(Reuters) - Prospects have brightened for an improvement of ties between nuclear-armed India and Pakistan after their prime ministers met, but distrust lingers and a big militant attack in India could swiftly shatter any progress. Indian Prime Minister Manmohan Singh and his Pakistani counterpart, Yousuf Raza Gilani, met on Thursday while in Bhutan for a summit of South Asian leaders.
The United States has been pressing both countries to ease tension to allow Pakistani forces to turn their attention from the Indian border and focus on battling al Qaeda and Taliban militants on Pakistan's western border with Afghanistan.
But analysts said details still had to be worked out and the effort to improve ties between the neighbors, who have fought three wars since independence in 1947, would remain vulnerable to setbacks.
"The only success is that they have agreed that they should talk but the details are not settled," Pakistani security and political analyst Hasan Askari Rizvi said on Friday. "It's a kind of a half-way house which they are trying to build".
Pakistan has been pressing for the resumption of broad talks, known as the composite dialogue, in which all problems, including the disputed Kashmir region, border disagreements, and trade and sporting ties, would be tackled.
India broke off those talks after the Mumbai attack and is reluctant to rush a resumption until Pakistan acts against the planners of that carnage. Pakistan says it is taking action against seven militant suspects on trial in prison.
"MILITANT STRUGGLE WILL NOT END"
Pakistani Foreign Minister Shah Mehmood Qureshi said in Bhutan the present round of talks was unconditional and all issues were on the table.
But Rizvi said Qureshi was giving the wrong impression in suggesting India had agreed to resume the full, suspended talks.
"The dialogue that got suspended is not going to be revived. India has made that very clear," he said, adding that means the two sides will have to agree on a common agenda for new talks.
"Mistrust is still there. They have only agreed to talk because India wants to deflect international pressure," he said. "Their priorities are still different and they have not agreed to the format of dialogue".
Indian foreign policy analyst C. Raja Mohan also said much needed to be done to get a talks process back on track.
"The two governments have much work to do before the Indo-Pak peace process finds the stable footing that it had enjoyed during 2004-2007," Mohan wrote in the Indian Express newspaper.
"The biggest challenge ... is the fact that Indo-Pak relations are so accident-prone; and opportune moments are rare and fleeting," Mohan said.
At the same time, strong domestic compulsions, especially in India, may prevent the concessions needed for a breakthrough.
India's main opposition party, the Hindu nationalist Bharatiya Janata Party, criticized the government for caving in to U.S. pressure and not being tough enough on Pakistan, an Islamic nation.
"The government remains on the backfoot," Rajiv Pratap Rudy, a BJP leader, told Reuters. "Pakistan has again deftly handled its position, giving very little ... on issues such as terror".
"The excitement of our prime minister is uncalled for and it is clear that India is under U.S. pressure to build up talks".
A Pakistan-based Kashmiri militant was also dismissive.
"This is a repeat of the exercise they've been going through for the past 60 years to temporarily reduce tension," Syed Salahuddin, commander of the Hizb-ul-Mujahideen militant group, told Reuters by telephone.
"Unless the core issue of Kashmir is addressed, such talks will be of no use ... Our militant struggle will not end".
Economic analysts say real peace could unlock a host of business opportunities. But the latest progress had no immediate impact on business confidence, one said.
"Talking about talks wouldn't really have much of an impact, but actual talks truly would," said Asad Iqbal, chief investment officer at Faysal Asset Management in the Pakistan's Karachi.
"Both countries have a nuclear deterrent so the likelihood of a nuclear war is very slim. On the other hand, trade between the two, free trade, would be a huge boost for some sectors of the economy".
Additional reporting by Bappa Majumdar in New Delhi and Sahar Ahmed in Karachi; Writing byRobert Birsel
Reuters
