Recent media reports in the U.S. and Pakistan reveal that India and Pakistan came close to reaching an informal agreement on Kashmir after three years of secret negotiations. The reports say the deal could not be formalized because the Musharraf government fell.

India's Kashmir Valley, once a paradise for tourists, is often under curfew now because of a separatist drive led by a dozen Muslim militant groups. Hundreds of army troops patrol the valley to crush these groups, which India says are being armed and funded by Pakistan.  Islamabad denies this.

Over the past two decades, India and Pakistan have tried several times to reach agreement on a plan to bring peace to Kashmir, but have failed. But recent media reports have revealed that the two neighbors did come close to reaching an informal agreement last year, just before Pakistani President Pervez Musharraf was ousted.

General Musharraf was in Washington last month and confirmed these reports to South Asia expert Shuja Nawaz.

"They were not just discussing Kashmir but they were discussing the entire India Pakistan relationship, according to President Musharraf himself," says Nawaz, an analyst with the Atlantic Council. "Recently when he was here in Washington he confirmed this that they were very close to an agreement," he said.

India controls two-thirds of Kashmir and Pakistan the rest. Both claim the entire region that for now is divided by a U.N.-marked boundary, known as the Line of Control, or LOC.
Indian Prime Minister Manmohan Singh has repeatedly said he wants to make the LOC irrelevant and let the divided Kashmiri families visit each other. Shuja Nawaz says that was the basis of the aborted accord.

"The idea being that Kashmir should progress, in the sense that people on both sides of the Line of Control should be able to cross to and from and let there be some commerce, let there be some movement so that over time it ceases to be a hot border," Nawaz explained.

General Musharraf said he wanted to change the old Pakistani policy of insisting on a referendum in Indian Kashmir demanded by a 1948 U.N. resolution. But then last year General Musharraf himself landed into political turmoil after he replaced the judiciary.

"Even within the military, people started doubting his ability to get Pakistan out of the hole which he had dug for the country and for himself. ? India also saw him crumbling," Nawaz said.

But the turmoil may have contributed to a lost opportunity - especially for India, according to Stephen Cohen of the Brookings Institution. "I don't think they truly understood how radical and different Musharraf's proposal was. He broke with the past Pakistani policy," he said.

India is expected to hold general elections later this year, and Cohen is not optimistic the two sides can pick up the thread that General Musharraf left until afterwards.  "We have to come back to this issue in about four months from now after the Indian elections, after the new Indian government and by that time we are not quite sure what is going to happen in Pakistan," he said.

Shuja Nawaz says he also sees no short term solution. He says both countries must realize that the impasse over Kashmir cannot be resolved simply through bilateral discussions - but must include the participation of Kashmiris on both sides of the LOC before a permanent solution can be reached.