By Kamil Zaheer

NEW DELHI, March 31 (Reuters) - South Asian leaders meet next week at a summit aiming to boost trade in a region that accounts for a fifth of the world's population, but real progress is unlikely with domestic turmoil dominating national agendas.

The seven members of the South Asian Association for Regional Cooperation (SAARC) are Pakistan, Nepal, Sri Lanka, India, Bhutan, the Maldives and Bangladesh.

Afghanistan joins as the eighth member at the 14th SAARC summit in New Delhi on April 3-4 that will be attended by leaders including Indian Prime Minister Manmohan Singh and Pakistani premier Shaukat Aziz.

Pakistan President Pervez Musharraf, facing his own domestic troubles including a political standoff over the sacking of the country's top judge, will be absent. "SAARC is unlikely to go anywhere soon in a hurry," C. Uday Bhaskar, a New Delhi-based foreign policy analyst.

"Nearly all SAARC countries are facing some sort of internal turbulence and animation and, therefore, the determination to progress on collective issues is not a high priority," he added.

He pointed to Islamist violence in Pakistan and Afghanistan, ethnic clashes and political tension in Nepal where Maoists and the government have signed a tenuous peace accord, and the raging conflict in Sri Lanka between Tamil rebels and Colombo.

Bangladesh had recently witnessed the installation of an army-backed interim government after months of turmoil, he said, while parts of India are affected by separatist revolts, including in Indian Kashmir, and a Maoist insurgency.

Some top officials say SAARC needs to move beyond being a forum for regular summits and pious statements.

"It's our feeling the time has come for SAARC to move now to a stage of implementation, rather than just studying the issues," Indian Foreign Secretary Shivshankar Menon said this week.

Progress since SAARC's creation in 1985 -- formed with the aim of accelerating economic growth and trade in one of the world's poorest regions -- has also been stymied by the edgy ties between Pakistan and India, the group's largest members.

Domestic politics such as Pakistan refusing to give India Most Favoured Nation trading status has kept intra-regional trade at about five percent of South Asian nation's total trade.

Although relations between the nuclear-armed rivals have improved in the past few years due to a cautious peace process, the two sides have made little headway over Kashmir.

Hindu-majority India says Islamic Pakistan needs to do more to curb Islamist militants operating from Pakistani territory, who stage attacks in Indian Kashmir.

Islamabad wants New Delhi to act with urgency over Kashmir, where a Muslim separatist revolt against Indian rule has killed thousands, and is pushing for demilitarisation of the region, which has caused two of the three India-Pakistan wars.

"India and Pakistan have held SAARC hostage," said Nurul Kabir, editor of the New Age newspaper of Bangladesh.

No major agreements are expected -- accords could include a SAARC university and freer movement of journalists.

"PACKED LIKE SARDINES

Some analysts say dealing with terrorism needs to come first.

"Nowhere in the world do you have a region where there are so many terrorists or militants packed like sardines," New Delhi-based security analyst Ashok Mehta said.

That issue has helped divide the region.

India says Bangladesh allows Indian insurgent groups to operate from its soil while Sri Lanka has warned that Tamil Tiger rebels pose a threat to the entire region, including India.

Afghanistan accuses Pakistan of not doing enough to crack down on Taliban militants operating from its soil.

"We will have to see whether what we have done is sufficient and whether we can do more together to try and fight terrorism, because this is an issue that concerns all of us," Menon said. (Additional reporting by Jonathan Allen)

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