In May 1998 India surprised the world by testing five nuclear weapons, and despite the pleas of the international community, Pakistan followed suit a few days later. The global effort to halt the proliferation of nuclear weapons in South Asia never recovered. The recent United States-India nuclear deal is a wise accommodation to reality but puts no constraints on the nuclear arms race in South Asia. Meanwhile, Pakistan is unlikely to conclude such a deal, especially given the A.Q. Khan affair. In the last decade the two neighbours have fought a small war and mobilised for a much larger one, and cross-border terrorism could provoke another crisis at any time. The danger of a nuclear confrontation remains serious and should be addressed by creative diplomacy to deal with the underlying issues that have divided the subcontinent since partition in 1947, most notably Kashmir.