...Taliban influence in Pashtun areas of Afghanistan has...served Pakistan's cause against India. The [Pakistani] generals fear that India will use economic aid and political support for Afghanistan to encircle Pakistan, establishing consulates and business outposts, and use these to funnel aid to separatist groups such as those fighting to achieve independence for the Pakistani province of Baluchistan. The [Afghan] Taliban offer a counterforce in this proxy struggle.What evidence is there that India has actually tried to "encircle" Pakistan via aid to the Karzai government, setting up "business outposts," etc.? I know that India funded an elaborate road-building project or two in Afghanistan but I don't follow developments closely enough to know the answer to the question. Fears of 'encirclement,' however, can become a self-fulfilling prophecy.
The news today that the Pakistani prime minister is urging the Afghan Taliban to enter peace talks with the Afghan government (which have been in the 'feeler' stages for a while) may indicate that the proxy-against-perceived-encirclement strategy is becoming less attractive and that Pakistan is beginning to realize that its interests will be served if the Afghanistan war comes to some kind of a settlement.
On Baluchistan, btw, I have bookmarked this piece by Akbar Ahmed (h/t The Yorkshire Ranter), but haven't yet read it.