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DATE=7/21/98 TYPE=CORRESPONDENT REPORT NUMBER=2-235775 TITLE=PAK / U-S / NUCLEAR (L) BYLINE=AYAZ GUL DATELINE=ISLAMABAD CONTENT= VOICED AT: INTRO: DEPUTY U-S SECRETARY OF STATE STROBE TALBOTT HAS ARRIVED IN ISLAMABAD FROM INDIA, TO DISCUSS NUCLEAR NON-PROLIFERATION ISSUES WITH PAKISTANI LEADERS. MR. TALBOTT'S VISIT IS PART OF WASHINGTON'S EFFORTS TO DEFUSE TENSION IN SOUTH ASIA FOLLOWING THE TIT-FOR-TAT NUCLEAR TESTS INDIA AND PAKISTAN STAGED TWO MONTHS AGO. AYAZ GUL REPORTS FROM THE PAKISTANI CAPITAL. TEXT: MR. TALBOTT FLEW INTO ISLAMABAD FROM NEW DELHI TUESDAY FOR A THIRD ROUND OF TALKS WITH PAKISTANI OFFICIALS. HE IS BEGINNING OFFICIAL TALKS (AT 1200 UTC) WITH PAKISTAN'S CHIEF DIPLOMAT, SHAMSHAD AHMED. THE TWO MET IN WASHINGTON EARLIER THIS MONTH. MR. TALBOTT ALSO WILL MEET PAKISTAN'S PRIME MINISTER NAWAZ SHARIF AND FOREIGN MINISTER GOHAR AYUB KHAN ON WEDNESDAY. SINCE THE TWO NATIONS CONDUCTED NUCLEAR TESTS IN MAY, THE UNITED STATES HAS BEEN TRYING TO PERSUADE PAKISTAN AND INDIA TO SIGN THE INTERNATIONAL TEST BAN TREATY, THE C-T-B-T, UNCONDITIONALLY. THE RIVAL TESTS HAVE RAISED FEARS OF A NUCLEAR ARMS RACE IN SOUTH ASIA. THE UNITED STATES AND OTHER NATIONS SLAPPED ECONOMIC SANCTIONS ON BOTH INDIA AND PAKISTAN AFTER THE NUCLEAR BLASTS, IN AN ATTEMPT TO PERSUADE THE TWO COUNTRIES TO COMMIT TO THE TEST BAN TREATY. EXPERTS SAY THE SANCTIONS HAVE HAD A DAMAGING IMPACT ON PAKISTAN'S ALREADY TROUBLED ECONOMY. THE COUNTRY'S FINANCE MINISTER HAS WARNED PAKISTAN COULD FACE A MAJOR FINANCIAL CRISIS IF THE SANCTIONS GO BEYOND THREE MONTHS. PAKISTAN HAS SAID MR. TALBOTT'S VISIT WILL BRING THE TWO COUNTRIES CLOSER TO THE LIFTING OF U-S ECONOMIC SANCTIONS. THE U-S ENVOY REPORTEDLY IS CARRYING A PERSONAL MESSAGE TO THE PRIME MINISTER FROM PRESIDENT CLINTON, REINFORCING NON-PROLIFERATION DEMANDS BY THE WORLD'S FIVE NUCLEAR POWERS AND THE GROUP OF EIGHT LEADING INDUSTRIALIZED NATIONS. PAKISTAN SAYS THE ECONOMIC SANCTIONS AND THEIR IMPACT, PAKISTAN'S SECURITY CONCERNS AND THE C-T-B-T ALL WILL BE ON THE TABLE DURING THE TALKS. OBSERVERS BELIEVE THE UNITED STATES WILL BE PRESSING PAKISTAN TO SIGN THE TEST-BAN TREATY IN EXCHANGE FOR A WAIVER OF ECONOMIC SANCTIONS. A FOREIGN MINISTRY SPOKESMAN SAYS ISLAMABAD WILL NOT SIGN THE C-T-B-T IF IT COMPROMISES THE COUNTRY'S SECURITY. /// SPOKESMAN ACT /// WE WILL NOT BE PAINTED INTO A CORNER. WE WILL RETAIN OUR OPTIONS BUT IT IS NOT A RIGID POSITION. THERE ARE NO INFLEXIBILITIES. WE HAVE AN OPEN MIND AND THAT IS HOW WE WILL ENTER INTO NEGOTIATIONS IN THIS CONTINUED PROCESS WITH THE U-S AND (DEPUTY) SECRETARY (OF STATE) TALBOTT. /// END ACT /// PAKISTAN HAS LONG MAINTAINED IT WILL SIGN THE C-T-B-T IF INDIA DOES SO. BUT, AFTER THE NUCLEAR TESTS, ISLAMABAD SAID PAKISTAN WILL RETAIN ITS OPTIONS EVEN IF NEW DELHI SIGNS THE TEST-BAN TREATY. /// REST OPT /// PAKISTAN IS ALSO SEEKING U-S HELP IN ENGAGING INDIA IN WHAT IT CALLS A MEANINGFUL AND PURPOSEFUL DIALOGUE ON DISPUTED REGION OF KASHMIR. THE TWO COUNTRIES HAVE FOUGHT TWO WARS OVER THE REGION SINCE GAINING INDEPENDENCE FROM BRITAIN IN 1947, AND THEIR SHARED BORDER REMAINS TENSE BECAUSE OF THE DISPUTE. INDIA CONTROLS TWO-THIRDS OF KASHMIR AND PAKISTAN HOLDS THE REST. (SIGNED) NEB/AG/CB-T/WTW 21-Jul-98 5:41 AM EDT (0941 UTC) NNNN Source: Voice of America .