Perennially high tensions between India and Pakistan over Kashmir have hindered attempts so far to achieve a sustained peace process, despite occasional moments of optimism. U.S. concern for stability in South Asia increased considerably as a result of the racheting up of India-Pakistan nuclear and ballistic missile capabilities, especially since their May 1998 nuclear tests. Almost exactly one year after these tests, India and Pakistan appeared on the brink of launching their fourth war in the past half-century. A two month skirmish which began in May 1999 near the town of Kargil along the Line of Control (LOC) in Kashmir marked the worst outbreak of fighting between India and Pakistan since the India-Pakistan war of 1971. Since Kargil, tensions over Kashmir have remained high. Following a December 13, 2001 terrorist attack on the Indian parliament by militants alleged by India to have been supported by Pakistan, a chain of events ensued that placed the nuclear weapons states at military loggerheads. India and Pakistan have levied sanctions against each other, mobilized their armies and positioned missile batteries along their borders prompting the United States to embark on an intensive diplomatic effort to calm emotions and de-escalate the warlike rhetoric and maneuvering of these two South Asian adversaries. Given these dangers, United States policy in the region is geared towards reducing tensions between India and Pakistan, encouraging a constructive dialogue and confidence building measures between the two countries, and working to reduce terrorism in the region and worldwide. For further details of U.S. relations with India and Pakistan, see CRS Issue Brief IB93097, India-U.S. Relations and CRS Issue Brief IB94041, Pakistan-U.S. Relations). This report will be updated as circumstances warrant. [ABSTRACT FROM AUTHOR]