"Pakistan has adopted a two-track approach. We are going for CBMs and conflict resolution. CBMs are going pretty well," Musharraf told the Foreign Relations Committee of the European Parliament here Tuesday.
"I think our relationship with India has never been this good. But conflict resolution, I am afraid, is halted at the moment. We are trying our best to move the conflict resolution forward. And in this, the Kashmir resolution is the key to our problem," he said in his first ever appearance before the European Parliament.
During his forthcoming meeting with Indian Prime Minister Manmohan Singh in Cuba during a NAM summit, Musharraf said, he would discuss how to move the peace process forward. He praised Manomohan Singh as a man of flexibility and sincerity.
"I feel very comfortable interacting with him," he said.
Members of the European Parliament quizzed the Pakistan president on issues such as terrorism, nuclear proliferation and ties with India.
Musharraf said western countries had trained and brought 30,000 Mujahideen to Pakistan to fight the Soviet invasion of Afghanistan in the 80s.
"Taliban was not created by Pakistan. We are against the Talibanisation of Pakistan," he said, noting that Taliban today posed a bigger threat than Al Qaeda "because they have roots in the people.
"The centre of gravity of terrorism has shifted from Al Qaeda to the Taliban."
Earlier, addressing a meeting on Kashmir in the European Parliament he stated that today opportunities exist and they must be seized to resolve the problem through dialogue.
"Kashmir runs in the blood of every Kashmiri and therefore a solution is essential. The Kashmir dispute cannot be brushed aside," he stressed. Musharraf said terrorism should not hinder the peace process with India.
"Terrorist acts should not hinder the rapprochement process. Finger pointing will help no one. We need to move forward," he said, adding Pakistan had condemned the recent terror attacks in Mumbai.
"There is no solution without the involvement of the Kashmiri people," he added.
The "Discourse on Kashmir" meeting was organised by the All Party Group for Kashmir in the European Parliament and the Brussels-based Kashmir Centre. Later in the evening, Musharraf met European Commission President Jose Manuel Barroso and discussed bilateral ties and regional developments.
Barroso said after the meeting: "Pakistan is a very important partner for the European Union. We will enhance our help for Pakistan from 2007 onwards to build up its education system and also to support rural development. There will be a rural development funding for Pakistan."