Saikat,

> [SR] Ok. This however does not happen in bgp-free core (ASBR2 will tunnel
>           the packet to ASBR4 even if AR3 is in the forwarding path).

True but http://tools.ietf.org/html/draft-ietf-idr-error-handling-03
does not mandate nor recommend to use "treat-as-withdraw" in IBGP in
tunneled only networks. Once you upgrade your router to new release it
careless if there is MPLS or GRE running in your domain.

In fact it says quite clearly:

   Although the "treat-as-withdraw" error-handling behavior defined in
   Section 2 makes every effort to preserve BGP's correctness, we note
   that if an UPDATE received on an IBGP session is subjected to this
   treatment, inconsistent routing within the affected Autonomous System
   may result.  The consequences of inconsistent routing can include
   long-lived forwarding loops and black holes.

Rgs,
R.
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