ISLAMABAD, Feb 2: President Pervez Musharraf said on Friday that confidence-building measures (CBMs) between Pakistan and India were moving in the right direction to secure a "diplomatic solution" to the Kashmir problem.

"We ought to be happy over improving relations between the two countries and this is expected to lead to the final solution to the Kashmir issue," he said.

Addressing a news conference at his Camp Office, the president said that a recent incident of suicide bombing outside a hotel in Islamabad should not become a hurdle in the way of composite dialogue. All decision-makers in India, he said, had realised that Pakistan "cannot be coerced militarily".

President Musharraf told an Indian journalist that Pakistan and India were moving forward and he was optimistic about the outcome of ongoing talks to resolve all outstanding issues peacefully."Both the countries are having very constructive dialogue but we cannot divulge it publicly," the president said, adding that people in both countries would be taken into confidence if some solution for Kashmir came up eventually.

"There are sensitive issues, therefore, we should avoid talking them in public", Gen Musharraf believed.

He did not agree with a reporter that he had "overlooked" the Kashmir problem and was concentrating more on international issues like Palestine and Lebanon. However, he did agree with another reporter that only a few people, including himself, the foreign minister or National Security Council (NSC) secretary Tariq Aziz, knew what was happening in talks on Kashmir.

Gen Musharraf said that he had a good meeting with APHC leader Mirwaiz Omar Farooq on ways of resolving the Kashmir dispute. But, he said, both India and Pakistan would have to be steadfast and bold enough to look for a solution.

In reply to a question, Gen Musharraf said the government was not demolishing mosques and Madressah in Islamabad but these were being relocated to avoid increasing traffic problems.

"We cannot destroy them but when mosques are built on encroached land, they have to be relocated.

“The mindset will have to be broken and the misuse of some mosques and Madressah stopped as they encouraged sectarianism and extremism,” he added.

When asked about his new initiative on the Middle East, he said the initiative was meant to resolve disputes peacefully.