NEW DELHI: Iran's application for observer status in the South Asian Association for Regional Cooperation was unanimously approved by the SAARC Foreign Secretaries at their Standing Committee meeting on Saturday.

Briefing presspersons at Vigyan Bhavan here, Foreign Secretary Shivshankar Menon said Iran's application received a positive recommendation from the Standing Committee. It would now go before the SAARC Council of (Foreign) Ministers, which would meet on April 2.

Asked about the relationship the new observers — China, Japan, South Korea, the United States and Japan — would have with the SAARC, Mr. Menon said there could be cooperation in trade and counter-terrorism as well as social and economic sectors.

The Foreign Secretary said SAARC was open to cooperation in all these sectors, but would have to work out the modalities after the summit meeting, the first to be attended by the five observers.

Asked whether an inter-governmental agreement on setting up a SAARC University would be clinched during the April 3-4 summit, Mr. Menon said some "last-minute cleaning up of the text" was being done. "We are close to finalising the agreement."

Development fund

About operationalisation of the SAARC development fund, the Foreign Secretary said there was some $300 million already available, but discussions were continuing on how to structure the fund. "I hope we can do it [at the summit]," Mr. Menon said, describing himself as a "constant optimist."

(SAARC sources, however, told this correspondent that differences among member-states were holding up progress on agreeing to the structure of the fund. Several countries wanted to have a system of weighted votes, in line with the World Bank structure.

India, however, did not want such a structure.

The sources said another issue being discussed was outside contributions to the fund and whether or not SAARC should accept such aid. Given that the observers might want to contribute heavily to the fund, there is some wariness on the part of some members.)

Testing of missiles

Asked why India and Pakistan tested missiles in advance of the SAARC summit, Mr. Menon said that both countries had given each other advance information about the tests.

Reacting to a newspaper report about the arrest of some Indian-origin persons in the United States in an alleged case of trading in banned dual-use items, the Foreign Secretary said: "We are looking into the allegations."

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