The Geostrategic location of Kashmir is Unique.
The southern Silk Route from China crossed Karakoram at Haji Langare in Ladakh, or At Karakoram Pass and through the state of Kashmir, entered the Indus Plains leading to warm water ports of Arabian Sea.
In late 19th century and early 20th century it was the pivot around which the Great Game (made Popular by Rudyard Kipling’s KIM) revolved.
(The Panjdeh Incident when Russians seized the oasis of Merv in 1884 brought interests of British Empire and those of Russia to clash in central Asia. Without any Afghan say in the matter, the Joint Anglo-Russian Boundary Commission agreed the Russians would relinquish the farthest territory captured in their advance, but retain Panjdeh. The agreement delineated a permanent northern Afghan frontier at the Amu Darya, with the loss of a large amount of territory, especially around Panjdeh
In 1890–91 the British suspected Russian involvement "with the Rulers of the petty States on the northern boundary of Kashmir". This resulted in the Hunza-Naga Campaign was fought in 1891.)
Kashmir through out the British Raj was a buffer between the Russian and them. (Tsarist Russia prior to 1917 and Communist Soviets thereafter). It could have well been integrated into Dominion of Pakistan or Union of India at time of Independence, but the British realize that its exclusion will yield better policy results. (This aspect will be dealt separately).
The State of Kashmir lies in the upper riparian of Indus River. The water scarce state of Pakistan is insecure about its water resources. For Pakistan Kashmir means water security and additional land to settle its Punjabi population. As a Muslim Majority state it gives credibility to the two nation theory. It gives Pakistan a lager open boundary with Tibetan Autonomous Region (TAR) of longtime ally China. It increases the standing of Pakistan with the Islamic republic and makes Pakistan a stronger contender for Islamic Caliphate.
For China Kashmir is a vital link for a all weather link to the Arabian Sea port of Karachi. It gives boost to energy security of China. Kashmir under Chinese influence means Rail and Road link with Karachi along Indus River, Oil pipe line from Iran. It makes Straits of Malacca redundant. It will assist in bringing development of Xinxiang Autonomous Region (XAR) and western TAR. It will assist in integration of TAR, XAR in China. The Kashmir dispute keeps into Pak brinkmanship alive keeping them engrossed. This leaves enough room for China to yield its influence on Central, South Asia and Middle East. It keeps the burgeoning Pakistan defense Market Alive.
Anglo- American Stakes
The Anglo American synergy is directed to control of energy resources in Middle east. The Indo Pak conflict fueled by Kashmir dispute gives them a rally point to cajole Pakistan in their favour. The bases that have been rewarded to them in Gilgit and Hunza keep the Chinese and Resurgent Russians under surveillance. Kashmir especially Ladakh with India aids them as it blocks Chinese access to Arabian Sea. Northern Areas with Pakistan prevent indo Russian link up. It checks Indian influence on Afghanistan. In nutshell the Kashmir dispute is a vital constituent of maintaining global hegemony. India and Pakistan are major arms importers.
Resurgent Russia wants an unprecedented influence in Central Asia. Kashmir keeps India and Pak, two major contenders confined south of Pamir tract. Ladakh with India keeps Chinese energy stakes vulnerable. The Weapons market is a major contributor to economy.
India gets no water from Kashmir. It stands nowhere in competition with China for global energy stakes. Less Kashmir Indian borders are strategically more compact. Indain forces gain overwhelming ratio over Pakistan Army. It has free money to invest for progress in Bihar, Chhattisgarh, Orissa and North East. It annually spends US$ 824 Million on keeping Kashmir afloat.
It is cradle of Indian Philosophy. It is a matter of Belief in Sufism, Islam and Buddhism. For India Kashmir is the cornerstone of its secular existence.
It is unfortunate that we have lost reference to 3000 years of heritage and history of Kashmir. If revived it could well prove to be the vital link to integrated India.
(Contribution - Mr Skand Nayal Khan)