Pakistan must focus on problems, not Musharraf: U.S

ISLAMABAD (Reuters) - Pakistani politicians should stop squabbling over the fate of President Pervez Musharraf and focus on pressing problems of rising Islamist militancy, soaring prices and energy shortages, a U.S. official said on Wednesday.

U.S. ally Musharraf has become increasingly isolated since his political supporters suffered a humiliating defeat in February elections, but critics say differences in the new coalition over how to deal with him have virtually paralyzed government.

"Frankly, President Musharraf is not the issue right now. This is not the problem that Pakistan faces right now," U.S. Assistant Secretary of State Richard Boucher told a news conference after talks with Musharraf and other leaders.

"The problem Pakistani people face is the danger of bombings, suicide bombers, rising food prices. There are energy difficulties," he said.

The coalition led by the party of slain former prime minister Benazir Bhutto wants to get rid of Musharraf, who seized power as a military strongman in 1999.

However, there is disagreement between the coalition partners over how to do it and also over how to resolve the issue of dozens of judges Musharraf sacked in November after he imposed a brief period of emergency rule.

The United States and other Western allies are concerned about instability in the nuclear-armed state which faces a growing threat from al Qaeda and Taliban militants trying to extend their writ from tribal areas on the Afghan border.

Pakistan's allies also want it to stop Taliban militants from making cross-border forays into Afghanistan, where in June Western troops suffered their highest monthly death toll since 2001.

Critics say the new government is also not focusing on widening trade and fiscal deficits, surging inflation and a chronic power shortage. Stocks and the rupee have both been falling.

AFGHAN COMPLAINTS

Boucher said the United States backed a Pakistani strategy to negotiate with ethnic Pashtun tribal elders to get them to stop attacks in Pakistan and into Afghanistan and to expel foreign militants.

However, he reiterated the United States was opposed to deals with hard-core militants.

"We don't support making concessions to violent leaders like Baituallah Mehsud," he said, referring to an al Qaeda ally who leads Taliban militants in Pakistan.

"We don't support releasing terrorists in the wild so that they can strike again."

Mehsud is blamed for a wave of suicide attacks across Pakistan since mid-2007, including the assassination of Bhutto, and he has vowed to continue sending fighters into Afghanistan.

A flurry of Afghan complaints over Taliban infiltration into Afghanistan has strained relations between Pakistan and Afghanistan, both vital U.S. security allies.

Afghan President Hamid Karzai threatened last month to send troops into Pakistan to battle the Taliban.

Boucher said he had discussed cross-border militant movement in his meetings but repeated that Washington wanted Western and Afghan forces to tackle militants in Afghanistan, and Pakistani troops to act on their side of the border.

Boucher also welcomed a sweep launched by Pakistani forces last Saturday aimed at militants in the Khyber region who had been threatening the northwestern city of Peshawar.

Concern has been growing as well about security for Western military supplies trucked to Afghanistan through the Khyber Pass.

Security forces have seized and blown up nearly 10 militant posts in Khyber. On Wednesday they captured 31 militants and seized arms and ammunition, a government officer said.

Separately, a rocket fired from Afghanistan killed two people and wounded three in Pakistan's Bajaur region but it was not clear who fired it, a security official said.

(Editing by Robert Birsel)