Conflicting claims over Kashmir has bedeviled Indo-Pakistan bilateral relations for the last 57 years. But the highly successful SAARC summit last year in Islamabad gave hope that both India and Pakistan would restart their composite dialogue to address the Kashmir issue. The first part of the composite dialogue was conducted between February to September 2004 and was reasonably successful. But Pakistan which has tried to project Kashmir as the core issue felt that this issue was not getting enough attention.

To force the pace General Musharraf made a proposal during an Iftar party on 25 October in which he suggested dividing Kashmir [on both sides of the line of control (LoC)], into seven ''regions'' demilitarizing them and granting them either independence or placing them under joint control or UN mandate. His suggestions found favour with US Deputy Secretary of State Richard Armitage, who termed Musharraf's suggestion to resolve the Kashmir issue as ''very forward-thinking.'' Showing an interest in this proposal Armitage said, ''I think he (Musharraf) has caused a great deal of thinking both in India and here in Pakistan about the way forward.''

Kashmir also came up for discussion during the fifth India-European Union (EU) summit when Dr. Manmohan Singh chose to return to basics and asked Pakistan to stop supporting those engaged in terrorist activities against India and only then hope for a dialogue. In the joint statement issued after the India-EU summit meeting, the European Union welcomed "the positive evolution of the relationship between India and Pakistan", but hoped for its "consolidation" in an atmosphere "free from the menace of terrorism and violence", in with the joint press statement issued on 6 January, 2004. The EU also indicated its support for India's efforts to situate its relationship with Pakistan within the broader framework of regional co-operation in South Asia.

For a while it appeared that both India and Pakistan would return to their earlier stated positions and the peace process might be derailed. However, things have taken a positive turn once again after the recent visit of the Pakistan premier who clarified that the idea floated by President Pervez Musharraf at the Iftar Party was meant only for internal debate. Musharraf stated that his remarks, outlining options to resolve Kashmir issue, was aimed at stirring a debate in the media.

Though Aziz has lowered the pitch on Kashmir, he underlined the importance of Kashmir for improving bilateral relations. He commended out-of-the-box thinking, and stated that Kashmiris should be included in the dialogue process for it to succeed. But there is no unanimity between India and Pakistan over the true representatives of the Kashmiri people. For Pakistan, the Hurriyat represents Kashmiri people, but it is not a united group. The Pakistani premier got a taste of the complexity of the Kashmir problem when he failed to unite the various factions of the Hurriyat when he met them in the Pakistan High Commission in New Delhi. On the other hand, Manmohan Singh invited Karan Singh, Omar Abdullah and Mehbooba Mufti for the lunch that he hosted for his Pakistani counterpart, and informed the visiting leader told the visiting leader that they were the true representatives of the people of Kashmir.

During his meeting with Shaukat Aziz, Manmohan Singh reiterated India's commitment to "look at all options", but plainly stated that the search for "a resolution must be based on ground realities." India also made clear that it was not looking for territorial solutions but favoured a people-centered approach. The emphasis by India on people to people contact is based on the affinities on both sides of the LoC and the international border. There is a need to expand this feeling of goodwill. Therefore India favours more bus and train services, had proposed two bus services between Srinagar and Muzaffarabad and Jammu and Sialkot. Pakistan has added another-between Poonch and Rawalkot. They are also planning to revive the Munabao-Khokhrapar rail link. India talks of a soft border in Kashmir, and is willing to provide further autonomy to the state and to discuss the issue.

The recent developments over the Kashmir issue have sent the message that its solution can be found through a step by step process of negotiation. The attempt to force the pace would prove a non-starter and derail the peace process, which nobody wants. The new importance given to the economy by both sides has also modified Pakistan's Kashmir centric policy. Both sides are once again back to a policy of incrementalism, wherein lies hope to resolve the Kashmir dispute.