Pakistani President Asif Ali Zardari and Iranian President Mahmoud Ahmadinejad met this week at the countries' border to mark the start of construction in Pakistan for a $7.5 billion natural gas pipeline from Iran.
The project has faced a series of delays since it was proposed in the 1990s. The United State has opposed the plan because of the potential financial benefit to Iran and its nuclear program.
A diplomatic source told Pakistani newspaper Dawn on condition of anonymity that Washington won't cut off aid to Pakistan in response but already-strained ties could deteriorate.
"The worry about Iran's nuclear program is real enough and the perception that Pakistan may be helping them to make more money to evade international sanctions will further damage Pakistan's stock here," the source was quoted as saying.
Ties between Washington and Islamabad were damaged by the revelation that al-Qaida leader Osama bin Laden had been hiding at a compound in Pakistan. He was killed in 2011 by U.S. forces.
Islamabad says it needs to secure more natural gas to address an energy crisis. Washington favors a rival natural gas project from Turkmenistan.
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