FACTBOX: Pakistan's political prospects

ISLAMABAD (Reuters) - Pakistan's political parties are jockeying for position ahead of a September 6 presidential election and after the ruling coalition split, worrying investors and allies concerned about the economy and militant violence.

Former prime minister Nawaz Sharif pulled his party out of the ruling coalition on August 25 over disputes with his main partner over the judiciary and who should be the next president.

The split came a week after the coalition celebrated the resignation of Pervez Musharraf as president.

The coalition is headed by the Pakistan People's Party (PPP) of assassinated former prime minister Benazir Bhutto, which has nominated its leader and Bhutto's widower, Asif Ali Zardari, to replace Musharraf as president.

Following are some implications of the latest developments.

BATTLE OVER THE PRESIDENCY

* The voting in the presidential election on September 6 will be by members of the country's four provincial assemblies and the two-chamber national parliament.

* Sharif's Pakistan Muslim League (Nawaz) party is fielding a former chief justice, Saeeduzzaman Siddiqui, while the party that backed Musharraf put forward top party official Mushahid Hussain Sayed. Zardari looks likely to win.

* Sharif wants to make the presidency a ceremonial post after it became a seat of executive strength under Musharraf by stripping the office of powers, in particular to dismiss parliament. The PPP has been coy about whether and when it would agree to reduce the presidency's authority.

* The stance of Sharif and his party is likely to win popular points with those who saw the presidency's powers as enabling Musharraf's strongman rule.

BATTLE OVER JUDGES

* The PPP has so far been reluctant to quickly restore all the judges deposed by Musharraf, partly because of concern the former chief justice might take up challenges to an amnesty granted to Zardari and other party leaders from graft charges last year, analysts say.

* Before Musharraf sacked the judges, notably the chief justice, were also quite willing to challenge his government on the legality of various decisions, a tendency the PPP may not view with enthusiasm now that it effectively controls government.

* Twelve of the scores of judges deposed were restored to the bench last week, Zardari has indicated the PPP would move to reinstate more after the presidential election. The chief justice, who critics say has been politicized, is not expected to be among them. Zardari will be immune from any prosecution if he becomes president.

* Lawyers held street protests on Thursday to press for the restoration of all deposed judges, and say there will be more actions to come. However, the lawyers do not want the judges to take their swearing-in oaths as now worded because they fear it legitimizes a Musharraf-backed constitution they say was illegal.

GENERAL ELECTION SCENARIOS

* The departure of Sharif's party from the coalition has not forced a general election, and analysts say it is unlikely to do so anytime soon. The PPP should be able to gather enough support to rule and Sharif has said despite sitting with the opposition he does not intend to try to bring down the government. But the PML (N)'s departure makes it more difficult for the PPP to marshal the two-thirds majority needed to amend the constitution.

* However, Sharif looks set to gain in popularity by standing firm on the judges, whose sacking was regarded as the major decision turning opinion against Musharraf. That and public sympathy on the presidential power issue could help strengthen Sharif and his PML (N) when an election is ultimately held.

ECONOMIC AND SECURITY IMPLICATIONS

* The various squabbles divert government attention from economic and security problems, critics say, to the dismay of investors and allies. Pakistani stocks and the rupee strengthened initially after Musharraf's resignation on hopes of an end to political uncertainty but have since fallen sharply.

* An intensifying insurgency in Afghanistan is pressuring Pakistan to act quickly to stop Taliban attacks from sanctuaries on its side of the border and control other militants. However, some fear a tough stance spurs tit-for-tat suicide attacks and may drive more people into the militant camp.

* Although the main parties all claim to be against terrorism some U.S. officials have their doubts about how tough a line Sharif would take if he were in power, while Zardari is generally viewed as relatively close to Washington. None of the top parties would be likely to veer too sharply from policies liberalizing the economy, albeit slowly and with major exceptions.

(Writing by Jerry Norton; Editing by Kamran Haider)