The United States and India remain divided over a controversial nuclear cooperation agreement despite three days of talks to finally close the deal, a U.S. official said on Thursday.

The two sides were considering an Indian compromise proposal that would represent a special concession for New Delhi, U.S. officials and congressional sources told Reuters.

There's goodwill, we've made progress and we're very hopeful that we can hammer out the remaining differences in the coming days and weeks, said State Department deputy spokesman Tom Casey.

The two sides have been stalemated for months over the landmark deal that would give India access to U.S. nuclear fuel and reactors for the first time in 30 years.

President George W. Bush, who considers the deal a major foreign policy success, has only 18 months left in office and is running out of time to get the agreement approved and implemented before a successor comes to power.

Any deal must be approved by the U.S. Congress. Support there for rapidly improving U.S.-India ties is strong, but patience with what many see as India's unreasonable nuclear demands is waning. India's ties with Iran are also a complicating factor, experts say.

U.S. and Indian negotiators met on Thursday for a third and final day of talks, but Casey told reporters: I wasn't given the impression that you should look for an announcement today or some kind of definitive conclusion.

On Wednesday, as part of what was supposed to be a final push to the finish line, Secretary of State Condoleezza Rice met with Indian Foreign Secretary Shiv Shankar Menon, and National Security Adviser Stephen Hadley met Indian National Security Adviser M.K. Narayanan.

Obstacles have included a U.S. congressional mandate that Washington halt nuclear cooperation if India tests a nuclear weapon, as it did in 1998.


Other disputed points have been the U.S. refusal to give India prior approval to allow reprocessing of spent fuel with U.S. components and assure permanent fuel supplies.

Aiming to prevent the diversion of nuclear material for weapons use, U.S. law prohibits such assistance to countries such as India, which are not formally recognized as nuclear powers.

But India has proposed getting around the problem by constructing a new reprocessing facility that would be subject to inspection by U.N. monitors to guarantee that none of the nuclear material is used for weapons.

What the Indians want is unique. It would be an even better deal that what Japan got for its reprocessing program and Japan is a U.S. treaty ally, a non-nuclear weapon state and a signatory of the nuclear Non-Proliferation Treaty, one U.S. official said on condition of anonymity.

India has not signed the NPT. It developed nuclear weapons in contravention of international standards and tested a nuclear device in 1998.

The agreement that allows Japan to reprocess U.S.-origin nuclear fuel is thousands of pages long and requires enough transparency so Washington is certain there is no diversion.

The proposed agreement with India would not provide the same level of confidence that no diversion takes place, said the official, who is skeptical of the proposed compromise.

Congress last December passed the Hyde Act, which created a unique exception to U.S. export law to allow nuclear cooperation with India.

The current negotiations concern a separate agreement spelling out technical details of U.S.-Indian nuclear cooperation.