U.S. envoys meet Pakistan's new leaders

ISLAMABAD (Reuters) - U.S. envoys sounded out Pakistan's new civilian leaders on Islamist militancy on Tuesday as Pakistan President Pervez Musharraf swore in a new prime minister expected to review his policies on terrorism.

U.S. Deputy Secretary of State John Negroponte and Assistant Secretary of State Richard Boucher would ask the new government "how they see the way forward and what their plans are", a State Department spokesman said.

The new government, led by the late Benazir Bhutto's Pakistan People's Party (PPP), is hostile to Musharraf, long seen in Washington as an ally in the battle against al Qaeda and the Taliban in neighboring Afghanistan.

Musharraf, who has rejected calls to quit, swore in senior PPP official Yousaf Raza Gilani on Tuesday.

Gilani called for political parties to cooperate to tackle problems, including in the economy. "All forces have to get together and bring the country out of these crises," Gilani, standing beside Musharraf, told reporters.

But former prime minister Nawaz Sharif, whose Pakistan Muslim League (Nawaz) is part of the new coalition, said he told the U.S. officials that security would no longer be Musharraf's "one-man show".

"Now all issues will be brought before parliament. The representatives of the people will review all aspects of those issues," Sharif told a news conference.

In an apparent snub to Musharraf, Bhutto's widower, Asif Ali Zardari, and their son, Bilawal Bhutto Zardari, who together lead the PPP, declined to attend the oath-taking ceremony.

Musharraf, resented by many Pakistanis for his support for the United States, has seen his popularity battered over the past year. His political allies were beaten in February 18 elections won by Bhutto's PPP weeks after she was assassinated, while Sharif's party came second.

Analysts say the United States wants to ensure the new government maintains Musharraf's commitment to tackling militants after some spoke of the need to hold talks with them.

State Department spokesman Sean McCormack said Washington wanted to work with Pakistan "to combat the threat that exists to Pakistan, and the Pakistani people, as well as to us and others in the region, from terrorists and violent extremists."

"The broadening and deepening of political and economic reforms are, in our view, inextricably linked in the fight against violent extremism," he told reporters.

"A DIFFICULT ERA"

On Tuesday, Musharraf offered Gilani support and urged political forces to work together. "A difficult era in terms of terrorism, extremism and the economy is ahead," he said.

President George W. Bush called Gilani to congratulate him, while the European Union also offered congratulations. Indian Prime Minister Manmohan Singh telephoned Gilani and reaffirmed India's commitment to strengthening cooperation.

Negroponte and Boucher held talks with Musharraf, Zardari and Sharif. Negroponte was due to meet Gilani on Wednesday.

Sharif, ousted by Musharraf in a 1999 coup, said he told the U.S. envoys Musharraf was an illegal president and should go.

McCormack, asked if Musharraf was indispensable, said that the former army general was "a good friend and ally".

He added: "Those are the kinds of questions that I think ultimately have to be answered by the Pakistani political system, but, you know, he remains somebody that we have worked with and will work with closely."

Negroponte's visit was designed to "reinforce that we look forward to working with" the new government.

The United States and other Western allies fear more instability in their nuclear-armed ally if there is a confrontation between the president and the new government.

Pakistan's main stock index set a new life high in intra-day trade on hopes for stability but Standard & Poor's maintained its negative outlook on Pakistan, saying the country faced tough decisions over its growing fiscal deficit.

(Additional reporting by Zeeshan Haider in Islamabad and Ashad Mohammed in Washington; Editing by Myra MacDonald)

(For a Reuters blog on Pakistan please see: blogs.reuters.com/pakistan/)