufacture of uranium melting furnaces or autoclaves, which it obtained from European firms.

A top ranking proliferation expert who has monitored Pakistan's nuclear program extensively told The Indian Express that the Iraqis have in the 1990s switched from the refining uranium through magnetic fields to the gas turbine method. ``It's the AQ Khan method,'' the expert said, referring to the Pakistani scientist's expertise in the centrifuge technology. ``It is a definite pointer and it does not take a genius to figure out where that came from.''

Another story, related in Critical Mass, a book aboutnuclear proliferation, says Pakistan's former army chief of staff Mirza Afzal Beg had offered nuclear weapons technology to Teheran in return for a strategic alliance that would use Iranian money to pay off Pakistan's worsening national debt.

Former Pakistan President Ghulam Ishaq Khan, the original patron of A Q Khan and the man credited with financially lubricating Pakistan's nuclear programme, is also said to have kept a nuclear channel open with Iran.

Another time, then Iranian President Hashemi Rafsanjani is believed to have offered to pay Pakistan's entire defence bill -- $3.5 billion -- in return for its nuclear know-how. Even the Saudis are said to have once offered $800 million to Pakistan to finance their nuclear plans.

Such reports have largely been winked at by Washington, in part because through much of the 1980s, the US was willing to mollycoddle Islamabad in its effort to use Pakistan for taming of the Soviet Union in Afghanistan. But things may be changing, given the latest investigationand the US sanctions announced Monday against the A Q Khan Research Laboratories (KRL).

Some experts believe that in the long term, there is a basic conflict between US interests and Pakistan's Islamic-based nuclear drive. Says Yossef Bodansky, Director of the Congressional Task Force on Terrorism and Unconventional Warfare, ``(Pakistan's) military nuclear effort was motivated as much by the determination to deliver the Islamic bomb that would make Pakistan a world Muslim leader, as by the need to counter-balance India's military nuclear programme.''

Bodansky wrote in a recent report that Pakistan's extremely close strategic relations with China, including Beijing's strategic guarantees and assistance in the development of Pakistan's nuclear weapons, were considered the foundations of Islamabad's ability to deter an inevitable clash with the US and a possible war with India.

Although many analysts say the sanctions against KRL could be purely cosmetic, considering it has barely any interaction with USentities, the embargo could mean a closer scrutiny of Pakistani imports and Islamabad's interaction with China and North Korea.

At the very least, it would have a sobering effect on China and North Korea, says Milhollin.

Established in the 1970s as the Engineering Research Laboratories, the name of the outfit was changed to Dr A Q Khan Research laboratories by General Zia ul-Haq during a visit in 1981 in recognition of the services by the man often called the Edward Teller of Pakistan.