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A high-ranking U.S. government delegation has pressed Pakistan not to become the next declared nuclear military power, but Pakistan still is grappling with a decision over whether to test its ability to make the bomb.

The United States is gravely concerned that a nuclear arms race is about to break out between Pakistan and its arch-enemy, India, which stunned the world by conducting five underground nuclear tests Monday and Wednesday.

The tests meant that India has declared itself the sixth nuclear military power after the U.S., Russia, China, France and Britain.

Pakistan considered India’s move a direct threat to its security, and is publicly mulling the option of pursuing its own test. Both countries, along with Israel, had been considered undeclared nuclear powers, capable of producing atomic or nuclear weapons but without proving or acknowledging their ability.

President Clinton, in Birmingham, England, for the meeting of the Group of Eight nations, said the U.S. was trying to work out ways to “reward” Pakistan. He said a deal might be possible and that nuclear testing “was not inevitable.”

“I hope we can find a formula,” he said. “Perhaps those of us here at the G-8 can make a contribution to that. I hope we can find a formula which they will find politically possible not to go forward. It would be a great act of statesmanship and restraint on their part.”

In New Delhi, India’s Prime Minister Atal Bihari Vajpayee said his nation was now a “nuclear weapons state” and has the ability to build “a big bomb.” He criticized sanctions imposed by other governments after India’s nuclear tests.

“India will not be cowed down by any such threats and punitive steps. India has the sanction of her own past glory and future vision to become strong–in every sense of the word,” Vajpayee said Friday in an interview with India Today magazine, according to a transcript of his remarks.

The initial transcript, released by the prime minister’s office, quoted him as saying: “We have a big bomb now for which the necessary command and control system is also in place.”

Later, the government backtracked. Vajpayee’s office provided a revised transcript that had the prime minister saying only that “we have the capacity for a big bomb now.”

“India is now a nuclear weapons state,” Vajpayee said in the transcript. He added, “Ours will never be weapons of aggression.”

Hindu India and Muslim Pakistan have fought three wars and been bitter rivals since they were created by the partition of colonial India from Britain in 1947. They still dispute ownership of the Kashmir region and remain locked in a bitter competition for influence in the region that includes an escalating arms race over missile technology.

In recent years, however, the two sides were moving toward a dialogue, and while tensions have risen several times in the past decade, the two countries have not fought a war since 1971. Analysts believe part of the reason for the moderating tension was the fact that both sides had gained nuclear technology and had become undeclared nuclear powers.

But that fragile stability has been undone by India’s tests, and most Pakistani analysts and overwhelming public opinion in Pakistan are pushing the government to respond with its own test and declaration.

Pakistan’s government welcomed the arrival of a U.S. delegation, which was led by Deputy Secretary of State Strobe Talbott, but Pakistani officials repeated their position Friday that they retained the right to do whatever they felt necessary to preserve national security.

“Our position is quite clear,” said foreign ministry spokesman Tariq Altaf. “Our responsibility will be in keeping with the threats we are facing and in keeping with our national and security interests.”

The U.S. team met with foreign ministry officials for 90 minutes Friday and later was to see Prime Minister Nawaz Sharif. While both sides said they had good talks, American officials acknowledged that Pakistan felt so threatened by India’s actions that there would be no easy solution. In a brief public comment, Talbott said it was important that the U.S. and Pakistan “understand each other’s views at difficult times.”

In comments to reporters on condition of anonymity, American officials painted a picture of a country grappling with its future and weighing the necessity to respond to India’s moves against an almost certain backlash if it proceeds with tests.

The international community has condemned India’s actions, and the U.S., Japan and other countries moved quickly to levy economic sanctions on India that analysts say could cost the nation more than $7 billion a year. Pakistan, however, is a smaller, weaker country still trying to come back from near bankruptcy and it is much less likely to withstand international isolation.

The American officials said Pakistan appeared not to have made up its mind but that its decision seemed based more on immediate security needs than what kind of deal President Clinton and other leaders might broker.

Still, a picture began to emerge of what the two sides might be talking about as inducements. The Pakistanis apparently would like to see an international diplomatic initiative to settle the question of Kashmir’s identity, and if it does not go ahead with a test, it wants assurances that sanctions against India will be serious and permanent.

“We want to see if there are rewards for good behavior or bad behavior,” said Mushahid Hussain, Pakistan’s information minister.

White House spokesman Mike McCurry said that at the meetings in Islamabad “no decision yet has been made about testing but no assurances have been given.” McCurry did say “we can see some ways in which we can get a positive outcome.”

One element of the deal apparently would involve the release of the 28 F-16 fighter jets that Pakistan bought from the U.S. in 1988 and 1989 but never received, or else the remainder of the $600 million that Pakistan paid for them.

The delivery of the jets was blocked by U.S.law and all but $150 million of the money was retained by the U.S. when it was determined that Pakistan was at work on a nuclear weapons program. The jets are now sitting in Arizona.

Clinton told reporters that “I think the Pakistanis have a genuine grievance, a legitimate grievance against the U.S. on this account.”

He also said however, “I believe we have found a way to work through the matter.”

McCurry declined to say whether the solution would involve the jets or the money, but he said the Clinton administration might seek a third-party transfer to get around the law and satisfy the obligation.

In a statement Friday night, the G-8 nations said: “We condemn the nuclear tests which were carried out by India . . .. India’s relationship with each of us has been affected by these developments. We are making this clear in our own direct exchanges and dealings with the Indian government. . ..”

The G-8 nations also urged Pakistan “to exercise maximum constraint.”