FACTBOX-Pakistan political prospects as coalition cracks

ISLAMABAD (Reuters) - The second biggest party in Pakistan's fractious ruling coalition has threatened to quit the alliance unless a decision is taken quickly to restore judges dismissed by former president Pervez Musharraf.

Former prime minister Nawaz Sharif, who leads the party, wants a fast decision in line with his demand all sacked judges be restored. He and his supporters are also unhappy the top party in the coalition seems to be dragging its feet on a commitment to strip the presidency of some of its powers.

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

Following are some implications of the latest developments.

GENERAL ELECTION SCENARIOS

* The departure of Sharif's Pakistan Muslim League (Nawaz) from the coalition would not force an election, analysts say, as the PPP should be able to gather enough support to rule from independents and from parliamentarians who had backed Musharraf.

* However, Sharif looks set to gain in popularity by standing firm on principle on the judges, whose sacking was regarded as the major decision that turned public opinion against Musharraf. That could help make Sharif and his Pakistan Muslim League (N) party the favourites when an election is ultimately held.

BATTLE OVER JUDGES

* The PPP is reluctant to restore the judges, partly because of concern the deposed 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 them the judges 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.

BATTLE OVER THE PRESIDENCY

* Pakistan will hold a presidential election on September 6. Under the constitution members of the country's four provincial assemblies and the national parliament elect the new president.

* Sharif's PML (N) has shown no inclination to field its own candidate, who would have little chance in any case, but would like to make the presidency a ceremonial post after what it views as the Musharraf dictatorship. The PPP meanwhile is coy about whether and when it would agree to strip the presidency of such powers as being able to dissolve parliament.

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

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 last week in hope Musharraf's resignation heralded an end to political uncertainty. But in the last three days of the weak they fell sharply, with traders citing the coalition's inability to get its act together as the main factor.