Speaking to reporters in Havana, his first press conference after being appointed foreign secretary, Menon said, "We are learning to work with each other and for the last two years we have learnt to live together."
Menon's media interaction was held hours after Pakistan President Pervez Musharraf declared "Mohabbat Zindabad" soon after emerging meeting Prime Minister Manmohan Singh on the sidelines of the 14th Non Aligned Movement summit.
The two leaders issued a joint statement saying that both countries would work on the peace process including Jammu and Kashmir.
"Terrorism is a threat to Pakistan and a threat to India too," Menon, whose last posting was as India's high commissioner to Pakistan, said. "We have to fight it together. We have never attempted anything like this and we feel that this is the way to go forward."
Asked what discussion had taken place on Jammu and Kashmir and if any agreement had been reached on the issue, Menon said, "Albert Einstein said once if I knew what I was doing it would have not been called research. We have to give peace a chance and talk to find solutions."
After agreeing to set up an anti-terrorism institutional mechanism with India, Pakistan joins a group of 23 countries with whom India has a bilateral agreement of sharing information about terrorism and terrorist activities.
"We are working to eliminate the trust deficit between us and if we can cut down on terrorism in any way then as an Indian I will try to do everything to stop that," Menon said.
Before arriving in Havana, Dr Singh told the media delegation accompanying him to the NAM summit that there was a trust deficit between India and Pakistan. "I have said more than once that I can't carry Indian public opinion with me if terrorist acts continue on Indian soil," the prime minister had said then. "Whatever be the cause, it puts a dampener on India-Pakistan relations."
Menon said the institutional mechanism was just an idea and how it will function and how many meetings would be held between the officials of the two countries to share intelligence was not decided yet.
Asked whether Pakistan would hand over terrorists like Dawood Ibrahim and Hizbul Mujhadeen leader Syed Salhauddin who are based in Pakistan, Menon said, "This institutional mechanism will be a forum to discuss such issues."
Would this mechanism guarantee India protection against future terrorist attacks? "Public opinion in India has it that terrorists who plan attacks against India are based in Pakistan," Menon said. "Our goal is to eliminate terrorism. As far as a guarantee is concerned there is no guarantee but we will make our best effort to make this system work."
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