India's prime minister and Pakistan's president have agreed to a new round of peace talks before the end of the year. Barry Newhouse in Islamabad and Anjana Pasricha in New Delhi report the leaders also agreed to a joint commission that will investigate the bombing of India's embassy in Afghanistan.

Pakistan PM Hopeful of Resolving Dispute

Indian Prime Minister Manmohan Singh (L) hugs Pakistan President Asif Ali Zardari during a meeting in New York on the sidelines of the United Nations (UN) General Assembly meeting, 24 Sep 2008

The meeting on the sidelines of the United Nations General Assembly in New York was the first between Pakistan's new President Asif Zardari and Indian Prime Minister Manmohan Singh.
 
Relations between the longtime rival nations have been particularly strained after India accused Pakistan's intelligence services of participating in the July bombing of its embassy in Kabul.

Asif Zardari told reporters that his country now faces a difficult situation, but he is hopeful about resolving the long-standing issue of Kashmir with India.

"So I think there is an impetus of a new dialogue with the realization and the growth of this generation, I think people of India and people of Pakistan should themselves decide," he said.
 
New Delhi Feels Sense of Reassurance

The first meeting between Indian Prime Minister Manmohan Singh and Pakistani President Asif Ali Zardari appears to have reassured New Delhi of Islamabad's commitment to a peace process begun with the former Pakistani government.  

New Delhi has been worried that negotiating peace with a weak civilian government may be more difficult than dealing with former Pakistani leader Pervez Musharraf, who had a firm grip on the army.

Analysts say that, for India, Islamabad's promise to act against terrorism remains a top priority. Tensions escalated between the two countries after New Delhi accused Pakistan's spy agency of involvement in a powerful suicide car bomb attack on the Indian Embassy in Kabul in July.

After the meeting between the two leaders in New York, Indian Foreign Secretary, Shiv Shankar Menon, said that the Kabul bombing would be discussed with Islamabad, next month.

"They agreed that violence, hostility and terrorism had no place in the vision they share of the bilateral relationship and must be visibly and verifiably prevented," he said.  "Severe action would be taken against any elements directing or involved in terrorist attacks."

A commitment to stabilize a truce along the volatile border in Kashmir is also expected to lower tensions between the South Asian rivals. Several incidents of cross border shooting have been reported in recent months, after four years of calm.

But for people in Indian Kashmir, the most significant outcome is the decision to start  cross border trade next month in the region, which is divided between the rivals.

Kashmiris have been demanding closer cross border linkages since the peace process began four years ago.  So far, the two countries only operate a passenger bus service in the region.