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BOMBAY, Nov 29 (AFP) - India has in the past been seen as a "soft nation" by its neighbours, Indian Defence Minister George Fernandes said Thursday.

Fernandes, in a speech on national security delivered in Bombay said it was because of this perception that India and Pakistan came close to a fourth war in 1999 when troops fought for six weeks in Kashmir's Kargil peaks.

India and Pakistan have fought two of their three wars over Kashmir since 1947.

"Whether it was the 1965 India-Pakistan war or the 1972 confrontation we did not take the issues to their logical ends. It is this that has created perceptions that we are a soft nation and can be dealt with," said Fernandes.

"Even after 50 years, the (Kashmir) solution is still being found. The reason is that we as a nation did not on our own take the issue to its logical end," he added.

Fernandes also reiterated New Delhi's position that Kashmir was an integral part of Indian territory, while ruling out a referendum on the future of the state.

"India is not divided on the Kashmir issue as Pakistan President Pervez Musharraf recently said in a media report," said Fernandes.

"Kashmir is a core issue to India's secular character as India is the second largest state following Islam, even more than Pakistan and yet Musharraf says India is divided," he added.

With about 134 million Muslims, India has the world's second-largest Islamic population after Indonesia.

Kashmir is divided between India and Pakistan and claimed by both. The two countries have fought two wars over the region.

Fernandes also said that India had to face up to the challenges of international terrorism and learn from the US handling of the September 11 terror attacks on New York and Washington.

"America's financial might and military might were destroyed on September 11. But look at the way the Americans stood as one, whether a democrat or a republican. They all were one on this issue," said Fernandes.

"India also is one and is definitely not divided on the Kashmir issue," Fernandes said.

He said the rise of insurgency in India was a reflection of high levels of unemployment.

"All those terrorists who have surrendered and are being reformed have only one thing to say. They want jobs. It is unemployment which is the single most factor leading to terrorism," Fernandes said.

India's billion-plus population has an estimated 40 million educated youths who are unemployed.

A study done by the US consultancy firm McKinsey this year reported that unless India's gross domestic product grew at closer to 10 percent a year, India could face unemployment as high as 16 percent by 2010.

"Growing unemployment is the only cause for terrorism and it is this that is threatening national security," said the defnce minister.

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