American and Pakistani officials have voiced optimism over reaching a deal to reopen NATO supply lines into Afghanistan that were closed after an American airstrike killed 24 Pakistani soldiers near the Afghan border last November.
US deputy secretary of state Thomas Nides, in Islamabad held discussions with Pakistan foreign minister Hina Rabbani Khar on ending the seven-month blockade of supplies for foreign troops in Afghanistan.
While officials from both countries refused to discuss details of the discussions, a top American official was quoted by the New York Times as saying "stay tuned".
A senior Pakistani counterpart added, "Fingers crossed".
General John Allen, the American commander of NATO forces in Afghanistan, last week met Pakistani army chief of staff General Ashfaq Parvez Kayani in Islamabad to discuss counterterrorism strategy and the supply routes.
Over the weekend, Secretary of State Hillary Clinton telephoned to congratulate Pakistan's new prime minister, Raja Pervez Ashraf, and brought up the supply routes.
Victoria Nuland, a State Department spokeswoman, told reporters in Washington yesterday, "We're continuing to talk about the GLOCs, and we will until we have resolution of the issue," referring to the military's acronym for the supply routes, known as ground lines of communication.
After the November airstrike, the two countries have struggled to resolve the impasse.
Pakistan had demanded a fee of $5,000 for each truck that crossed its territory from the port in Karachi to Afghanistan.
Before the November attack, NATO had paid $250.
Pakistan later reduced that demand to about $3,000 a truck while the United States has offered $1,000 per vehicle.
The New York Times report said the US has agreed to pay for repairs to the port of Karachi and road improvements near the border crossings, but rejected Pakistan's request for indemnity waivers in case American cargo is damaged en route.
The major stumbling block in talks has been Pakistan's demand for a formal American apology for the airstrike in November.
The Pentagon and the White House have offered regret and condolences but are adamantly opposing any additional apology.
The report said some State Department officials have expressed hope that if carefully worded and delivered, an apology of sorts was not just possible but prudent to end the crisis.
A former senior American official even said such an apology was "being mulled over".