Pakistani President General Pervez Musharraf Thursday said Kashmir issue has a central role inPakistan-India relations and its solution should be in line with the wishes of Kashmir people.

Addressing the nation over radio and television on Thursday night, Musharraf said there has been improvement in the relations with India and Pakistan is dealing with that country on the basis of sovereign equality, without any compromise on principles.

"The two countries are moving through confidence building measures and dialogue process," he said.

Pakistan has stated that it will show flexibility but this willnot be done unilaterally, Musharraf said, adding Pakistan will only show flexibility if there is reciprocity from the Indian side.

Regarding Kashmir dispute, he said Pakistan has not shifted from its principled stand that the Kashmir issue should be resolved through plebiscite as provided in the United Nations Security Council resolutions.

If the two countries step back from their stated position they will meet at the middle for a solution of this problem, he said.

Musharraf said he sees a light of hope for the solution of the long-standing issue and stressed that Kashmiris will have to be involved in the dialogue process at some stage.

On relations with Afghanistan, the Pakistani president said thetwo countries now enjoy the best of diplomatic, political and economic relations.

"There is now more than 1 billion US dollars of trade between our two countries and the people and government of Afghanistan arethankful to us the way we helped them in the process of rebuildingand the election process," he said.

There have been some problem of terrorism from the tribal areasbut this is being dealt through a joint military and political strategy, he stressed.

Source: Xinhua