Hi Abdel,

> During my study I have understood that when the router peer with its
> neighbor it compare its own AS # with the neighbor AS# to decide whether its
> IBGP or E-BGP neighbor.

This is the case. R1 and R2 still see each other as eBGP neighbor. But
as you pointed out, when you use the local-as command, the router
prepends its real AS # by default. And as R1 and R2's real AS # are
the same, the BGP loop prevention enter in action: Routers refuse all
NLRI containing  their own AS # in the AS_PATH. (You can see it with
"debup ip bgp updates").

Your workaround simply prevent the routers to prepend their real AS#
and to replace it by the fake AS# (or local-as).

Another option could be to use "neighbor x.x.x.x allowas-in" command.
This disable the AS_PATH check for updates coming from that neighbor.

Regards,
Christophe
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