The State Department said Friday the United States is close to concluding a nuclear cooperation agreement with the United Arab Emirates, the UAE. The deal would be the first of its kind with a Middle Eastern country, and it has raised concerns in Congress that it could spur nuclear proliferation in the region.

State Department officials said the two governments have finalized the text of the nuclear deal, and that the accord could be signed before the Bush administration leaves office in January.

The so-called 1-2-3 agreement would be similar to the nuclear cooperation accord the United States reached with India in 2005, and which took effect in October after a difficult legislative approval process in both countries.

It would allow the United States to sell nuclear fuel, equipment and technology to the UAE - a longtime close ally - in return for commitments by the Gulf state to abide by the Nuclear Non-Proliferation Treaty and accept International Atomic Energy Agency safeguards.

The two governments signed a memorandum of understanding on nuclear cooperation in Bahrain in April. But the prospect of a final accord has drawn expressions of concern from some members of U.S. Congress, worried that it might prompt other Gulf states to start nuclear programs or that the UAE might share nuclear know-how with Iran.

State Department Spokesman Sean McCormack defended the prospective deal at a news briefing, saying it would deter, rather than encourage a regional nuclear arms race or proliferation.

"We think, actually just the opposite - that if you encourage states, whether they're in the Middle East or elsewhere around the globe, to engage in responsible behavior, realize the benefits of peaceful nuclear energy while carefully proscribing the uses of those technologies, and having countries formally enter into agreements that proscribe the uses of the technology - that's a good thing," he said.

The UAE has large oil reserves but officials there said natural gas resources are limited and that civilian nuclear power is an attractive option.

McCormack said the UAE's willingess to put any nuclear facilities under international controls and inspections stands in contrast to Iran, which has refused demands to halt a uranium enrichment drive U.S. and European officials believe is weapons-related.

The Wall Street Journal, in a report on the pending deal Friday said some U.S. officials are concerned about it because the UAE is a major financial partner of Iran and has served in the past as a trans-shipment point for military technology bound for Iran.

A senior Republican in the House of Representatives, Ileana Ros-Lehtinen, has introduced a bill that would bar the transfer of U.S. nuclear hardware or technology to the UAE, unless the President can certify that the UAE has halted trade in sensitive items with Iran and is fully complying with U.N. sanctions against Tehran.

Spokesman McCormack, who pledged close consultation on the deal with Congress, said there are several steps remaining before it is signed but that it could be concluded before the end of President Bush's term January 20.

President-elect Barack Obama has not taken a position on the accord, and if it is signed before he takes office, he would have to decide whether to seek Congressional approval.