Inder Kumar Gujral and Nawaz Sharif, then prime ministers of India and Pakistan respectively, met in Male during the South Asian Association of Regional Countries(Saarc) summit to discuss how to improve relations between the two countries. Both decided to normalise trade and business first.

But they also appointed a committee of bureaucrats drawn from both sides to discuss Kashmir. With this task done, Gujral requested Sharif to allow the export of cotton which was in short supply in India at that time. The latter agreed to it. But a secretary-level official from Pakistan shouted from the corner of the room: "Mian Sahib, what about Kashmir?" The deal did not take place.

This is the bane of relations between India and Pakistan. The bureaucracy in Pakistan believes that it serves its interest if it is adamant. India, too, faces a similar problem.

Lately, things are beginning to look up between India and Pakistan because of various reasons. One of them is that people on both sides are sick of enmity and its fallout. Elections in Pakistan, however rigged, have thrown up a political alternative. This is an opportunity for both countries to start afresh. I wish New Delhi would take the initiative after the government is formed in Islamabad.

Asif Ali Zardari, the co-chairman of the Pakistan People's Party (PPP), who is set to lead the next government in Pakistan, has proposed to keep Kashmir "aside" to focus on trade.

"We do not want to be a hostage to that situation," he said while underlining "strong feelings" on Kashmir. Whatever else he may be, Zardari is a realist. He understands that too much embroilment with the Kashmir issue has told upon his country, economically, politically and socially. The entrenchment of the armed forces is one of the worst consequences.

Terrorism which threatens Pakistan in many ways, Zardari knows, was initiated by General Zia-ul Haq and sustained by General Pervez Musharraf to bleed India. True, the latter suffered and it still does. None in Delhi knows when and where terrorists will strike again. Yet, as a gathering of clerics of Dar-ul Uloom at Deoband in India has said, terrorism is against the tenets of Islam and the religion does not in any way condone the killing of innocents.

Eliminating terrorism

Deoband is a severe, orthodox sect of Islam closely connected to the Wahabis in Saudi Arabia. Zardari may have been influenced by the fatwa from Deoband. He may also be feeling helpless against the situation where terrorists are striking in the northwest. Zardari's first priority is to eliminate terrorism. This is what Benazir Bhutto would have done had she been alive. To fight terrorism, Zardari has no recourse but to rely on the armed forces. He also realises that he cannot challenge the military as long as Kashmir is hanging fire.

Keeping Kashmir "aside" does not mean that Zardari is writing off Kashmir. Nor does it mean "sidelining the question" as is the fear of the Hurriyat leaders. It only means that the two countries have open trade and commerce so that the goodwill generated in the process will help both overcome the impediments on Kashmir and come to a settlement.

"We can be patient till everybody grows up further," says Zardari. Zulfikar Ali Bhutto also told me once in an interview that "it was not incumbent on his generation to solve every problem. Let the next generations take up Kashmir." Zardari has argued that "maybe, when the coming generation grows up further, let us interact as human beings and come to a position of love." This is a practical approach.

Pakistan should exploit the opportunity of having access to India's open markets as the West is doing. Even now the unofficial trade between the two countries via Dubai and Singapore alone is said to be worth $2 billion (Dh7.34 billion). Why not have direct trade which will earn the governments on both sides customs duty, excise tax, etc. and save importers the money spent on bringing goods via circuitous routes?

I know there are hardliners who will frown upon Zardari's suggestion. The two countries have fought three wars on Kashmir and have wasted millions of rupees defending the line of control. (India has increased its military budget by 10 per cent, from Rs960 billion to Rs1.05 trillion).

Kashmir is a political question and it needs to be settled that way. The armed forces cannot solve the problem. Many commanders on the Indian side have said so. The commanders on the Pakistan side have also felt the futility of a militaristic approach. Zardari's statement only underlines that and he feels that a new initiative is needed to break the logjam.

Once trade between India and Pakistan is established, the arrangement can be extended to Bangladesh, Sri Lanka and Nepal. Ultimately, the entire region from Afghan-istan to Myanmar can become a common market, like the one the European countries have. The sky is the limit.

Kuldip Nayar is a former Indian High Commissioner to the UK and a former Rajya Sabha MP.