Kashmiri leaders own palatial houses, flaunt expensive accessories and lead flashy lifestyles, particularly the Abdullahs, Omar and Farooq.

All this is thanks to the huge amount of money being pumped into the state by the Union government to contain the insurgency and by New Delhi's adversaries to keep the conflict going.

In a cable titled, 'Show me the money', US diplomats say Indian and Pakistani money have made all Kashmiri political leaders dependent on handouts and changed the way they live. As the money flows freely, all the stake holders in the conflict have developed a vested interest in the problem continuing, according to the diplomats.

"Omar and Farooq Abdullah, descendants of the Sheikh who first figured out Delhi's money game, live in fabulous houses in Srinagar and Delhi, wear matching Panerai watches, serve Blue Label to the guests and travel all over the world first class courtesy of the Indian government," the cable reads.

"Mirwaiz (Umer Farooq) is alleged to have real estate in Dubai courtesy of Pakistan. The state administration gets rivers of money for development but the streets in J& K are appalling, even by Indian standards," says the cable.

The US has also not spared the army for milking the conflict. "Army officers, we have heard, allegedly bribe their superiors for postings to J& K to get their hands on the logistics contacts and 'hearts and minds' money," the cable reads.

The US diplomats feel Kashmiri politics is nothing but a money game. "Sajjad (Lone) lamented that the conflict remained lucrative to many, and he is right. CPM legislator Tarigami also told us too many people have a stake in the conflict's perpetuation."

In a cable dated August 1, 2005, 'India now holds all the cards, but will it pay them', it quotes A. Y. Khan, who has been introduced as a prominent banker to explain the flow of money in the state.

"A.Y. explained to us that as people hunkered down for the long years of violence, they sent their sons and daughters to schools in every part of India, opened shops and businesses in Himachal, Delhi, Rajasthan, Bangalore, and Punjab, and, ironically, prospered mightily."

The banker said the "rich elite in Kashmir had been taking money from India (the RA& W and the IB) for a long time. Then, money started flowing in from Pakistan too."