"SAARC is mired in conflict, you cannot deny it," Pakistan Prime Minister Shaukat Aziz told journalists early on Sunday. "The truth is we need to take issues head-on and come up with solutions, whether it's Pakistan-India or any other countries in the region."

Raking up Kashmir again, he reiterated, "We must make progress on Kashmir and then move in parallel on other issues.  We do not subscribe to the view that let's do everything else and Kashmir will resolve itself. For sustainable peace, we must address Kashmir."

At a separate press conference at the Dhaka Sheraton, Prime Minister Manmohan Singh [Images] agreed that there was a trust deficit, saying that Pakistan had not done "...all that needs to be done" for stopping cross border terrorism. "There has been a trust deficit. It is our obligation to convert that deficit into a surplus," he said.

Asked whether evidence linking Pakistan to the recent Delhi blasts had been found, he said, "Indications do suggest external linkages. An inquiry is underway. There are several clues and there are some indications about external linkages to terrorist groups that might have been involved. I will not say more on that till we have a firm grasp on knowledge who was involved."

Referring to the Pakistan's assurance at the Islamabad summit in January 2004 that its territory would not be allowed to be used to promote or further terrorist activities directed against India, he said, "There has been some reduction. But it is our feeling unfortunately, that all that needs to be done has not been done. We, of course, have assurances that the future will be different from the past. We wait for that."

Earlier in the day, the SAARC leaders agreed to include Afghanistan in the group as a full member and to consider China's application to be given observer or dialogue partner status after working out the criteria involved. Other agreements included removing double taxation, easing custom duties and setting up a council to arbitrate on trade disputes.

Addressing journalists before leaving for Delhi in the evening, Prime Minister Manmohan Singh said that the number of proposals that have been discussed at the summit reflected that there is a shared belief among SAARC members that it can and should do more. "We all feel there is scope for more concrete action in regional cooperation, and that not enough has been done."

"Discussions on outstanding issues related to the Singapore-Australia Free Trade Agreement continue to be under discussion. There will be further negotiations at the expert level in late November. The intention is for SAFTA to come into effect on the target date of January 1, 2006," he said.

Other Indian proposals include a open skies policy to enable a substantial increase in intra-SAARC flights, a SAARC car rally to catalyse an improvement in road connections, and a South Asia energy dialogue.  

"The concrete modalities for these are still to be developed but they are crucial to our vision of a seamless and strong SAARC and south Asia," the prime minister said.

"We hope that by the next SAARC summit, which India will host, there will be measurable progress on these and other proposals."

Also see:

• SAARC Summit 2005: Complete Coverage
• Tremors Across Borders
• Terror Strikes Delhi