Continued fighting between India and Pakistan -- both with nuclear arms capability -- over the disputed region of Kashmir is an ongoing source of concern in the region. One small source of hope is the desire for trade on both sides, though there is some question about how bright a candle that might be. PNS commentator Muddassir Rizvi is a Pakistani journalist specializing in development issues whose work appears in several weekly and monthly publications.

As guns spit fire along the Line of Control between India and Pakistan in the disputed Valley of Kashmir, the two neighbors recently signed a sugar trade contract.

The nascent peace movement in South Asia was happy to see a train carrying 1,500 tons of Indian sugar roll into the eastern Pakistani city of Lahore.

"The train brought not only sugar but hopes that the leadership of the two nuclear countries would not let politics stand in the way of economic common sense," commented one peace activist here.

But some critics believe peace with India will only be possible if the issue of Kashmir -- which the two countries have fought three wars over since 1947 -- is resolved.

The sugar was purchased by the Pakistani government's Trading Corporation, which accepted an Indian offer in response to an advertisement it had placed in the international media. There is an acute shortage of sugar here.

The deal came after weeks of heavy fire along the border in Kashmir and after the prime ministers of both countries refused to meet even though they were both in New York to attend the UN General Assembly session.

It is a clear indication that Islamabad wants to improve its ties with New Delhi, which have been at an all-time low since the military takeover in Pakistan last year. India has refused to enter into talks unless Pakistan commits itself to halting cross-border terrorism and withholds support to groups fighting India in Kashmir.

Pakistan denies both charges.

Many observers saw the sugar deal as a move to break the ice -- not that trade will bring lasting peace, but that the two countries will make peace so they can trade.

"We believe that trade and business should be given a chance to flourish in the subcontinent. This would also provide an enabling environment to talk about peace and amity," said the Peshawar Frontier Post newspaper.

Pakistan's government, despite calls from the business community, has always insisted that trade with India would only be possible when the Kashmir issue is resolved.

"We must convince our governments to remove obstacles in the expansion of bilateral trade and investment," said S.M. Naseem, president of the Rawalpindi Chamber of Commerce and Industry. His view is shared by his counterparts in other major cities in Pakistan and India, especially now when foreign multinationals are coming to tap the South Asian markets.

This view is shared by some liberal politicians who believe trade with India is essential to a tension-free South Asia.

The religious right, however, is opposed to any trade relations with India, on the grounds that India will completely capture the small Pakistani economy once free trade is allowed. But these parties never express concern over Pakistan trade with China or the United States, which have far bigger economies than India.

"Trade is not the real issue- - we want India to vacate Kashmir and return it to Pakistan," commented one leader of the right-wing Jamaat-i-Islami. When the military government suggested granting Most Favored Nation Status (MFN) to India, the reaction was so harsh the suggestion was withdrawn.

India awarded MFN status to Pakistan in 1995 under its World Trade Organization's obligations, but Pakistan has not followed suit. Commerce Ministry figures show that between them, India and Pakistan import and export about 600 items worth $35 million every year. The Economic Survey of Pakistan gives a much higher figure of $250 million.

Independent studies, however, put the bilateral trade at between $1 and $2 billion -- most of which involves smuggling. Smuggled videotapes of Indian films, artificial jewelry and cosmetics are popular in Pakistan. Videotapes of Pakistani television plays and dry fruit are smuggled into India.

Pakistan loses an estimated $500 million annually in custom duties to smugglers. But Pakistan still imports wheat from the distant United States, which it could buy from India, and costly medicines and farm fertilizers from third nations even though they are much cheaper from India.

And in early September, the military rulers rejected a proposal to sell surplus electricity to energy-deficient India, even though the producer offered to give half the profit from the sale to the Pakistani government.