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SCENARIOS-What next in Pakistan?

March 16 (Reuters) - Pakistan's government agreed on Monday to reinstate Iftikhar Chaudhry as chief justice in a surprise move to defuse a crisis and end agitation by lawyers and activists. [ID:nLF205623]

The decision is seen as a climb-down by President Asif Ali Zardari, who had long resisted reinstating the judge, fearing Chaudhry could undermine his position, and a victory for his main rival, opposition leader and former Prime Minister Nawaz Sharif.

Tension will linger between Zardari and Sharif whose parties, the countries' two biggest, have long been rivals. Analysts say there is no trust between the men and both are hard-nosed political battlers.

Following are some scenarios for the nuclear-armed country which is also struggling to stem Islamist militancy and revive a flagging economy:

TENSION OVER THE SHARIFS' ELIGIBILITY

A main issue that could inflame tension is the question of the eligibility of Sharif and his brother, Shahbaz, to hold elected office.

A Supreme Court ruling last month barred the Sharifs from elected office and triggered this crisis. The Sharifs said Zardari was behind the ruling that was based on old convictions they say were politically motivated.

In a first step toward reconciliation, the government said on Saturday it would seek a review of that court ruling. Tension will build if the Sharifs are not made eligible for election quickly.

CONFLICT OVER PUNJAB

Another, related source of tension between Zardari and Sharif is control of Punjab, Pakistan's most populous and politically important province, returning more than half the members of the National Assembly.

Last month's Supreme Court ruling nullified a by-election victory by Shahbaz Sharif, and disqualified him from holding the office of chief minister of Punjab. The Sharif party's government was thrown out of power in the province and Zardari imposed central rule there for two months.

The Sharifs' party is the biggest in the provincial assembly but it does not have a majority. Zardari's PPP is second biggest while a party set up to support former President Pervez Musharraf holds the balance of power.

A bid by Zardari for control of Punjab would spark a political battle with the Sharifs. Control of the province was a main source of conflict between the two parties in the turbulent 1990s.

LEGAL PROBLEMS

Chaudhry earned a reputation as an independent-minded maverick that eventually led former President Pervez Musharraf to sack him. Similarly, Zardari has feared that if Chaudhry was restored he would rule Musharraf an illegal president and overturn an amnesty the general had given him and his wife in 2007 to allow them to return to Pakistan without fear of prosecution on old corruption cases they said were politically motivated. Analysts expect Chaudhry to be cautious and make no hasty moves to rake up old controversy, but they also say he might not be able to prevent the revival of legal challenges to Zardari's amnesty. That could spark tension between the president and the judiciary. If the amnesty was ruled illegal, that could result in cases against the president being resurrected, a prominent lawyer said.

MORE STABLE POLITICS

Optimistic analysts say Chaudhry's return has restored faith in Pakistan's democracy and political order and that will contribute to stability. They point to the constructive role of a growing middle class, civil society groups and the media. They also point to the role of army chief General Ashfaq Kayani, who was involved in negotiations that led to the judge's restoration. Whereas in the past, military leaders might have been looking for an excuse to step in and take power, Kayani's help in defusing tension might show a new kind of power structure was evolving. Zardari, though weakened, is seen as a survivor who can live with the setback to his credibility. Sharif, at least in the short term, may not want to be seen grasping for power after taking what was seen as a principled and widely popular stand on Chaudhry's restoration, the optimists say. (Additional reporting by Augustine Anthony; Writing by Robert Birsel; Editing by Alex Richardson)

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