By Lynne Duke
Washington Post Foreign Service
Thursday, July 30, 1998; Page A24

COLOMBO, Sri Lanka, July 29—In their first face-to-face meeting since their rival nuclear tests shocked the world in May, the prime ministers of India and Pakistan agreed today to a new round of security talks but appeared as divided as ever about the disputed territory of Kashmir.

Atal Bihari Vajpayee of India and Nawaz Sharif of Pakistan instructed their foreign secretaries to meet here Thursday to iron out a format for new talks to deal with what Sharif described as the region's "precarious security situation."

India and Pakistan have fought three wars since achieving independence from Britain in 1947, two of them over Kashmir. Tensions between them escalated sharply when India detonated five underground nuclear test devices in mid-May and Pakistan followed with six of its own later that month.

The agreement to resume talks, an earlier round of which broke down over Kashmir, comes amid intense international pressure to back down from the nuclear brink and abandon the South Asian cold war that they have inaugurated at a time when nuclear nonproliferation had become the prevailing global philosophy. Because of those nuclear tests, Japan, the United States and other nations slapped economic sanctions on both countries -- some of which have since been rolled back.

Since May, India and Pakistan have announced moratoriums on further testing, but neither has agreed to sign the 1996 Comprehensive Test Ban Treaty. And both continue to develop missiles that could easily threaten the other and be outfitted with nuclear warheads.

The most immediate fear in the regional weapons race is that the historical dispute over Kashmir could become a nuclear one. Predominantly Hindu India controls two-thirds of the Muslim-majority territory, and Pakistan, an Islamic republic, controls the rest. Troops from both nations are massed on either side of the unrecognized border, which is seen by regional security experts as the main flash point for conflict in South Asia.

Public discussion after the meeting between Vajpayee and Sharif, held during the seven-nation summit of the South Asian Association for Regional Cooperation, was not marked by the kind of apocalyptic, breast-beating rhetoric that followed each country's nuclear tests.

Instead, both leaders spoke of the need to resolve their disputes and work toward regional cooperation through a renewed dialogue. The two countries had agreed in June 1997 to a framework for talks on issues ranging from missile technology to economic development, but that framework broke down last September over whether to include a separate working group on Kashmir.

Vajpayee said that he hoped the two countries would use the renewed talks to establish a "comprehensive and constructive structure of foreign relations." Despite his country's nuclear tests, Vajpayee said that India's "strong commitment to global nuclear disarmament" is a key policy element and that India would continue to work toward the elimination of nuclear weapons worldwide.

India declared itself a nuclear power after its tests, suggesting it is now in a position to shape global nuclear issues along with the United States, Russia, China, France and Britain, the so-called nuclear club. The Clinton administration's point man on the issue, Deputy Secretary of State Strobe Talbott, is to hold a fourth meeting with Indian officials next month, followed by more meetings with Pakistani officials. Talbott's diplomacy thus far has yielded no commitments from either side.

In a morning speech at the regional conference, Sharif proposed that South Asia establish a peace-and-security initiative that could include dispute mediation and that could be a forum for establishing formal agreements on the renunciation of the use of force.

"It is imperative that we address ourselves to make sure of nuclear and conventional restraint and stabilization, avoidance of conflict and confidence-building measures," Sharif said at a news conference this evening.

At the same time, he reaffirmed Pakistan's contention that the Kashmir conflict is the "core" security issue in the conflict.

"Unless we address this issue effectively and meaningfully, we will not be able to make any progress on any other issue," Sharif said. "India has to show some flexibility on Kashmir. . . . As far as Kashmir is concerned, I think there has to be third-party mediation."

India historically has refused third-party mediation on Kashmir, which Pakistan has advocated. Pakistan wants Kashmir's people to be allowed to vote on self-determination, as prescribed in a 1949 U.N. resolution. India opposes such a vote.

Shortly after the news conference, however, Home Minister L.K. Advani told the Indian Parliament that India had sent more troops into the Kashmirian region to "crush the proxy war by Pakistan," the Reuters news agency reported from New Delhi.

Muslim militants in the Indian-controlled portion of Kashmir have been waging an insurrection since 1989, with backing from Pakistan. On Tuesday, suspected separatist guerrillas gunned down 16 Hindus and wounded five in two incidents in the southern part of India's state of Jammu and Kashmir.