Pakistan Saturday said the political atmosphere with India has improved and the peace process to resolve Jammu and Kashmir [Images] and other issues augured well for the South Asian region and the South Asian Association for Regional Cooperation grouping.

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Making a special mention of Indo-Pak relations in his address at the SAARC Summit, Pakistan Prime Minister Shaukat Aziz said the meeting was taking place "under propitious circumstances as we are witnessing a new hope across our ancient sub-continent".

"I am happy to state that political atmosphere between India and Pakistan has improved, and both countries are engaged in a peace process to resolve all issues, including J&K. Sucess of the process augurs well for the region and
SAARC," he said.

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Aziz also made it clear that Pakistan was going ahead with the $7.4 billion Indo-Iran gas pipeline via Pakistan. He said this will be an "outstanding example" of regional cooperation in the energy sector.

On admitting Afghanistan as a new SAARC member, he said Pakistan would welcome this move as it would enrich the grouping and add to its strength.

"We also welcome the interest of our friend and neighour China to be associated with our organsiation (SAARC) as an observer or dialogue partner," he said.