Blair's government argued with increasing vigor, officials of both countries said, that it was time to confront Pakistan about Khan and stop the operation of his network.
"We disagreed," said a senior U.S. policymaker, who would not permit quotation by name on the dispute between allies. Moving immediately, he said, would have closed opportunities for covert surveillance.

Iran's facility in Natanz, seen in a satellite image, was the site where much centrifuge equipment was headed. A Pakistani was the supplier.
(Reuters)
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_____Bush Initiatives_____
Global Nuclear Initiatives: President Bush has offered a variety of alternative approaches to the traditional tools used to stop nuclear proliferation.
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_____The Bush Record_____
Afghanistan, Iraq: Two Wars Collide (The Washington Post, Oct 22, 2004)
The Tax-Cut Pendulum and the Pit (The Washington Post, Oct 8, 2004)
Interceptor System Set, But Doubts Remain (The Washington Post, Sep 29, 2004)
Oil and Gas Hold the Reins in the Wild West (The Washington Post, Sep 25, 2004)
From His 'Great Goals' of 2000, President's Achievements Mixed (The Washington Post, Sep 2, 2004)
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  | U.S. President | Updated 2:09 AM ET | Precincts:0%  |
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Khan continued moving freely abroad, evading nominal restrictions. On a trip to Beijing, one senior Pakistani diplomat said, Chinese authorities "took me aside, said they knew it would be embarrassing, but A.Q. Khan was in China and bribing people, and they wanted him out." The diplomat said Pakistan confiscated a false passport, but Khan kept traveling.
"They made no attempt to get a handle on his activities abroad," said John Wolf, who was Bush's assistant secretary of state for nonproliferation until June.
Bolton said Bush's advisers "were continually engaged in a trade-off" between stopping the sales of nuclear technology and learning enough about them "so that when we did move we brought down what we could."
"It was a 51-49 call every day we were going through this," he said.
Deliveries to North Korea
As London and Washington tried to keep watch in 2001 and 2002, important parts of the black-market network escaped their view. During that period, authoritative sources in both capitals said, Khan's operation delivered tens of thousands of gas centrifuge parts that brought North Korea to the threshold of unlimited bomb production.
It was that unhappy discovery, made in two stages in July and September 2002, that forced North Korea back onto Bush's agenda when he was trying to keep the world's focus on Iraq.
Until then, North Korea was believed to be a nuclear power with "one or possibly two" weapons and no immediate route to more, according to declassified CIA reports. Its existing arsenal had been built with plutonium from a nuclear power plant. In 1994, Clinton neared the brink of war to prevent North Korea from extracting more plutonium from spent reactor fuel. Instead North Korea agreed to shut down its reactors and leave the spent fuel -- enough for five or six bombs -- under U.N. seal, in return for energy and food aid from the United States, South Korea and Japan.
U.S. intelligence agencies knew North Korea was working to circumvent that agreement by acquiring technology to enrich uranium, the alternative ingredient for a bomb. But as recently as June 2002, a National Intelligence Estimate judged it would be three years or more before the Pyongyang government could assemble gas centrifuges in a small test cascade.
By September, U.S. officials said, the CIA reached the dismaying conclusion that a "production-scale" centrifuge facility was nearly complete. "It was much more advanced then anyone expected," said a White House official who followed the subject closely.
With a supply of enriched uranium, Pyongyang would not need plutonium to build bombs. The CIA's best estimate, Bush administration officials said, was that North Korea could add two weapons to its arsenal each year.
On Oct. 5, 2002, Assistant Secretary of State James A. Kelly returned from a hastily arranged trip to Pyongyang with stunning news. When he confronted the North Koreans about U.S. suspicions, they responded by belligerently acknowledging his claims.
The Bush administration dispatched Kelly to brief allied ambassadors. One of them asked whether Bush would seek U.N. Security Council attention for Pyongyang. Kelly replied, according to a diplomat who was present, "The Security Council is for Iraq." Kelly said through a spokesman he does not remember the remark.
Inheriting 'a Train Wreck'
Behind the scenes, most of the president's national security team saw Kelly's news as confirmation that Bush "inherited a train wreck" from Clinton, said a policymaker who has watched both administrations. They resolved to stop "paying the North Koreans just to show up at meetings," and Bush halted U.S. contributions of food and fuel aid under the Clinton agreement.
"Having been burned once," Falkenrath said, Bush's advisers refused to "start talking about benefits, carrots" for North Korea in exchange for further promises. "They say insanity is to just repeat the same behavior and expect a different outcome," he said.
The president's advisers agreed that North Korea must halt its uranium program but could not agree on steps to compel -- or provide incentives for -- Pyongyang's compliance. For the next six months -- a consuming period from the run-up to war in Iraq to the fall of Baghdad -- Bush largely set North Korea aside. His administration took no further action save to organize ongoing six-nation talks that began in August 2003.
In the same period, North Korea broke the seals on its stored plutonium, expelled U.N. inspectors, restarted its Yongbyon reactor and withdrew from the nuclear Nonproliferation Treaty.
"We had a choice and we played it tough, and so did they, and now we're stuck," said a senior intelligence official.
Bolton defended the record.