Pakistan retreats on controversial graft amnesty order

By Zeeshan Haider

ISLAMABAD (Reuters) - Pakistan's government has averted a potentially destabilizing coalition split by abandoning a bid to get parliamentary approval for an amnesty from graft charges for the president and other senior politicians.

The amnesty, introduced by former president Pervez Musharraf in 2007 in a bid to strike a power-sharing deal with former prime minister Benazir Bhutto, was to be debated in parliament this week as the government struggles with a surge in militant violence.

Musharraf introduced the amnesty, known as the National Reconciliation Order (NRO) by decree, but the Supreme Court said in July that it had to be approved by parliament.

It hit a hurdle, however, when opposition politicians -- and some members of a coalition led by President Asif Ali Zardari's party -- said they would vote against the order, which they said legitimized corruption.

The 2007 order cleared the way for Bhutto to return from self-imposed exile and take part in a general election by granting her amnesty from persecution on graft charges.

She was assassinated two months after returning but her husband, Zardari, went on to lead her party to victory in February 2008 polls and to become president later that year.

Zardari spent years in jail on corruption charges but was never convicted. He said the charges were politically motivated.

Opposition to parliamentary approval for the amnesty could have driven rifts in the coalition, with one partner even suggesting Zardari step down over the issue.

Prime Minister Yusuf Raza Gilani, a top member of Zardari's party, told the assembly on Tuesday the government abandoned the plan to avoid divisions.

"The democratic system in the country is already very fragile. We have to protect this institution," he said, referring to parliament.

"The sense of the house was that the NRO should not be brought into the house. We didn't make it an issue of ego ... we have decided not to insist on it."

STOCK INVESTORS WARY

The withdrawal of the order from parliament will not open Zardari to any immediate corruption prosecutions, but accusations still hang over him and could provide his political enemies with ammunition.

The NRO cleared all graft charges against politicians and civil servants laid before October 1999 when Musharraf seized power in a military coup.

It favored members of Bhutto's Pakistan People's Party but not the other main party, led by former prime minister Nawaz Sharif, who was hit with graft charges he said were politically motivated after he was overthrown in October 1999.