Pakistan for its part should not only agree to police camps inside its territory, but should allow third party observors in that process. Whoever seems appropriate - Turks or Indonesians or Canadians or some mix. The idea is to reassure India that the actions being taken are not just window dressing, and to give credibility to Pakistani claims that they are trying seriously. India for its part should cease its provocative moves along the border and drp the present war threat. Again, observed doing it by third parties.
But those will not be enough. They do not address the real problem, of private parties in Pakistan and in Kashmir trying to bring about a war and conducting their own foreign policies, trying to foist them on the Pakistani state. The principle involved in stopping that must be that states determine control of territories according to international security concerns, and specifically that they are not determined by identity group politics, populist local sentiment, or campaigns of violence. However, when violence is not used, populist concerns deserve to be heard. Which in this case means -
For its part, Pakistan should renounce all territorial claims to Indian-occupied Kashmir. Seeking control of the territory of a foreign state is a belligerent act, whatever slogans are used to justify it and by whatever means it is pursued. Since Pakistan transparently does not want war with India, it should stop acting belligerently in this respect by leaving open a claim to territory controlled by India. The basis of every maintained peace is the recognition of the existing military facts on the ground, instead of trying to change those facts.
In return, India should renounce its claims to Pakistan controlled Kashmir. And it should also state a willingness to deal with any local Kashmir political groups that renounce violence, while retaining the right to use force within its territory - including Indian-occupied Kashmir - against any political groups that resort to violence. Nothing to violence, any reasonable degree of local autonomy to peaceful political processes.
The real test in all of this is whether rational states planning their foreign policies according to their real interests - including their powerful interest in maintaining peace between states - are really in control of their foreign policies. Because the terrorist idea is essentially that of "privatizing" foreign policy, subsuming it under identify group politics that operate without any rational control, on blind passion. Which is not a livable idea in a nuclear world, whatever pieties of populism and nationalism peddled over the last 200 years say about it.
"Self determination" is only compatible with civilization if pursued by peaceful political means exclusively. Pursued via privatized terrorist violence, it leads directly to an anarchic war of all against all - and in this technological era and even more so in future ones, to the destruction of all who engage in it.
Can the US bring about such mutual concessions? I think so, if we are willing to bring our full power to bear. We can deter India, if Pakistan cannot. Especially so when Europe and Russia entirely agree with us in the matter. It would be madness for India to persist in a war policy if we organize all the great powers against that course, and back it up with a real willingness to make India pay if they persist in their present course to war. Great powers cannot make war on allies of other great powers lightly.
There is comparatively little difficulty with Pakistan, where our leverage is enourmous. If we insist, and threaten to let India proceed if the Pakistani's do not follow our lead in the matter, then Pakistan would be crazy to turn us down. Especially when we can offer real benefits in return for renouncing claims to Indian-controlled Kashmir.
The passions of a crazies who want Islam to be at war with the world (there are such crazies on both sides of this one, Islamicists allied to Bin Laden, and Islam-haters who want Ragnorok) need not control the foreign policies of nuclear powers. They cannot be allowed to substitute their murderous passions for reason.
I haven't seen anyone really analyze the Chinese interest and possible involvement in the developing crisis. It seems to me that they have much to gain in the event of a full-fledged war: the destruction of one its chief rivals in the region, India.
Has anyone given any thought to whether or not the Chinese are actively influencing events, or are they just sitting back? Hard to believe they wouldn't have anything to say about a situation like this brewing up in their own backyard. Don't they aspire to "superpower" status? Wouldn't this be an optimal time for them to step forward as a potential power broker?
Indian leaders have said that they are willing to consider the option of declaring the LoC the International Border. They have not done so officially (in Parliament) yet, however. The Pakistanis, OTOH, dismiss the notion outright.
And it (India) should also state a willingness to deal with any local Kashmir political groups that renounce violence
India has officially said any former-terrorist organization (i.e. any organization that has disarmed) may contest elections in Jammu and Kashmir. The only problem is, the current J&K administration (the National Conference) has been in power for decades, and the bureacracy is saturated with NC loyalists, thus creating (plausible) allegations of electoral fraud every time an election is held and the NC wins. They seem to always win, which would indicate that elections in J&K are not free and fair. The current government in New Delhi at one point indicated that they'd like to appoint a caretaker government to conduct elections, but the NC threatened to pull political support at the Federal level, which the BJP needs.