ISLAMABAD, July 20: President General Pervez Musharraf on Tuesday emphasized that Saarc should institute a confidence-building process among the member states.

Talking to the foreign ministers of Saarc states, the president underlined the importance of peace, security and trust-building for achieving the goals of Saarc, said a foreign ministry spokesman.

He quoted the president as having told the foreign ministers to pay increased attention to 'preventive diplomacy' and peaceful settlement of disputes. Briefing journalists about the deliberations of the 25th session of the Saarc Council of Ministers, spokesman Masood Khan said the proposal that the president made had been articulated at various levels and forums but "the reaction from the participants is not forthcoming at the moment".

The council of ministers is responsible for formulating policies, reviewing progress, deciding new areas of cooperation and establishing additional mechanisms. Explaining Pakistan's point of view, the spokesman said peace and security were important themes which had to be discussed for stability and economic development of the region.

He stressed the need for 'conscious efforts' to promote peace and stability "as they had an interface with other issues'. Pakistan, he pointed out, had to draw upon the experiences of other regional groupings as well, such as the Association of Southeast Asian Nations.

Mr Khan said Pakistan's intent was to sensitize the delegates to the reality of security issues aimed at making Saarc a region where an atmosphere of harmony and amity prevailed to facilitate economic cooperation.

He said a time would come when everybody would realize that a dialogue on peace and security at the Saarc forum was in the interest of everyone. "It is not something exclusive to Pakistan. We are asking for mechanisms."

In reply to a question about growing defence spending in the region and its effect on the peace process, the spokesman said that the increase in defence budgets could trigger an arms race which must be avoided.

"We must promote an atmosphere which boosts confidence and encourages integration rather than (setting) trends that can sow seeds of suspicion and doubt," he elaborated.

Referring to the Saarc meetings, the spokesman said an interactive dialogue was held on economic integration, poverty alleviation, infrastructure, parliamentary exchanges, peace and security, and confidence-building.

In the afternoon session, he said, SBP (State Bank of Pakistan) Governor Dr Ishrat Hussain presented a report on behalf of the Saarc-Finance (coordination group of central bank chiefs) on the concepts of a South Asian development bank and a South Asian economic union.

The bank chiefs had recommended a detailed analysis of the concepts, he added. Mr Khan said the session had assumed importance as the Saarc foreign ministers were reviewing the progress made on the decisions taken on trade, poverty alleviation, social development and counter-terrorism at the 12th Saarc Summit.

He said those decisions had to be followed up and implemented and the council of ministers would give directions for future action. The council, he said, had approved the appointment of a new Saarc secretary-general who would 'probably' be the ambassador of Bhutan now posted in Thailand.

He said a formal announcement to this effect would be made by Foreign Minister Khurshid Mahmood Kasuri. The term of the present secretary-general would end in January. The spokesman said the council had also decided the dates for the next Saarc summit to be held in Dhaka on January 9-11.

Asked if the Indian delegation had sought a separate meeting with President Musharraf on Wednesday, the spokesman said there was a possibility of such a meeting. Answering a question about the statements by United States Deputy Secretary of State Richard Armitage that Pakistan had not fully dismantled the militant training camps in Kashmir, he said the United States intelligence was 'faulty' and 'flawed' and was based primarily on Indian sources.

"We do not agree to the assessment of Mr Armitage," he added. The spokesman said there was widespread concern in Pakistan that human rights violations in occupied Kashmir had gone up, vitiating the atmosphere to 'some extent' despite the ongoing process of confidence building and the composite dialogue between India and Pakistan.

He reiterated Pakistan's stance that Kashmiris should also be associated with the process of confidence building. He said Kashmiris must have some relief: political prisoners should be released, laws used to victimize political activists should be repealed and the number of Indian forces in Kashmir should be reduced.