Pakistan Prime Minister Shaukat Aziz said on Wednesday he remained hopeful that peace could be achieved with India, but progress on the bitter dispute over Kashmir represented the key to better ties.  

"As regards the issue of Jammu and and Kashmir, we believe this is an issue we all need to address, and progress on other issues will be made in tandem with the progress on the issue of Jammu and Kashmir," Aziz told reporters after talks with his Indian counterpart Manmohan Singh.

New Delhi says further improvements in ties between the nuclear-armed neighbors should not be held hostage to their dispute over Kashmir. Pakistan fears India, which controls the lion's share of Kashmir, is dragging its feet over the dispute.

The talks came after renewed discord over Kashmir between the neighbors who have twice gone to war over the scenic Himalayan region.

Aziz said peace talks would continue on a range of issues and said he was optimistic the two countries, who have fought three wars in the last five decades, could achieve sustainable peace.

"We had a good day of meetings, and discussions on a wide range of issues. The talks were held in a conducive, friendly atmosphere," said the Pakistani leader, making a rare visit across the border.

But Aziz said the two sides had not yet resolved a row over what travel documents Kashmiris would use to travel on a proposed bus service linking the capitals of the two parts of Kashmir under Indian and Pakistani control.

"In the meeting we talked about the need for having a bus service, but we have to sort out the details of what travel documents will be required," Aziz said.

India, which considers Kashmir an integral part of its territory, wants people traveling from its part of the divided region to carry Indian passports. Pakistan says the region is disputed and has proposed travel with UN documents.

Kashmiris have been urging both sides to resolve their differences and start the bus services that would to help reunite divided families. The region has been at the root of the enmity between India and Pakistan since both were carved out of British colonial India in 1947.

The visit comes after diplomatic sparks flew last week when Singh ruled out any redrawing of India's borders or a further division of Kashmir, spiking a set of proposals by Pakistani President Pervez Musharraf.

Musharraf suggested last month that Kashmir should be demilitarized and India and Pakistan should agree on a compromise over its disputed status. That outcome could be joint control, some form of UN control or independence.

Despite the row, India has started to withdraw some troops from Kashmir, citing a decline in guerrilla violence.

On Wednesday, separatist militants threw a grenade at a paramilitary picked in Indian Kashmir wounding six civilians.

No progress on pipeline

Aziz met Indian oil minister Mani Shankar Aiyar to discuss a longstanding plan to build a gas pipeline to run through Pakistan and bring fuel to energy-hungry India from Iran. No discernible progress was achieved.

Aziz said Pakistan would go ahead with plans to bring gas from Iran, Turkmenistan or Qatar -- with or without India's participation.

"We have asked the Indian government to join us in this project. However if they have other sources of energy, Pakistan is going ahead with this pipeline anyway for its own use."

Oil analysts say a major pipeline would not be viable unless it tapped the lucrative Indian market. India says any movement on the pipeline could only be made after overall economic ties improve between the uneasy neighbors.

"It shouldn't be that in one field we race ahead and not in others," Aiyar told reporters. New Delhi has urged Pakistan to expand trade links, including granting Most Favored Nation status to India.

(Chinadaily.com.cn via agencies, November 25, 2004)