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by Myra MacDonald and Tahir Ikram 

NEW DELHI/ISLAMABAD, (Reuters) Will this be the year that India and Pakistan end half a century of conflict? Until barely a week ago, few people even bothered to ask the question, long used to failed peace bids and hostility, which brought the nuclear-armed rivals close to war last year. But Indian Prime Minister Atal Behari Vajpayee's promise on Friday to try one last time for peace in his lifetime has raised hopes on both sides of a breakthrough.

"I see a very vast canvas opening up after this initial peace offer by Prime Minister Vajpayee," said Niaz Naik, a former Pakistan foreign secretary.

The 78-year-old Vajpayee has already held two failed summits with Pakistan's leaders, in the Pakistani city of Lahore in 1999 and the Indian city of Agra in 2001. "The third attempt will be decisive and will be the last in my lifetime," he told parliament on Friday.

His comments followed a phone conversation last Monday with Pakistan Prime Minister Zafarullah Khan Jamali, the first high-level contact since war was averted last year.

And while analysts caution that much can yet go wrong, they say the lessons of last year's military standoff combined with pressure from Washington - fresh from its successful war against Iraq - offer the best chance of peace in years. "I was struck by Vajpayee's use of the word 'decisive', which is an indication of his personal determination to see this through," said Indian defence analyst Uday Bhaskar. "I have never been more optimistic about developments in 25 years," said South Asian analyst Brian Cloughley.

The diplomatic thaw came ahead of a visit to the region this week by U.S. Deputy Secretary of State Richard Armitage who as recently as April 30 mentioned India and Pakistan in the same speech as discussing risks posed by Iraq and North Korea.

The two came close to war last year over a 2001 raid on India's parliament which New Delhi blamed on Pakistan-based Kashmiri separatists. Pakistan denied involvement. And they are still licking the wounds of partition into Islamic Pakistan and mostly Hindu but officially secular India by departing British colonial rulers in 1947.

"You will see India and Pakistan with a thousand-mile shared border and a 50-year history of enmity and war - a situation that is truly frightening when you add into the mix nuclear weapons," Armitage told a gathering in Washington.

Vajpayee has said the developing world must draw a lesson from the U.S.-led war in Iraq, and stressed India must solve its own problems rather than allow interference from outside.

And though it is not clear how much Armitage's imminent arrival prompted his peace initiative, Vajpayee has deftly avoided appearing to cave in to U.S. pressure by getting the process going beforehand. Armitage is due to visit Afghanistan, Pakistan and India between May 5 and 11.

Washington has long been pushing Pakistan to stop Muslim militants infiltrating into Indian Kashmir to fuel a revolt against Indian rule in its only Muslim-majority state. It has simultaneously been pushing India to talk to Pakistan.

"It is very clear to me that the Americans have really facilitated this dialogue," said Najam Sethi, editor of Pakistan's weekly Friday Times.

Even without U.S. pressure, India was reluctantly coming to terms with the idea that last year's near-war highlighted the dangers of a conflict that could turn nuclear, leaving peace as possibly the only real option to change the status quo.

But with both Vajpayee and Pakistan President Pervez Musharraf facing the risk of a backlash from domestic hardliners, analysts say the success of the peace initiative depends on it being gradual and cautious.

Vajpayee on Friday restored full diplomatic ties with Pakistan and promised to resume air links cut in January 2002, and analysts expect Islamabad to respond by doing the same.

The next steps could involve trade talks or even reviving cricket matches to build up enough trust to hold a summit - which would have to be before Indian elections due in 2004.

So far Vajpayee appears to have calculated that a peace dividend will be more electorally popular than war and has managed to rally sceptics on the Hindu right-wing behind him.

As the leader of the ruling hardline Hindu nationalist Bharatiya Janata Party, he has long been seen as one of the few prime ministers able to make peace without being accused of selling out at a time when militancy continues in Kashmir.

Musharraf on his side has to keep a lid on the Islamic right-wing, and hope that militants opposed to peace do not carry out a spectacular, damaging attack in India. "Vajpayee might be able to control his wild men, but Musharraf's wild men are not of the same political leaning as the government in Pakistan," said Cloughley.

He added that the success of the peace process would depend on the ability of both sides to curb any hint of triumphalism, which would give ammunition to sceptics in either country.

And despite India's opposition to outside interference, this might mean holding discreet talks using U.S. help.

"There will be behind the scenes dialogue via the Americans. Open dialogue will be the form, and real content will be behind the scenes via interlocuters," said Sethi. "I think you will see movements this time, but the derailing factors are very dangerous. There are hardliners and rogue elements on both sides. They will need to be controlled."

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