A mushroom-shaped cloud of gloom hit TIME's New Delhi bureau chief Tim McGirk at a press conference in India's capital earlier this month. Expectations were high that Pakistan and India, which had just reached a kind of perverse parity as nuclear powers, might at last be able to resolve some of their many territorial disputes. McGirk recalls: "In negotiating over Sir Creek--a mangrove-infested waterway that keeps changing course between the Indian state of Gujarat and Pakistan's Sindh province--officials from the two sides spent an entire day arguing over which tribesmen were allowed to collect firewood there in 1914. The hopes of the subcontinent's 1 billion people were riding on these negotiators, and all they could talk about was firewood."

That sense of exasperation and lost opportunity permeated our work on this week's special report about the subcontinent in the nuclear age. Six months after India and Pakistan concluded their historic atomic tests, the two nations appear no closer to security, prosperity or mutual understanding than they did before. As Islamabad reporter Syed Talat Hussain puts it: "After spitting venom at each other for 50 years, both governments have become prisoners of their own rhetoric. They can't escape this."

Or can they? Correspondent Maseeh Rahman and photographer Robert Nickelsberg traveled to Kashmir, the cockpit of India-Pakistan enmity, to see whether the populace there was as polarized as the leadership. Their findings, in words and pictures, offer some surprises. Correspondent Meenakshi Ganguly was similarly surprised by her reporting among young people in Bombay. "A new generation has emerged in both countries," she says. "Born long after partition, they treat the existence of the two nations as a fact, not a tragedy."

Senior writer Anthony Spaeth, who crafted the report's opening article, was struck by how little both countries have changed in his dozen years on the subcontinent. "In Pakistan, the death of dictator Zia ul-Haq in 1988 offered the promise of democracy, but since then the country has gone into a downward spiral," he says. "In India, economic reform was the promise, but it has stalled because of lack of commitment." So is there any cause for hope? Karachi reporter Ghulam Hasnain found one. "Cricket players will tell you that there's something very special about India-Pakistan matches," he says. "Beneath all the hostility, there's also a kind of hidden love. The general public on either side doesn't hate the other. That hatred is only there at the official level." In this week's special report, we examine all levels of a complex, newly dangerous relationship.