Reuters : Violence hits as Pakistani politicians jockey

Violence hits as Pakistani politicians jockey

By Kamran Haider | August 27, 2008

ISLAMABAD (Reuters) - Government forces killed about 40 militants in clashes in northwest Pakistan on Wednesday as increasing violence, and political uncertainty deepened by a split in the government drove stocks lower.

Hopes for political stability in nuclear-armed Pakistan after Pervez Musharraf resigned as president last week were dashed when the ruling coalition, led by the party of slain former prime minister Benazir Bhutto, fell apart over a judicial dispute and replacing Musharraf.

The departure of the second biggest party, that of former prime minister Nawaz Sharif, ended what analysts said was an unnatural alliance between the two old rival parties and set the scene for a battle over the presidency.

The wrangling has distracted the government's attention from mounting militant violence, critics say, though the government says it is committed to pressing on with the campaign against militancy.

Military officials said on Wednesday that 41 militants were killed in two clashes near the Afghan border.

The first began around midnight when militants attacked a military post in the South Waziristan region and 11 of them were killed, the military said.

Later, 30 militants including some foreigners died in fighting in the northwestern region of Bajaur, also on the Afghan border, a military official said.

"Our troops carried out an operation this morning and we have reports that 30 militants, including some Uzbeks, were killed," said a military official who declined to be identified.

The United States, an ally and important source of aid for Pakistan, says militants on the border provide shelter for insurgents fighting the Afghanistan government.

Drawn out political uncertainty and militant violence have undermined confidence of investors who hoped Musharraf's departure would let the government focus on economic and security problems.

Pakistani stocks fell more than 4 percent to their lowest level in more than two years in intra-day trade on Wednesday.

The benchmark Karachi Stock Exchange index has fallen for six consecutive sessions after a two-day recovery following Musharraf's resignation.

"There is still a lot of uncertainty on the political front. People just want to get out of the market," said Sajid Bhanji, a dealer at Arif Habib Ltd.

DRUMMING UP SUPPORT

As investors sold their stocks, politicians drummed up support for the September 6 presidential election in which members of the country's four provincial assemblies and two-chamber national parliament will vote.

Bhutto's Pakistan People's Party has nominated her widower and political successor, Asif Ali Zardari. Sharif's party has put forth a former Supreme Court judge, Saeeduzzaman Siddiqui.

The main pro-Musharraf party nominated a former government minister and top party official, Mushahid Hussain Sayed.

No party has a simple majority of votes though analysts expect Zardari to be able to gather enough support to win.

Bhutto's party dismissed a news report this week suggesting Zardari, who spent 11 years in prison on various charges but was never convicted, suffered from severe mental problems.

Party spokeswoman Farzana Raja said Zardari had been tortured while in prison and as a result had been under mental stress and had a heart problem.

"But he has never been mentally ill," she said.

"It's a planted story to try to ridicule Mr Zardari, our party and the country."

A spokesman for Sharif's party said if the report of Zardari's mental illness were true, he would be ineligible to run for president.

The main issue that led to the departure of Sharif's party from the coalition was his demand scores of judges Musharraf purged last year be reinstated.

The PPP is reluctant to restore the judges partly because of concern the deposed chief justice might take up challenges to an amnesty granted to Zardari and other party leaders from graft charges last year, analysts say.

But eight of the dismissed judges, all High Court judges from the southern province of Sindh, were re-appointed on Wednesday, the eve of the launch of a nationwide protest campaign by lawyers aiming to get all their colleagues restored.

Analysts say it is doubtful the government will reinstate the top judge whom Musharraf purged, the independent-minded former chief justice, Iftikhar Chaudhry.

(Additional reporting by Augustine Anthony; Writing by Robert Birsel; Editing by Jerry Norton)

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