Musharraf swears in Pakistan cabinet full of foes

ISLAMABAD (Reuters) - Pakistani President Pervez Musharraf swore in 24 members of Prime Minister Yousaf Raza Gilani's cabinet on Monday, six weeks after opposition parties won a general election.

There is strong speculation the new government will force U.S. ally Musharraf, who came to power as a general in a 1999 coup, to quit within weeks or months.

There has been some apprehension within Pakistani media and political circles that the United States could try to prop up Musharraf so that counterterrorism operations in the region are not disturbed by the changing of the guard in Islamabad.

"I expect from the international community that it will support democracy in Pakistan and will help us in strengthening democratic institutions," the country's new Foreign Minister, Shah Mehmood Qureshi, told reporters after being sworn in.

Eleven of the new ministers, including Qureshi, belonged to assassinated former prime minister Benazir Bhutto's party, which won the most seats in the February 18 vote. A further nine were from the party of another former prime minister, Nawaz Sharif.

Of the other four, one was an independent member of parliament and three were from two junior coalition partners.

Members of Sharif's party wore black armbands as they were sworn in, to protest against Musharraf, whom they consider an unconstitutional president.

"We took the oath because there is a larger objective and that is the restoration of the judiciary," Senior Minister Nisar Ali Khan, who was given the communications and farm portfolios, said.

Musharraf purged the judiciary in November when he resorted to emergency rule for six weeks to stop the Supreme Court ruling his re-election by the outgoing parliament was unconstitutional.

Bhutto's widower, Asif Ali Zardari, who succeeded her as leader of the Pakistan People's Party, and Sharif have promised to reinstate deposed Supreme Court Chief Justice Iftikhar Chaudhry and his colleagues through a parliamentary resolution within 30 days of forming a government.

That is likely to trigger a show-down with Musharraf, who will fear the judges will resurrect constitutional challenges to his re-election last October.

Pakistan's stock market set a life high last Thursday and appears insensitive to the doubts lingering over Musharraf's fate. The Karachi 100-share index lost almost 1 percent on Monday, but dealers said it was a temporary setback.

"Market fundamentals are still strong, and investors are cautiously optimistic about the new government," said Ashraf Zakaria, a dealer at brokers Ali Hussain Rajabali and Co.

The rupee eased slightly to close at 62.70/76 on Monday, still stronger than the six-year low of 63.11/14 struck on February 16, just before the election.

INVESTORS OPTIMISTIC

As expected, Ishaq Dar, a member of Sharif's party, was appointed finance minister, but he is taking over at a difficult time with inflation hitting Pakistan's poor, fiscal and current account deficits widening alarmingly, fears of recurrent grain shortages and increasingly frequent power cuts.

"Our economy is currently facing a lot of challenges," said Zubair Tufail, vice president, Federation of Pakistan Chambers of Commerce and Industry.

"We hope that he (Dar) and the government will give a solid plan to ease the pressures on the economy."

Dar, 60, was appointed commerce minister in a pro-business Sharif government in 1997.

He became finance minister a year later, when he had to negotiate an IMF rescue package to tackle an economic crisis triggered by sanctions over Pakistan's nuclear tests.

Dar was detained for nearly two years after Musharraf overthrew Sharif in a 1999 coup.

The four-party coalition is made up of Bhutto's Pakistan People's Party, Sharif's Pakistan Muslim League (Nawaz), the ethnic Pashtun-based Awami National Party and the Jamiat Ulema-e-Islam religious party.

(Additional reporting by Faisal Aziz; Editing by Simon Cameron-Moore)

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