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This article analyzes the latest trends in India-Pakistan relations. It begins by justifying the assumption of one coherent Indian strategy towards Pakistan and, while focusing on the debate in India, argues that this strategy can best be described as one of "hedging." It then analyzes three sources of cooperation and six sources of competition—including one in Afghanistan. Next it argues that India should preferably follow an engagement strategy instead of its current hedging or the alternative containment strategies. At the same time, it acknowledges that an engagement strategy is unlikely, while there are recurrent terrorist attacks in India, especially those that have their roots in Pakistan. In the penultimate section, it examines the sort of political decisions that are needed in following this engagement strategy that should, ideally, lead toward a normalization of relations. However it concludes with the assessment that, despite the erratic composite dialogue, "ugly stability" continues to characterize the bilateral relationship. [ABSTRACT FROM AUTHOR]