By Simon Cameron-Moore
ISLAMABAD (Reuters) - The party of Pakistan's assassinatedformer prime minister Benazir Bhutto contemplated a coalitionon Wednesday that could spell the end for President PervezMusharraf after it won most seats in a general election.
The United States welcomed the vote as "a step toward thefull restoration of democracy" but urged the next government inthe nuclear-armed country to work with Musharraf, one ofWashington's most important Muslim allies in its fight againstal Qaeda.
A wave of sympathy helped Bhutto's Pakistan People's Party(PPP) win the most seats in the National Assembly in Monday'selection, in which the allies of former army chief Musharraf,who seized power in a 1999 coup, suffered big losses.
But the PPP needs coalition partners and the president'scamp is banking on persuading it to invite the pro-MusharrafPakistan Muslim League (PML) to salvage his leadership.
Bhutto's widower Asif Ali Zardari, who took over as PPPleader after she was killed in December, appeared to take thatlifeline away by saying his party would not invite anyone fromthe PML into a broad-based coalition it planned to form.
The PPP wants Nawaz Sharif, the prime minister Musharrafoverthrew in 1999, to join the coalition along with an ethnicPashtun party that kicked Islamist parties out of power in theNorth West Frontier Province where militants operate.
"The dividing line is whether you were with thedictatorship or whether you were with those forces who werestruggling for democracy," senior PPP member Taj Haider toldDawn Television.
Sharif, whose party ran a close second in Monday's poll,has made driving Musharraf from power his mission sincereturning from exile in Saudia Arabia in November, a monthafter Bhutto.
According to unofficial results for 261 seats, the PPP hadwon 87 and Sharif's party 67. The pro-Musharraf PML trailedwith 38. Small parties and independents shared the others.
Musharraf's popularity has largely disintegrated over thepast year, especially after he imposed a stint of emergencyrule in November, purging the judiciary and gagging the media.
"Past experience with Musharraf is not good," said30-year-old Karachi IT manager Ali Baloch, walking to workcarrying a tiffin lunch box.
"Terrorism and other problems increased under thegovernment of Musharraf. If his removal leads to a reduction interrorism, then it is good," he added. "If these parties nowget combined it will be a good thing."
Some analysts say ideological differences between the PPPand Sharif's party might make a coalition difficult and theypoint out that Bhutto had considered a pact with Musharraf lastyear.
THE CHOICES
Intense negotiations are expected over coming days, andZardari and Sharif are due to meet on Thursday. If they do notagree, the PPP's door could re-open to Musharraf's supporters.
But Sharif joining forces with the PPP would leaveMusharraf with two choices that would mean his demise, saidanalysts.
He could either quit or drag out political upheavals with ahostile parliament that would try to oust him on grounds heviolated the constitution when he imposed emergency rule.
"He has the graceful option and the confrontationaloption," said Ijaz Shafi Gilani, chairman of pollsters GallupPakistan.
In Washington, U.S. State Department spokesman Tom Caseysaid: "We certainly would hope that whoever becomes primeminister and whoever winds up in charge of the new governmentwould be able to work with (Musharraf)."
White House spokeswoman Dana Perino said: "We hope thatthey continue to work with us as partners incounter-terrorism."
Apart from the PML, Musharraf has relied on two othersources of support -- the army and Washington. But Musharrafquit as army chief in November and U.S. support has beenstretched thin over what critics saw as his autocraticbehaviour over the past year.
Political paralysis has played havoc with management of theeconomy in the last six months, and Pakistanis have had tostruggle with soaring fuel prices, shortages of basic foods andgas, and worsening power cuts.
But investors have appeared impervious to the problems. TheKarachi stock market gained three percent on Tuesday,registering relief the vote had passed off relatively smoothly.
(Editing by Robert Birsel and David Fox;)
(To read more about the Pakistan election double click on;and visit the Reuters blog "Pakistan: Now or Never?" athttp://blogs.reuters.com/pakistan/)
