Dispute resolution mechanisms anchored on economic interdependence and developing mutual economic vulnerabilities have delivered even in the case of worst enemies that repeatedly fought for territory. Germany and France twice went to war over mutually contested territory during the first half of 20th century. Both states claimed Alsace-Loraine as theirs and employed military power to settle the dispute. Control over disputed territory switched hands between the two parties depending on the outcome of war. The defeated state that lost territory would prepare for next war to win back and gain territory. This bloodbath for disputed territory between Germany and France continued until leaders, and people in both states realised such territory grabbing approach through military means was not going to settle the dispute forever.The United States helped to build peace in post-World WarII in Europe and developed the Western Europe through Marshall Plan. The US helped create enabling an environment for West European countries that changed the perspective of leaders and people for adopting an economic approach for dispute resolution, especially territorial disputes. Confidence building measures, resource sharing and joint administration of disputed territories coupled with the initiation of economic integration process eventually created mutually accommodating environment that gave confidence to the leaders for making concessions without being termed as traitors. Kashmir is an unresolved territorial dispute involving Pakistan and India. Both states have resorted to war for resolving the dispute. Conventional military force failed to deliver the political outcome that both states expected to manufacture through war. After becoming overt nuclear power states, there can be no rational consideration for war on Kashmir fourth time.Even though there is war mongering attitude by Bharatiya Janata Party government towards Pakistan, the possession of nuclear weapons by Pakistan works to instil rationality in the minds of the political and military elite of India.Nuclearisation of both states has essentially frozen the territorial status quo prevailing in Kashmir state. The US has maintained the non-interference stance on Kashmir, encouraging both parties to negotiate directly, but such approach essentially means shying away from the moral responsibility that the world leader has for building peace around the world. The US has failed to create enabling environment whereby India and Pakistan could resolve this disputes according to wishes of the people of Kashmir. While making demands especially on Pakistan for economic integration with India, the US and Western leaders hoped that Franco-German economic interdependence model could eventually lead to a bilateral approach that would help resolve the Kashmir issue. The US failed to provide specific economic incentives to both states for moving towards a resolution of Kashmir dispute. China-Pakistan Economic Corridor (CPEC) provides an opportunity to both states for creating enabling environment through economic integration for the eventual resolution of Kashmir dispute.Within South Asia, India is the biggest trade partner of China. Though China has proposed Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC) under One Belt One Road (OBOR) initiative, the real incentive for India will be connectivity with Central Asia. For India, the relative economic advantage will be degraded by preferring any regional connectivity strategy ignoring Pakistan. Within Indian Administered Kashmir (IAK), there is popular support for joining CPEC and connectivity with China and Central Asia. Even the puppet government of IAK has given friendly gestures to the idea of IAK becoming part of CPEC. Detractors of CPEC in India who are hostile to the idea of IAK becoming part of this economic initiative argue that such action will give legitimacy to Pakistan’s control over Kashmir. Such extremist constituency that right-wing nationalist political parties have fostered in India ignore the fact as recognised in United Nations Security Council resolutions that Kashmir is a disputed territory. By offering India to become a part of CPEC, Pakistan is not trying to seek any legitimacy for its part of Kashmir. The purpose of such offer is improving the condition of people of IAK. The instrument of accession that Hari Singh signed with India is not acceptable because he had ceased to be the legitimate rule of the state. The people of Kashmir state through massive indigenous uprising delivered their verdict on the legitimacy of the ruler. Oppressive tactics that Indian armed and paramilitary forces have been using against the people of Kashmir have failed to break the will of the people to fight for the right to self-determination that is the cornerstone of Human Rights Law. Holding Kashmir by India through force is wastage of economic resources and cruel joke with millions of people living under poverty line in India. The full potential of transit trade agreement that India has signed with Afghanistan using Pakistan’s land cannot be realised till India starts taking meaningful steps towards economic integration with Pakistan. The Indian designs for connecting with Central Asia can be economically feasible only if there is peace in the region, especially in Afghanistan. Economic development of China offers the opportunity to Pakistan and India to benefit from this miracle. With increasing economic stakes in the stability of the region, imperatives for peace building efforts by China through economic development projects will increase. Status quo on Kashmir can be maintained while developing economic links between the two Kashmir. With political will, such a framework for visa issuance can be agreed between the two countries that will not undermine the status of the disputed territory. Pakistan’s offer to India for joining CPEC, if utilised, can become a boon for improving the condition of people of Kashmir. Mutual trust building by enhancing the economic development of Kashmir through CPEC can help create right conditions for the resolution of Kashmir dispute. The indigenous movement of Kashmiris for the right to self-determination has shown to Indians that business, as usual, cannot continue in IAK. CPEC provides an opportunity for the demilitarisation of Kashmir. Instead of using brutal force against the people of Kashmir, India should give the nod to IAK becoming part of this mega economic project. Conflict transformation and improving the condition of the people of IAK through CPEC should be the focus of New Delhi. CPEC has the potential to bring peace not only in Kashmir but Afghanistan as well. The future belongs to regional connectivity, economic integration and regional trade. The author works as Research Associate with Strategic Vision Institute (SVI), a think tank based in Islamabad.