Pakistani Prime Minister Zafarullah Jamali will open the 12th summit of the South Asian Association for Regional Cooperation (SAARC), the 18-year-old forum's first since January 2002 when India and Pakistan were on the brink of their fourth war.

Last year's summit was cancelled when Indian Prime Minister Atal Behari Vajpayee refused to travel to Pakistan because of ongoing tensions.

This year he has made an historic journey to Islamabad to take part in the summit, eight months after kick-starting fresh peace moves with a "hand of friendship" offer to Pakistan.

The trip, his first since 1999, marks the first visit by an Indian leader to Pakistan since their near-war confrontation less than two years ago.

All eyes are on whether Vajpayee will extend his pronounced "final" bid for peace with Pakistan as far as a bilateral meeting with President Pervez Musharraf or Jamali on the three-day summit's sidelines.

At Sunday's opening, Prime Minister Khaleda Zia of Bangladesh, Bhutan Prime Minister Lyonpo Jigme Yaeser Thinley, India's Vajpayee, Maldives President Maumoon Abdul Gayoom, Nepal Prime Minister Surya Bahadur Thapa, Pakistan's Jamali and Sri Lankan President Chandrika Kumaratunga will deliver addresses.

On Monday they will retire to a private "retreat" at the Pakistani premier's official residence to discuss and ratify agreements.

Top of the agenda are the South Asia Free Trade Area (SAFTA) Framework Agreement, and a strengthened counter-terrorism accord.

SAFTA envisions a free trade regime starting from January 1, 2006, when the seven states begin dropping their tariffs from 25 to 30 percent, to 0 to 5.0 percent. Deadlines for implementing the tariff regime will differ according to respective states' economic prowess.

"This indeed is a landmark decision," Pakistan Foreign Minister Khurshid Mahmud Kasuri said as he announced the SAFTA agreement was ready for signing by heads of government.

"It will enter into force from January 1, 2006 after completion of formalities including ratification by all member states."

Vajpayee said in a formal statement Saturday he would "interact" with his Pakistani hosts during his three-day visit, but told Indian state television that there would be no "bilateral" talks with the Pakistanis.

He told Pakistani television he could meet Musharraf, but gave no timeframe.

"We think that we can have talks with Musharraf sahib (mister)," he said in the interview given in New Delhi before travelling to Islamabad.

Newspapers were rife with speculation that talks may take place Tuesday after the closing session and before Vajpayee returns to India.

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