U.S. security interests in South Asia concentrate on weapons proliferation, strategies to reducetensions, antiterrorism, and regional stability. This report emphasizes the role of missiles in SouthAsian security because of their potential use as delivery vehicles for nuclear weapons. As such, theproliferation of missiles in the region is considered to be a central variable in calculations gaugingregional stability. During the 1990s, the U.S. security focus in South Asia sought to minimize damage to the nonproliferation regime, prevent escalation of a nuclear arms and missile race, and promoteIndo-Pakistani bilateral dialogue, especially on the sovereignty dispute over Kashmir. In light ofthese goals, the Clinton Administration established five "benchmarks" for India and Pakistan basedon the contents of UN Security Council Res. 1172, which condemned the two countries' nuclear testsof May 1998. These were: signing and ratifying the Comprehensive Nuclear Test Ban Treaty (CTBT); (2) halting all further production of fissile material and participating in FissileMaterial Cutoff Treaty (FMCT) negotiations; limiting development and deployment of WMD deliveryvehicles; implementing strict export controls on WMD materials and technologies;and establishing bilateral dialogue between New Delhi and Islamabad. Progress in each of these areas has been limited, and the Bush Administration makes no reference to the benchmark framework. (3) NeitherIndia nor Pakistan has signed the CTBT, and bothappear to be continuing their production of weapons-grade fissile materials. (4) The status ofweaponization and deployment is unclear, though there are indications that this is occurring at aslow, but more or less steady pace. (5) Earlier optimismin the area of export controls waned as fearshave gained credence that these countries, especially Pakistan, might seek to export WMD materialsand/or technologies. (6) Finally, while there has beenno repeat of the intense 1999 military clashesin Kashmir -- and a ten-month-long military standoff in 2002 ended without large-scale fighting --bilateral tensions remain significant, and no substantive dialogue between New Delhi and Islamabadis underway. Upon taking office, the Bush Administration set out substantively to build upon an initial improvement in U.S. relations with New Delhi begun by President Clinton, while also shifting U.S.nonproliferation policy from seeking to prevent South Asian nuclearization to encouraging India andPakistan to be "more responsible nuclear powers." (7) Some analysts have argued that, by moving theU.S. focus away from international nonproliferation treaties such as the CTBT and withdrawing fromthe Anti-Ballistic Missile Treaty, the Bush Administration's de-emphasis of "vertical proliferation" (8) issues has contributed to legitimizing South Asia's strategic arsenals. (9) In the face of congressionalquestioning about seeming "contradictions" in U.S. policy, Assistant Secretary of State for SouthAsia Christina Rocca stated in March 2003 that the United States is taking a "pragmatic approach"that seeks to have India and Pakistan "exercise restraint" with regard to the proliferation of strategicarsenals. (10) The September 2001 terrorist attacks on the United States and ensuing U.S.-led antiterrorism efforts transformed U.S. relations with India and, especially Pakistan, which again became a"front-line" ally and beneficiary of significant U.S. foreign assistance (up from $3.5 million inFY2001 to more than $1 billion in FY2002). India's swift offer of full support for U.S. antiterrorismefforts was widely viewed as reflective of much improved U.S.-India relations. In 2003, and forperhaps the first period in history, the United States simultaneously enjoys positive relations withboth countries. (11) This circumstance may meanthat the ability of the United States to influence SouthAsian security dynamics is at an all-time high. At the same time, differences with Pakistan (overissues of terrorism, proliferation, and democratization) and with India (over definitions of terrorism,U.S. policy in the Middle East, and human rights) continue to cloud forecasts of future U.S.engagement with South Asia's two largest and nuclear-armed countries. The key issues for Congress addressed here are whether missile proliferation in South Asia enhances or detracts from regional stability and the role of U.S. policy in promoting such stability,as well as in tension reduction and nonproliferation. Levels of U.S. foreign assistance to India andPakistan, the establishment of aid restrictions, the transfer of conventional weapons platforms(possibly including missile defense systems), the setting of export control parameters andnonproliferation goals, and the maintenance of policy and intelligence oversight of U.S. relationswith India and Pakistan all have a vital congressional facet. Pending and future legislation couldinfluence levels of stability in South Asia. Understanding present-day missile proliferation in South Asia and relevant U.S. policy optionsis aided by a review of the historical setting. Three wars -- in1947-48, 1965, and 1971 -- and aconstant state of military preparedness on both sides of their shared border have marked thehalf-century of bitter rivalry between India and Pakistan. A bloody battle in the Kashmiri mountainsnear Kargil in 1999 cost thousands of lives and marked history's first significant direct clash betweenthe forces of two nuclear-armed countries. Most recently, a 10-month-long military standoff in 2002involving up to one million Indian and Pakistani soldiers was viewed as the closest the two countrieshad been to full-scale war since 1971, and caused the U.S. government to become "deeply concerned... that a conventional war ... could escalate into a nuclear confrontation." (12) A persistent and oftentimes perplexing aspect of U.S. engagement in the region has been the difficulty of maintaining a more-or-less balanced approach toward two antagonistic countries whilesimultaneously promoting perceived U.S. interests in South Asia. India has seven times thepopulation and four times the land area of Pakistan. In 2002, the Indian GDP was more than eighttimes that of Pakistan, and the Indian military enjoys a 2:1 or 3:1 advantage in numbers of soldiersand conventional arms. (13) Yet, despite India'sclearly greater status in these concrete terms, theUnited States has for the past half-century found itself much more closely engaged with Pakistan,in particular during the 1950s, when Pakistan was part of the U.S.-led alliance system to contain theSoviet Union; the 1980s, when Pakistan was a front-line ally in U.S.-supported efforts to defeat theSoviet Army in Afghanistan; and today, when Pakistan is again a front-line ally, this time in U.S.-ledefforts to defeat Islamic militancy. India and Pakistan were established in August 1947 from what had been British India. Some 500,000 people died during the Partition, and by October the two countries were fighting a war overthe disputed Kashmir region. Even before the onset of the U.S.-Soviet Cold War, there existed a"strategic divergence" between the United States and Indian nationalists that "set habits and patternson both sides" which persisted for many decades. (15) Over the course of the Cold War, U.S. interestin South Asia was inconsistent and almost wholly subordinated to efforts at containing Soviet andChinese communist expansion. A perceived absence of compelling geostrategic or economic stakeslimited the extent of U.S. involvement in South Asian affairs. During the 1950s, Pakistan became embedded in U.S.-led treaty organizations that sought to encircle and contain communist expansion. Two key results were the institutionalization of closeU.S.-Pakistan ties and the provision to Islamabad of large assistance packages. (16) While thisU.S.-Pakistan security relationship developed, Indian leaders concentrated on nation-building andfollowed a policy of what became known as nonalignment. By the mid-1950s, Washington'sdifferences with New Delhi gave rise to what a top U.S. diplomat characterized as "correct but ratherchilly"exchanges that would last for several decades. (17) After a brief 1962 border war with China exposed serious weaknesses in the Indian Army, the United States initiated military assistance programs for New Delhi that totaled about $150 millionby 1966. However, the second India-Pakistan war over Kashmir in 1965 spurred the United Statesto end military assistance to both countries. Given Pakistan's 10 years of close cooperation with theUnited States, some in Islamabad felt betrayed by this move. However, when East Pakistan (nowBangladesh) fell into turmoil in 1971, leading to the forced partition of Pakistan after its defeat ina third war with India, President Nixon elected to "tilt" U.S. support toward Pakistan and, in sodoing, brought U.S.-India relations to a nadir. (18) India's "peaceful nuclear explosion" of 1974 madeSouth Asian weapons proliferation a top-tier U.S. concern for the remainder of the Cold War. TheSoviet invasion of Afghanistan of 1979 transformed U.S.-Pakistan relations virtually overnight, andduring the 1980s Pakistan became regarded as a front-line U.S. ally in the struggle against Sovietexpansion. (19) Following the Soviet Union's withdrawal from Afghanistan and its subsequent collapse in 1991, U.S. policy toward South Asia sought to "break the zero-sum mind-set that [had] plaguedIndo-Pakistani relations since partition and was reinforced by the global rivalries of the pastdecades." (20) Proliferation-related restrictions onaid to Pakistan constrained this effort, however, andcontributed to a perceived imbalance in U.S. policy after their (re-)imposition in 1990.