Abstract: Using secondary data and literature review, this paper explore Desai’s (2010) preconditions for creation of regional unions for SAARC. There are Common goals articulated in several SAARC declarations. However, power balance and conducive local political environment are questionable. Therefore, the performance of SAARC as a regional cooperation is not satisfactory. A two stage-game is designed to describe SAARC internal affairs. First India and Pakistan play Stag Hunt game. Then the remaining members chose the best strategy for them after observing the equilibrium of the first stage Stag Hunt game. Effect of rest of the world interventions on equilibrium is also considered. Accordingly, India and Pakistan would have found amicable solutions to Jammu Kashmir issue and to the terrorism if they can cooperate. However, mutual mistrust does not allow it. Strategic interventions by external parties has aggravated the problem in terms of further restricting cooperative strategy and in terms of Indian retaliations against the smaller members with such cooperations with outside SAARC. In the second stage of the game, all small countries choose two optimal reactions; be silent over Indo-Pakistan issue and going for bi-lateral agreements disregarding the SAARC trade facilitation role in multilateral manner. All these developments are not in favor of the future of SAARC.

Key words: Regional Cooperation, SAARC, Stag hunt

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