By Simon Cameron-Moore

ISLAMABAD, Apr 11 (Reuters) Washington should set up nuclear arms controls for South Asia as part of its proposed deal to supply India with civil nuclear technology, Pakistani Prime Minister Shaukat Aziz said today.

''Our view is that this whole arrangement can be enveloped in a nuclear restraint regime for South Asia,'' Mr Aziz told Reuters in an interview at his hilltop official residence on the outskirts of Islamabad.

Mr Aziz also said the United States should make its nuclear technology available to Pakistan as well, although Washington has made it clear there will be no such offer despite Islamabad being a key ally in the war on terrorism.

''We are not in an arms race. Pakistan is a very peaceful country. Our defence strategy is a minimum credible deterrence.'' The India-US nuclear civil cooperation deal, agreed by President George W Bush last month, would allow New Delhi to buy foreign nuclear technology for the first time in 30 years.

The deal must be approved by the US Congress, where it has met significant opposition, as well as by the 45-nation Nuclear Suppliers Group.

For all of Pakistan's misgivings over the US-India nuclear deal, Mr Aziz did not see it undermining a two-year-old peace process with India.

''I think the peace process is based on a different paradigm,'' he said, speaking in a library in which a biography of Pakistan's founder Mohammad Ali Jinnah sat alongside ''A Thought for the Day'' by Indian independence leader Mahatma Gandhi.

Mr Aziz, who President Pervez Musharraf first picked as finance minister before promoting him to prime minister in 2004, said matching advances in economic development was also crucial to the poor countries of South Asia.

''We all have to move in tandem. If one country is falling behind it will effect the whole neighbourhood -- so I think that is a philosophy which is driving the peace process,'' he said, dressed in a dark suit and pink striped tie.

But, while Mr Aziz rescued Pakistan from bankruptcy seven years ago to turn it into the world's second fastest growing economy behind China in 2005, with 8.4 per cent growth, India's burgeoning economic power appears to give it the edge in ties with the United States.

Mr Aziz said it was reasonable to expect India to join a South Asia nuclear restraint regime even though India may have external security concerns outside of Pakistan and the South Asia region.

''We think that South Asia is part of the world where you have two nuclear powers and if there is sort of a restraint regime -- which doesn't mean roll back -- I think it will be healthy for the cause of peace in the world.'' Mr Aziz said Pakistan welcomed Indian Prime Minister Manmohan Singh's speech in the city of Amritsar last month in which he spoke of reaching a ''treaty of peace, security and friendship'', which helped dispel fears the peace process was grinding to a halt.

But Mr Aziz refused to drop any clue if there was anything more substantive brewing, instead restating Pakistan's desire to see Kashmir de-militarised, and its 'mantra' that any settlement should be ''in line with the wishes and aspirations of the Kashmiri people''.

''We are always expecting movement, because we fundamentally believe in the journey towards peace,'' Mr Aziz said.

Reuters CH RS1841