In major policy shift, Pakistani President Pervez Musharraf offered to drop longstanding demand for plebiscite, conditional on progress in talks with India on Kashmir. Foreign Minister Mahmood Ali Kasuri and Information Minister Sheikh Rasheed noted Pakistan continues to support plebiscite but would consider other options. Ceasefire along Line of Control (LOC) holding as normalisation steps continue. Both sides agreed to resume overflights, air and rail links from 1 January. India accelerating work on security fence along LOC, criticised by Musharraf. Ceasefire not supported by Kashmiri separatist groups, though violence reportedly has decreased: death toll since 26 November truce over 150. Indian PM Vajpayee confirmed attendance at January South Asian Association for Regional Cooperation (SAARC) summit in Islamabad; not yet known whether bilateral negotiations on Kashmir will take place.

Senior Islamic clerics ruled suicide bombings forbidden in Indonesia by Islam 16 December. Four of 6 suspected Indonesian Islamic militants, arrested in Pakistan and deported in December, detained under Indonesia's anti-terror laws - included Rusman "Gun Gun" Gunawan, brother of Hambali. More alleged rebels killed in Aceh but no independent verification of military statistics on numbers killed or detained since martial law declared in May 2003. Bomb blast at open air concert in Aceh New Year’s eve killed at least 9 concertgoers – perpetrator unknown. An Indonesian journalist held hostage by Aceh rebels since July 2003 killed in shootout between rebels and army 29 December. Red Cross and some U.N. agencies allowed back to Aceh but international NGOs effectively remained barred. Unrest in Papua following appointment of new police chief indicted by the UN’s East Timor Serious Crimes Unit for human rights abuses in East Timor. Sporadic violence continued in Poso.

Negotiations for mid-December six-way talks stalled, but Pyongyang said willing to take part in new talks in early 2004. N. Korea and U.S. failed to agree on talk objectives. Pyongyang insisting complete, irreversible, verifiable dismantling of nuclear weapons not possible without economic aid and security assurances. Economic and energy incentives not included in U.S. proposal. N. Korea accused Washington of delaying tactics. President Bush rejected North Korean 9 December offer to ‘freeze’ nuclear program; Pyongyang rejected U.S. 15 December counter-proposal.

‘Informal ceasefire’ agreed between military government and ethnic minority rebels, Karen National Union (KNU), 8 December. 12 nation talks held 15 December in Bangkok to explain government road map to democracy. Myanmar’s ruling council announced intention to hold constitutional conference with all opposition parties in 2004. UN welcomed move but, along with U.S., EU and Japan, continues to view road map as non-participatory, non-transparent and lacking timeline – all demand release of Aung San Suu Kyi and substantive talks with opposition. Suu Kyi refuses liberty until National League for Democracy (NLD) colleagues arrested in connection with 30 May violence released; 14 of 35 remain incarcerated. Nine linked to NLD sentenced to death for treason 3 December.

Violence continues unabated. Conflict spread into Terai lowland belt, where Maoist group Madhisey Liberation Front imposed 24-hour strike. U.S. Assistant Sec. State Christina Rocca met with government officials, raised issue of human rights abuses. Army, meanwhile, admitted instances of excessive force, promising to punish offenders. Government announced disarmament and reintegration plans for Maoist rebels, including amnesty, cash rewards for arms and munitions, and shelter and training if rebels surrender before 12 February; government has in past tried similar projects to diminish rebel ranks. Dozens injured in protests calling for all- party government and removal of royalist PM.

Two suicide bombers attacked motorcade of President Pervez Musharraf 25 December in second unsuccessful assassination attempt in under 2 weeks. Pakistani intelligence blamed al Qaeda; security under scrutiny. U.S. security personnel targeted in 7 December rocket attack in Northwest Frontier Province. Commonwealth countries said Pakistan to remain suspended until it undertakes democratic and judicial reforms. Deal between Islamist coalition MMA and Musharraf on Legal Framework Order (LFO), incorporated into constitution as seventeenth amendment, formalises Musharraf’s special powers to sack PM and dissolve parliament.

Arrangements finalised 11 December at bilateral summit for Australia to deploy around 300 police, judges and administrators to address growing lawlessness, as condition of U.S.$220 million Australian aid program. Draft constitution, proposed by Bougainville leaders to resolve final status of semi-autonomous province, being considered by Bipartisan National Committee. Third stage of weapons destruction by Bougainville rebels in progress under auspices of UN-chaired Peace Process Consultative Committee; UN political office to be replaced by smaller observer mission mandated until June 2004 to oversee constitutional process and weapons disposal.

Election campaigning gathered momentum. Fernando Poe, film actor and close friend of deposed President Estrada, ahead of President Arroyo in opinion polls, but opposition divided. Commander of Abu Sayyaf rebel group, Galib Andang, captured 7 December. Government capture operation provoked gun battles with aligned Moro Islamic Liberation Front (MILF) rebels, killing at least 14. Ceasefire with MILF re-established 17 December and formal peace negotiations expected to resume soon after Malaysia sends team of 25 observers to Mindanao. Five killed in clashes between insurgent New People’s Army (NPA) and government troops 7-8 December; immediately followed by unilateral declaration of Christmas ceasefire (10 December – 6 January) by government.

Security situation stabilised. Weather Coast region of Guadalcanal officially declared safe; over 200 refugees who had fled fighting earlier in the year returned in December. Australian-led multinational intervention force completed troop withdrawal from Weather Coast November 2003. Rapid reaction force remains on high alert in Townsville, Australia, deployable within 24 hours. Australian PM Howard visited 22 December for discussions with Solomon Islands government and civilian Regional Assistance Mission.

Political crisis between PM Wickremesinghe and President Kumaratunga continues to disrupt peace process; self-imposed 15 December deadline passed with no resolution to standoff. Wickremesinghe refused to continue peace negotiations with LTTE (Tamil Tigers) without control of security functions, currently in hands of Kumaratunga following latter’s 4 November dismissal of defence, interior, and information ministers and appropriation of their portfolios. Situation unlikely to change before parliament reconvenes in new year. Snap election a possibility.