Islamabad, Pakistan ? Terrorism, free trade and efforts to reduce poverty will top the agenda today at a South Asian summit, but attention will be focused on the sidelines, where Pakistani and Indian leaders have a historic opportunity to cement peace overtures after a half-century of hatred.

The leaders of India, Pakistan, Bangladesh, Bhutan, the Maldives, Nepal and Sri Lanka are meeting in the Pakistani capital for the three-day summit. A breakthrough agreement that would create a free-trade zone by 2006 was reached Friday at presummit meetings.

Far more interesting will be the chance for talks between Pakistani President Gen. Pervez Musharraf and Indian Prime Minister Atal Bihari Vajpayee, the first since the two men sparked the thaw in relations last year.

In recent months, the region’s two most populous nations have traded nuclear brinkmanship for detente, enforcing a total cease-fire between forces on each side of the disputed Himalayan region of Kashmir. They have resumed air, rail and bus links and restored top-level diplomatic relations.

Both nations have expressed a willingness to try new ideas to solve the Kashmir conflict, the source of two wars between the nuclear-armed neighbors since they gained independence from Britain in 1947.

“There’s a general assumption that this opportunity will not be missed,” Pakistani Foreign Minister Khursheed Kasuri said Saturday.

There are hopes that a formal peace dialogue could be announced.

“The results of such a meeting may not be spectacular, but it will be a breaking of the ice,” said Asma Jehangir, a prominent member of the independent Pakistan-India Forum for Peace and Democracy. “This conflict has held the whole region hostage, so just the fact that a meeting is happening is very significant.”

Vajpayee has said he would meet with Prime Minister Zafarullah Khan Jamali, who is Pakistan’s official representative at the summit, but insists he will not discuss flashpoint issues like Kashmir. He has not yet agreed to one-on-one talks with Musharraf, the nation’s real power broker. Officials on both sides say privately that a meeting is likely, however.

It is Vajpayee’s first visit to Pakistan since he met former Prime Minister Nawaz Sharif for talks in February 1999 in the eastern city of Lahore. Several months later, the two nations’ armies were fighting near the remote Kashmir border town of Kargil, killing more than 1,000 soldiers and inflaming nuclear tensions. By the end of that year, Sharif was gone — overthrown by Musharraf in a bloodless coup.

Officials from all seven countries acknowledge that South Asia’s fortunes are intertwined with those of its two largest members, whose squabbling has undercut regional trade.

Disagreements between Pakistan and India are a key reason that in its 18 years in existence, the South Asian Association for Regional Cooperation has little to show for itself.