Musharraf's Ouster Tests Coalition as Focus Shifts to Judiciary

Aug. 19 (Bloomberg) -- Pervez Musharraf's resignation as president removed a thorn in the side of Pakistan's six-month- old civilian government, leaving the reinstatement of judges he fired as the biggest hurdle to the coalition cementing its rule.

Asif Ali Zardari, co-chairman of the Pakistan Peoples Party, and Nawaz Sharif, the former prime minister, will meet in Islamabad today after talks ended without agreement, Farhatullah Babar, spokesman for Zardari's party, said yesterday.

Musharraf quit yesterday to avoid facing impeachment charges that he illegally toppled Sharif in a 1999 coup and abrogated the constitution when he fired 60 judges in November. Zardari's stalling in reinstating the judges prompted Sharif to withdraw his ministers from the coalition cabinet in May.

``The judges issue can cause a rift in the coalition,'' said Ayesha Siddiqa, an Islamabad-based political analyst and author of Military Inc. ``That's why it is now critical the judges are reinstated so that the system doesn't collapse and there is some semblance of stability.''

Musharraf's departure leaves the judicial issue as the main stumbling block to the coalition government tackling a slowing economy and rising militancy on the border with Afghanistan. U.S. Secretary of State Condoleezza Rice yesterday praised Musharraf's cooperation in the war against al-Qaeda and called on Pakistan's leaders to ``redouble'' their focus on fighting terrorism.

Bitter Rivals

Sharif and Zardari's wife Benazir Bhutto, who alternated power twice each between 1988 and 1999, were bitter rivals before the two parties united against Musharraf. The former general fired the 60 judges, including Supreme Court Chief Justice Iftikhar Muhammed Chaudhry, before a judicial panel was about to rule on the legality of his re-election as president.

The two parties pledged to reinstate the judges in a March 9 agreement that formed the basis for the coalition. Prime Minister Yousuf Raza Gilani asked all political parties to support the coalition in a speech in Parliament yesterday.

``Now will be the time for the coalition to test their bond,'' said Zafar Nawaz Jaspal, assistant professor of international relations at Quaid-e-Azam University in Islamabad. ``The bond may weaken after the completion of their first common agenda.''

Musharraf's departure marks a victory for Zardari and Sharif who pledged on Aug. 7 to remove the president. The government, which came to power in March after defeating pro- Musharraf parties in Feb. 18 elections, vowed to reinstate the senior judiciary but has been unable to agree on how to do so.

``Our party's effort is to reinstate the judges as soon as possible,'' said Siddiq-ul-Farooq, Pakistan Muslim League- Nawaz's spokesman.

Nationwide Protests

The judges should now be immediately reinstated, Aitzaz Ahsan, president of the Supreme Court Bar Association told reporters yesterday. Lawyers had led nationwide protests for more than a year calling for Musharraf to resign.

``If a tussle for the next president ensues between the coalition partners or if the judges restoration issue is still not resolved quickly, then pressure on the coalition could build, taking away government focus from the economy,'' AKD Securities Ltd. in Karachi said in a report yesterday.

Coalition partners also discussed candidates for the post of president, Aaj Television reported, without giving details. The president was replaced by Mohammedmian Soomro, chairman of the Senate and a Musharraf loyalist, pending a parliamentary vote to choose a new head of state within 30 days.

Slowing Growth

Since January, Musharraf has faced criticism for slowing economic growth, a widening budget deficit and an inability to rein in inflation running at a 30-year high. That's a reversal from his first eight years in office when he was credited for reviving the economy after the government had less than $1 billion in foreign exchange reserves.

``I deny the charges that economic crisis is caused by policies of my government in the past nine years,'' Musharraf said in a televised speech yesterday to announce his resignation. The coalition government ``may succeed in removing me but it can damage the country.''

Pakistan's benchmark stock index rose the most in eight weeks and the rupee gained after the announcement.

``It is too soon to say whether or not this is a credit- positive event because Pakistan's external finances remain under a lot of pressure and we have yet to see the effects of policy adjustments come through,'' Aninda Mitra, vice president at Moody's Investors Service in Singapore, said yesterday. Moody's lowered Pakistan's credit rating to B2 from B1 in May.