Pakistani supporters of Sunni Tehreek (ST) hold national flags as they gather during an anti-Indian protest in Karachi on Febraury 27, 2019. Asif Hassan | AFP | Getty Images

Long-standing tensions between nuclear powers India and Pakistan escalated this week after each country said it carried out airstrikes against the other, prompting concerns over the potential outbreak of a war in South Asia. It puts Indian Prime Minister Narendra Modi in a delicate position: He likely wants to respond in a way that makes it appear as if India has the upper hand in this week's altercations — to boost his and his party's standing ahead of elections — while at the same time preventing the outbreak of another war, which could destabilize the region. "Modi will seek to capitalize on his strongman image and national security credentials to boost the (Bharatiya Janata Party) ahead of upcoming elections," political consultancy Eurasia Group said in a Wednesday note. U.S. Secretary of State Mike Pompeo urged both countries on Tuesday to "exercise restraint" and avoid an "escalation." France, Australia, China, which is a close ally of Islamabad and a major investor in the country, and the European Union also called for restraint. While the countries have had a contentious relationship since 1947, this week's escalation reached heights not seen in recent years.

What happened?

On Tuesday, India said its air force conducted strikes against a militant camp in Pakistani territory. That attack killed a "very large number" of terrorists, trainers and senior commanders belonging to the Jaish-e-Mohammed, according to New Delhi. India's response came after the group recently claimed responsibility for an attack in India-controlled Kashmir that killed more than 40 security officers. The suicide car bombing prompted a barrage of international criticism toward Pakistan for failing to crack down on terror groups operating on its soil. For its part, Islamabad denied there were any casualties from India's Tuesday strike. On Wednesday, Pakistan said its air force carried out strikes along the so-called Line of Control to demonstrate its "right, will and capability for self defence." The Line of Control is the de facto border between the Indian and Pakistani parts of the former princely state of Jammu and Kashmir. Then, according to a spokesman for the Pakistan armed forces, Indian planes entered Pakistani airspace and two jets were shot down. One of the aircraft fell on India's side of Kashmir, while the second came down in Pakistani-held territory, and its pilot was captured, the spokesman said. An Indian External Affairs Ministry spokesman acknowledged that one pilot was missing and a combat jet had been lost. That spokesman also claimed a Pakistani jet had been shot down in the altercation. Pakistani Prime Minister Imran Khan on Wednesday called for talks with India and said he hoped "better sense" would prevail to reduce the tension between the nuclear-armed neighbors.

Why does it matter?

Kashmir has always been a sensitive topic for both countries, which have fought two wars over the mountainous region. In 2014, forces from Pakistan and India exchanged fire in border clashes. Tuesday's attack was the first time India has used airstrikes inside Pakistan since 1971. Moreover, the area it struck — Balakot — was well outside Pakistani Kashmir and beyond the Line of Control.

Students associated with religious political party Pakistan Jamaat-e-Islami hold images of Indian Prime Minister Narendra Modi during a protest in Lahore on Feb. 27, 2019. Arif Ali | AFP | Getty Images

Since the terrorist attack earlier this month, Modi has been under pressure from his base to respond with force ahead of a parliamentary election due to take place by May. "That India entered Pakistan's airspace is a clear indication that it is willing to do whatever it takes to keep India safe, which, I suspect, caught Pakistan off-guard," Akhil Bery, analyst for South Asia at Eurasia Group, told CNBC on Tuesday. Dhruva Jaishankar, a fellow in foreign policy studies at Brookings India, said India has faced a series of terrorist attacks since the 1990s from groups and individuals based in Pakistan. The challenge for both sides has always been about how to respond to provocations from its neighbor, especially after each country became a nuclear power. Jaishankar told CNBC that both countries have tested the limitations of how far they can escalate the conflict before reaching a "nuclear threshold." To be clear, escalating tensions to the point of nuclear conflict would be catastrophic for both India and Pakistan and would destabilize the entire region — an option unlikely to be taken by either New Delhi or Islamabad. For his part, Khan's sway with the country's influential military is limited. The way he handles this week's situation will be a big test of his leadership, according to Moeed Yusuf, associate vice president for the Asia Center at the United States Institute of Peace. "You have a new leader in Pakistan who (has to) show that he is strong and willing to stand up to India," Yusuf told CNBC. "He must also follow the army's lead and so if the army decides to escalate, he won't be able to say much to them right now." For Modi, meanwhile, it would be "political suicide" if he walked back on the conflict at this stage — when it may appear to outside observers that India and Pakistan had evenly matched each other's force, Yusuf said.

What's next?

Experts have said it is highly unlikely that a war would break out between the two nations — even if the situation escalates in the coming days.

Pakistani soldiers stand next to what Pakistan says is the wreckage of an Indian fighter jet shot down in Pakistan controled Kashmir at Somani area in Bhimbar district near the Line of Control on February 27, 2019. STR | AFP | Getty Images