From Lahore to Islamabad and from Mumbai to New Delhi, millions of people recently marked the anniversary of Pakistan's and India's 1947 independence from British colonial rule. The celebrations were accompanied by dances, parades and ceremonies on all levels of society. But, according to experts, the South Asian neighbors have little to celebrate when it comes to their bilateral ties.

Over the past 66 years, India and Pakistan have fought three major wars and been involved in a number of minor conflicts. Their differences revolve around a number of issues ranging from border disputes to water access and terrorism.

A 'myopic mindset'

Analysts such as Robert Hathaway from the Washington-based Woodrow Wilson International Center, believe the apparent unwillingness or inability of leaders from the two sides to settle these differences has led to a "huge drain of resources," which could have been directed at tackling more pressing problems such as poverty or access to education.

This view is supported by the latest data published by the Stockholm International Peace Research Institute (SIPRI). According to the research center, the two nations spend large amounts of money (around 2.6 percent of their GDP in 2011) on modernizing their armed forces and acquiring new weapons. In contrast, public expenditure on health care amounted to only 1.1 percent of the GDP in India and less than one percent in Pakistan, according to the World Bank.

A deep sense of mutual suspicion has permeated bilateral relations for over six decades. "Both India and Pakistan have been antagonistic towards each other since independence," said Hathaway. This view is shared by Moeed Yusuf, a senior Pakistan expert at the US Institute of Peace, who accuses leaders in both countries of acting with "myopic mindsets." Yusuf argues that since the two countries don't cooperate with each other and only try to undercut one another, they have made South Asia one of the least integrated regions in the world.

Indeed, commerce between the two countries, although increasing, is remarkably low. According to a study commissioned by the Trade Development Authority of Pakistan, bilateral trade was valued at around 2.7 billion USD in 2011. The authors of the study also point out that trade could reach $11 billion, if ties were to normalize, thus highlighting the economic consequences of the long term rivalry.

The 'blame game'

Despite efforts by several administrations on both sides to resolve their differences, there seems to be a trend that whenever India and Pakistan edge closer toward negotiations, some incident derails the process. "Every time there is an attempt to normalize relations, you see the number of terrorist attacks rise. It is an open secret that there are a number of actors in both Pakistan and India who do not want to see any improvement in the ties. There is a blame game between the two sides," Yusuf told DW.

This pattern seems to be repeating itself once again. Shortly after winning historical elections that saw the first handover of power between democratically elected civilian governments, Pakistan's Prime Minister Nawaz Sharif committed himself to improving relations with India. Sharif and his Indian counterpart Manmohan Singh even agreed to meet in September on the sidelines of the United Nations General Assembly in New York.

But the discussions between the two nuclear-armed neighbors now appear to hang in the balance. Just recently, the Indian army blamed Pakistan for the killing of five Indian soldiers along the disputed Kashmir border, a region not only divided by the two countries but also claimed by both in its entirety.

It said that troops had "entered the Indian area and ambushed" an army patrol on August 6th. In a speech marking India's independence anniversary, Singh denounced the killings, saying: "Recently there was a dastardly attack on our soldiers on the Line of Control with Pakistan. We will take all possible steps to prevent such incidents in the future."

Peace talks threatened

In his speech Singh asked Pakistan to prevent Islamic extremists from using its territory. India has repeatedly accused the Pakistani military of nurturing militants to fight a covert war over Kashmir. But Pakistan has always denied the claims. According to Hathaway, it's difficult to pinpoint who is responsible for the recent attacks, "since there are many parties on both sides that could benefit from the scuttling of the peace process."

Singh has been under increased pressure to take a tougher stance on Pakistan. India's main opposition party, the nationalist Bharatiya Janata Party already urged the prime minister to call off the meeting with Sharif to show India's anger over the killings.

Bhaskar Roy, political analyst at the India-based South Asia Analysis Group (SAAG), is of the opinion the talks are unlikely to take place."With the rise in tension and Pakistan now officially stating it would not give the 'Most Favored Nation' status to India, political and public opinion in India has turned against the meeting."

'Nothing will go forward'

And even if the talks were to be held as scheduled, analysts don't expect any major developments. Irfan Husain, a columnist for the Pakistan-based DAWN Newspaper told DW that given the fact that India will be holding general elections next year, Singh will probably not make any meaningful concessions to Sharif. "I don't expect much movement on the peace talks until a new Indian government has been formed," he said, adding that PM Sharif's choice of Pakistan's next army chief later this year "will be crucial for improving relations with India."

Nonetheless, most experts see no major changes taking place over the next couple of years. "I don't see any breakthroughs in the short to medium term. It is going to be a longer process," said Yusuf. New Delhi-based analyst Roy goes even further with his outlook: "The future of India-Pakistan relations has suddenly gone bleak. Until the Pakistani military changes its mind, which is not likely in the near future, nothing will go forward."