ISLAMABAD, 8 January 2004 — Pakistanis and Indians have pinned high hopes for peace between the two South Asian nuclear rivals after their breathtaking pledge to resume formal dialogue as early as February, two years after facing off on the brink of war.

“I pray to Allah that everything between Pakistan and India gets better,” taxi driver Sheikh Ikram said as he waited for passengers in Islamabad, the Pakistani capital where the breakthrough agreement was reached on the sidelines of a seven-nation summmit.

“Musharraf is taking good steps for peace with India and I wish him success,” Ikram said. On the lingering dispute of Kashmir, the cause of two of their three wars and over five decades of tensions, he was less optimistic. “Only some miracle can solve it.”

Afsar Jameel Bhutto, an executive at a private firm, said both countries had taken “a new direction toward peace”.

“This time they (India and Pakistan) seem really determined to move things forward.” Sentiments were equally positive in India where some said it would open a new era for South Asia, while others saw it as a chance to visit Pakistan. “I think South Asia, especially India and Pakistan, have finally realized the cost of non-cooperation as well as the benefits they could reap from a vibrant economic relationship,” said Sanjeev Verma, a senior banker.

Zarina Jillani, a Pakistani human rights researcher said a majority of the people on both sides wanted peace. “This time there is lot of hope and euphoria for some major changes between India and Pakistan as a majority of people want talks,” Zarina said.

Waseem Ahmed, manager at a law firm was skeptical of a breakthrough on Kashmir which has remained unresolved for over half-a-century.

“While all other problems can be resolved, the success of peace process is linked with Kashmir,” Ahmed said.

The international community hailed the breakthrough between the nuclear powers. The United States, which has been active in pushing the neighbors to reconcile since the specter of a nuclear holocaust over South Asia in 2002, praised the statesmanship of both countries’ leaders.

“We have seen them create a momentum. We have seen what we would call acts of statesmanship,” State Department spokesman Richard Boucher said Tuesday.

Secretary of State Colin Powell echoed Musharraf’s description of the deal as “historic.”

“I think it was a historic meeting that has taken place and opened new opportunities for achieving peace in that part of the world,” said Powell, who has undertaken several shuttle-diplomacy trips between Islamabad and New Delhi.

At the United Nations, Secretary-General Kofi Annan said the breakthrough would benefit all of South Asia, the region of 1.4 billion largely poor people which has been held hostage to the disputes between its giants.

European Commission President Romano Prodi called the decision to return to the negotiating table “proof of their commitment to further strengthen the process of confidence building and to resolve outstanding bilateral issues.”

Australia’s Foreign Minister Alexander Downer singled out Vajpayee and Musharraf for their efforts.

“The statesmanship displayed by both leaders in pursuit of peace is worthy of congratulations and praise,” he said in a statement.

Germany said it hoped “the comprehensive dialogue strived for will lead to a lasting normalization of relations between the two neighboring countries.” “This would be not only a great opportunity for India and Pakistan but would also have a stabilizing effect on the entire region,” its foreign ministry said.