*Pakistan the early winner in end-game tussle
*Testing time for ties with Washington
*India looks for room to manoeuvre
By Alistair Scrutton
NEW DELHI, March 29 Disquiet is growing in India that Pakistan is gaining the upper hand in a "proxy war" in Afghanistan as the two juggle for influence in an end-game that risks a political vacuum if the U.S.-led war winds down.
Escalating distrust over Afghanistan may threaten tentative India-Pakistan peace talks and herald more militant attacks on Indian soil, experts say. There are also signs it is all gnawing at New Delhi's once strengthening ties with the United States.
Last week's high level strategic dialogue between Pakistan's military and U.S. politicians in Washington, praise for Pakistan's crackdown on Taliban commanders and promises of swifter U.S. aid have added to India's sense of playing second fiddle.
Underlying this is a perception that Western powers need Pakistan more than India to broker any deal with the Taliban if there is any U.S. troops withdrawal, creating a potential flashpoint in relations between the emerging Asian economic power and the West.[ID:nSGE62Q02O]
"There is a sense in India that Pakistan is increasingly cocky," said Indian former secretary Lalit Mansingh. "Pakistan has a lot more self-confidence they will have a major role in Afghanistan, and America will be dependent on them to deliver.
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New Delhi saw a militant attack on a Kabul guest house that killed six Indians in February as a signal of increased Pakistan assertiveness. It was the third major attack against Indian interests in two years.
Islamabad denies Pakistan-based militants were involved. In a sign of what is often labelled a proxy war between the two over Afghanistan, Pakistan media has accused India of being behind the killing of some Pakistani workers in Kandahar in March.
Pakistan's officials have long accused India over covertly helping Baluch separatists and claims several new Indian consulates in Afghanistan are spy centres.
"India has to be marginalised. India has no role in Afghanistan," said former Pakistan foreign secretary Shamshad Ahmed Khan. "Americans ... also have recognised that Pakistan's role in any future Afghan settlement is crucial.
SECURING THE CROSS ROADS
Both India and Pakistan have for decades sought to secure influence in this Central Asian geopolitical crossroads and President Barack Obama's public, if vague, time-table to start to withdraw military forces has added to an urgency to gain leverage.
With the Taliban in power during the 1990s, India lost sway in Afghanistan. Under Afghan President Hamid Karzai, India used economic clout, some $1.3 billion in aid, to up it presence with new consulates and the construction of power lines and highways.
For New Delhi, it helped guarantee Afghanistan would not become a harbour of militants who could cross over to Kashmir.
But the London conference on Afghanistan in January was a turning point for many in India. It ushered in the idea that Europe and the United States could accept getting certain Taliban commanders involved in a deal to bring stability to Afghanistan.
"There is a genuine sense of disappointment - even disbelief - that the US perspective on reconciling the Taliban evolved all too abruptly, contrary to what Delhi was given to understand," said M.K. Bhadrakumar, a former Indian diplomat who has worked in Islamabad and Kabul.
While a significant number of other Afghanistan watchers say the euphoria over London was overdone, and question especially whether Washington significantly softened its position on reconciliation with the Taliban, Bhadrakumar's view is common in India.
Karzai also hinted he was now focused more on Pakistan.
"India is a close friend of Afghanistan but Pakistan is a brother of Afghanistan. Pakistan is a twin brother," Karzai said after meeting Pakistan Prime Minister Yusuf Raza Gilani in March.
It wasn't always like this. After the 2008 Mumbai attacks, the United States pressurised Islamabad to rein in militants. Prime Minister Manmohan Singh was feted in Washington months after Hillary Clinton visited New Delhi in 2009.
Now many Indians criticised what they saw as a tepid response by Washington to what they saw as a clear Pakistani link to the attack on the Kabul guest house.
"It is unfortunate that the Obama administration has forgotten its fine rhetoric about strengthening the forces of democracy in Pakistan," said Bhadrakumar. "The US has reverted to good old-fashioned geopolitics. The US current AfPak approach has begun casting shadows on US-India ties."
It may not all go Pakistan's way.
"Islamabad believes that this stepped-up cooperation will enable it to win long-term concessions from the US, which would give Pakistan a geopolitical balance against India," Eurasia analyst Maria Kuusisto wrote in a report. "The US is likely to adopt a highly cautious approach to these Pakistani requests."
Indian officials believe that while Islamabad is winning the PR war, India has room for manoeuvre -- and the Indian Express reported on Monday that New Delhi may be willing to reach out to some Taliban elements to counter Pakistan. "Of course Pakistan is better at shouting from the rooftops," said one Indian senior government official. "But we are not on the defensive. They will not get what they want.
But tension with Washington has surfaced, with India mulling legal action to force the United States to grant it access to David Headley, who admitted in a U.S. court this month that he scouted targets for the Mumbai attacks, which killed 166 people.
In a front page story, the Indian Express warned that the U.S. companies could fail in their bids for a $10 billion contract for 126 fighter aircraft -- one of the world's biggest arms contracts -- if aircraft sales went ahead with Pakistan.
Washington has been irked by India's parliament stalling a bill limiting nuclear firms' liability for industrial accidents, delaying entry of U.S. firms into a $150 billion market.
"The worry is caused by a feeling in the policy establishment that the U.S. wants to get out (of Afghanistan) as soon as possible," Brajesh Mishra, India's former National Security Advisor. "Pakistan wants to broker a deal. The worry is that would lead us back to the 1990s. (Additional reporting by Kamran Haider in Islamabad; Editing by Paul de Bendern and Sanjeev Miglani)