In his summit speech Vajpayee urged member countries to be sensitive to each other's security concerns.
"Mutual suspicions and petty rivalries have continued to haunt us and as a result the peace dividend has bypassed our region," he said.
He expressed satisfaction on the agreements reached on terrorism, South Asian Free Trade Agreement and the social charter.
"We should be candid in accepting that the expectations with which SAARC was created have not been fulfilled in the measure of potential," he, however, added.
Vajpayee delivering his speech on January 4, 2004.