Historically, regional cooperation in South Asia has been fraught with problems. As a result, the South Asian Association for Regional Cooperation (SAARC) remained a somewhat defunct political organization since its inception in 1985. In the 1990s however, SAARC has gathered some momentum, due mainly to the forces of globalization and economic liberalization with many of the SAARC countries. Two particularly significant aspects of this development have been the formation of the World Trade Organization (WTO) and the rising vehemence of the Association of Southeast Asian Nations (ASEAN). This paper will examine these changes in the trajectory of SAARC, and, more generally, the problems and prospects of regional cooperation in South Asia. I will argue here that (a) the "new" regionalism in South Asia is almost entirely a product of the contradictions of globalization, which increases competition on the one hand, and the need for collaboration on the other; (b) institutional structures, in and of themselves, cannot generate solutions to problems that emanate out of historical processes and structures; and (c) feasible strategies for cooperation in South Asia require the mobilization of nonstate actors, especially firms and groups undertaking various social movements.