What to make of events in South Asia? Well, after landing in New Delhi recently, I went straight to a dinner with some of India's best strategic analysts to straighten things out in my mind. One of them looked at the tense standoff between India and Pakistan--both armies fully mobilized, new terrorist attacks and, one could now add, last week's Indian missile test--and concluded that "war was inevitable." Another pointed to India's tough approach since the assault on its Parliament, Pakistani President Pervez Musharraf's boldness and America's new engagement, and concluded that things were moving toward a genuine rapprochement and that "peace was inevitable." And I'd thought things would be clearer on the ground than they are from a distance.

Actually, despite all the contradictory signs, most likely there will be neither real war nor real peace between India and Pakistan. The South Asian cold war will continue.

It is in neither side's interest to start fighting. India has limited military options. It could destroy terrorist-training camps in Pakistan-occupied Kashmir, but they are mostly empty tents that could be rebuilt within days. The nuclear stakes have made both sides hesitate before taking military action. India and Pakistan fought three wars between their founding in 1947 and the beginning of the nuclearization of the Subcontinent in 1974. Since then, there have been many crises but no wars.

New Delhi's massive military mobilization and missile tests are not signs of war, in fact, but signals to Washington. America fears that a war between Pakistan and India right now would be a disaster--it would mean, among other things, the end of the search for Osama bin Laden and his gang. So by mobilizing its forces and rattling its missiles, India hopes to get Washington to pressure Pakistan to crack down on its militants. The strategy has worked. As tensions mounted, Colin Powell (and Tony Blair) began pressing Musharraf hard.

In the short term, peace has a better chance. For the first time in decades Pakistan is ruled by a genuine and brave modernizer. Also, the Hindu nationalists in New Delhi can make peace with Pakistan more freely than anyone else--because criticism of any deal would usually come from Hindu nationalists. And American diplomacy in the region has been balanced, engaged and highly effective. And yet... there will be no lasting peace because Pakistan will not compromise on Kashmir.

Musharraf's recent decisions have been bold--and dangerous. The Pakistani Army and intelligence service have had only two foreign-policy "successes" in a generation: the installation of a friendly regime in Afghanistan (the Taliban) and cross-border terrorism in Kashmir, which at low cost has bled India. In the past four months Musharraf has declared that he is turning his back on both. Add to this his plans to weed out Islamic fundamentalists from schools and universities, and you have a man who has taken on many powerful enemies simultaneously.

But compromising on Kashmir is another matter. Musharraf's recent decisions would end policies that have been pursued for the past 15 years or so as Pakistan slipped into near failed-state conditions. Most people in the country wanted a new start. But the demand for Kashmir has been a core issue for Pakistan since its founding. The country has twice initiated a war--and several lower-level incursions--with its much stronger neighbor in order to get it. For many Pakistanis, it is part of the country's self-definition. (Pakistan was founded on the principle of Muslim nationalism, and particularly on the principle that all Muslim-majority areas of British India should become Pakistan.) The middle class, businessmen and intellectuals, all of whom support Musharraf, would not support a retreat on Kashmir.

For India also, Kashmir is not a territorial matter but an existential one. The Indian state was founded as a secular democracy, and its leaders will not allow a Muslim-majority state to secede. For most Indians, doing so would threaten the unity of a country with dozens of linguistic, ethnic and religious minorities.

How to overcome these differences? The most workable solution for Kashmir is to formalize the status quo. Each side gets the Kashmir that it has. India would agree to this--not immediately, but soon in any negotiation. But to get Pakistan to give up its claims, New Delhi must begin serious talks to develop a new and prosperous relationship between the two countries. It should also discuss the human-rights situation in Kashmir.

The only reason Pakistan's cries about Kashmir have some resonance around the world is that India has misruled the state almost from the beginning. It has dismissed governments, imprisoned leaders and suppressed popular movements. The Army has been accused--by Indian media and human-rights groups--of substantial abuses of authority in its rule of Kashmir. India's record on this issue is a stain on its stature as the world's largest democracy. New Delhi should assure Pakistan--and its own citizens--that it will move toward real autonomy and democracy in Kashmir. Elections that have been scheduled there later this year will be a test for India.

Compromise would be the right thing for both sides. Does Pakistan really want to be a state defined by religious nationalism? Does India want to continue to rule millions of its citizens by military force? But in the end there will be no deal, because Pakistan will not be able to cut the cord. After all, India is only being asked to live up to her founding principles. Pakistan is being asked to abandon hers.

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