The bloody confrontation between Indian soldiers and irate local civilians that left six dead here recently was purposely downplayed in India's national press and largely ignored elsewhere.

A world awash in crises was too busy to note the incident as a reminder that the generation-old question of who owns the spectacular, lush Himalayan valley known as the Vale of Kashmer and its environs, remains a simmering, unresolved problem.

Nearly a decade after India and Pakistan fought their third war here, Kashmir remains disputed territory. Pakistan occupies about 40 percent of the former princely state of Jammu and Kashmir. Except for a chunk of remote mountainous terrain in eastern Kashmir lost to China in 1962, India holds the rest including the prized Vale.

One of the longest serving contingents of U.N. military observers is in its 31st year of policing a line of control between two armies who today engage more in occassional potshots than serious fighting.

Bordering China and Afghanistan in addition to Pakistan and India, Kashmir is strategically located at the roof of the world.

But the Kashmir dispute is as emotinal as it is political. The "K" in Pakistan stands for Kashmir while indian Prime Minister Indira Gandhi and her father, India's first prime minister, Jawaharlal Nehru, traced their roots there.

But Kashmir has been divided so long and the prospects of unification remain so remote that many familiar with the problem seen to accept its intractability.

"There is no chance of resolving the issue for the time being," said Sheik Mohammed Abdullah, 74, the independent-minded Kashmir Moslem who has dominated politics of the region for nearly five decades.

When Hindu maharaja Harl Singh signed over Kashmir to predominantly Hindu India instead of Pakistan in 1947, it was Abdullah who rallied the state's predominatly Moslem population behind the decision.

After serving seven years as the first prime minister of the Indian state of Jammu and Kashmir, he was jailed during much of the 1950s and 1960s for allegedly trying to push Kashmir too far toward autonomy.

After Gandhi rehabilitated him in the mid-1970s he once again took control in Kashmir and has reestablished a bond with his people that has made him almost unassailable politically.

Many observers point to Abdulah's dominance as a key stabilizing factor and a major reason why Kashmir has remained so quiet in recent years. They cite his defusing of volatile anti-Indian sentiments here following last month's clash between Indian troops and Kashmir civilians as one such example of his influence.

The clash, which started after a minor traffic accident between an Army truck and a bus, quickly, erupted into a riot, with truckloads of off-duty soldiers beating civilians. The following night, civilian retaliated by attacking homes of senior Army personnel.

With the situation near the explosion point, Abdullah called a public meeting in Srinagar's main square, denounced the violence, promised to punish those guilty of starting it, then talked the vengeful crowd into going home rather than continuing the violence.

"No other politician in India could have faced a crowd like that and gotten away with his skin," summed up one local businessman.

But Abdullah is in the twilight of his political career and with the winds of an Islamic resurgence stirring Kashmir's Moslem population at a time when the forces of regionalism are on the rise in India, those who know Kashmir talk apprehensively of its future.

The small Islamic fundamentalist Jamaat Islami Party, whose leaders advocate a plebiscite that they believe would favor joining Pakistan, has gained strength in the state, especially among the educated unemployed youth.

Outside political support from Saudi Arabi and other Arab countries has been reported to fundamentalist groups, but Jamaat Party officials deny this.

"We got some foreign relief help when our homes were destroyed during demonstrations last year, but that's all," said Ali Shah Gilani, the party's lone member of the state assembly.

An international conference of Islamic youth planned for later this month was postponed at government insistence following the recent disturbances. m

Decades of intrasigence and lack of progress toward a solution have kept the Kashmir dispute alive. Initially, both India and Pakistan agreed that Kaskmirs fate would be decided by a plebiscite, but India later backed away from the idea. Today its stance is to negotiate a settlement.

"We're ready to discuss it bilaterally with Pakistan, but there is no question any more of a vote," said an Indian government spokesman.

The Islamabad government has continuously pressed publicly for a plebiscite. Pakistani officials believe Pakistan would win, since roughly 70 percent of the state's population is Moslem.

Despite Pakistan's disastrous political history since independence, many Kashmir Moslems still have strong feelings that Pakistan is where they belong.

"Pakistan's problem aren't enough to discourage us," said a Moslem community leader. "The religious tie is more important. If we accede to Pakistan, then we'll feel safe."

Another added: "When India and Pakistan play cricket, Srinagar celebrates if Pakistan wins. That shows where the true emotions lie."

Pakistan's former prime minister Zulfiqar Ali Bhutto, was probably more loved in Indian Kashmir than in his own country because of his efforts to resolve the issue. When Bhutto was hanged by Pakistan's military authorities las year, the largest, most violent demonstrations were not in Pakistan, but in the Kashmir valley.

Many Kashmiri Moslems, however, claim their people are reasonably well off under Indian administration and although they hate to admit it, many Kashmir Moslems agree.

"Ninety-nine percent of the people will tell you all the good things about Pakistan and bad-mouth India, but if the crunch came, I think they'd vote for India," said Soofi Ghulam Mohammed, editor of the Sringagar Times newspaper. "There no suppression of religion, we're prosperous and we choose our own government. That's not a bad deal."

Soofi claims reciption of Bakistani television has taken some of the luster off the Pakistan dream.

"Kashmiri Moslems looked on Palistan as the promised land where everyone prayed five times a day, but what they see is foreign cars, consumer goods and American films," he said.

The long-unresolved questions of where Kashmir belongs has intensified an already strong sense of Kashmiri identity separate from both countries.

With their own language, history and culture, Kashmiris think of themselves first and foremost as Kashmiris.

"When we go to Delhi, we say we're going to India," said Soofi.

That Abdullah has played heavily on this sense of cultural pride is considered one reason for his popularity. Just last month he ruffled political feathers in New Delhi by claiming that Kashmiris would never "become slaves" to either Pakistan or India.

While he later said his statement was taken out of context, few doubted what he meant. The remarks were aimed at recent attempts by Gandhi's Congress-I Party to destabilize his government and install her party there.

While genuine independence for Kashmir is considered politically impossible by most observers, Abdullah has helped maintain a special position for Kashmir within the Indian union. A pre-independence law, for example, that no non-Kashmiri can purchase land in the state still stands.