[Despite progress made by SAARC in recent years, a number of challenges continue to confront the organization. To play an effective role as a regional grouping, challenges such as poverty alleviation, the energy crisis, combating terrorism, and effects of globalization, among others, should be tackled jointly. SAARC countries, in general, need assistance in all these fields owing mainly to their weaker economies. Observers, having closer relationship with SAARC members, may be instrumental in meeting these challenges.]