DATE=7/26/2000 TYPE=CORRESPONDENT REPORT TITLE=INDIA / KASHMIR (L-ONLY) NUMBER=2-264813 BYLINE=ANJANA PASRICHA DATELINE=NEW DELHI CONTENT= VOICED AT: INTRO: One year ago, India concluded a military operation in Kashmir to evict hundreds of Pakistani- backed Muslim infiltrators from snow-capped peaks in the Himalayan mountains. On Wednesday, the nation marked the anniversary of the offensive. Anjana Pasricha has a report from New Delhi. TEXT: President K.R. Narayanan and Prime Minister Atal Behari Vajpayee led the country in paying tribute to the nearly 500 soldiers killed during last summer's 10-week battle with Muslim intruders in Kashmir. Tens of thousands of people lit candles countrywide to mark what was called "Kargil Victory Day." Last year's flare-up in the Kargil region along India's border with Pakistan brought the two countries to the brink of war, and focused international attention on the world's most volatile border. The face-off ended after Pakistan agreed to withdraw the intruders. Political observers say India's handling of the Kargil operation has led to substantial diplomatic gains for New Delhi. Independent foreign-policy analyst Kanti Bajpai says India won international praise for not provoking a wider war with Pakistan by restricting the military offensive to its own territory. India and Pakistan have fought two of their three wars over Kashmir. /// BAJPAI ACT /// Diplomatically, I think the most important fallout of Kargil was that the United States and the international community made it very clear that they would not countenance and support any change in the line of control [in Kashmir between India and Pakistan] beyond the present, [or] any kind of change based on the use of force by any party. /// END ACT /// One year after the operation, relations between India and Pakistan continue to be tense. New Delhi has refused to resume a dialogue with Islamabad until it gives up what India calls "cross-border terrorism." And with mistrust between the hostile neighbors running high, New Delhi increased defense spending this year by more than 20 percent. More troops have also been posted in the Kashmiri mountains. Meanwhile, Defense Minister George Fernandes says New Delhi's success in pushing back the Muslim infiltrators last year has prompted militant groups in Kashmir to "rethink" their future. Mr. Fernandes was referring to the recent decision by a major pro- Pakistan militant group [Hizbul Mujahideen] to temporarily suspend its armed struggle in Kashmir. /// FERNANDES ACT /// All of the militancy in Kashmir had both the financial and military backing of Pakistan. And when Pakistan was beaten in Kargil, in what they thought was not going to happen, I think all those who depended on Pakistan for support began rethinking about their future and the kind of situation they had now come to face. And we have welcomed the recent development where people have not only laid down their arms, but a large number have said they would like to have a dialogue and they would like to find ways of living in peace in Kashmir. /// END ACT /// But as Indians celebrate last year's military victory, analysts admit that peace between India and Pakistan, and a settlement of their volatile dispute over Kashmir, remains a difficult and probably distant goal. (Signed) NEB/AP/WTW 26-Jul-2000 08:51 AM EDT (26-Jul-2000 1251 UTC) NNNN Source: Voice of America .