updated 8/29/2007 12:03:14 PM ET 2007-08-29T16:03:14

President Gen. Pervez Musharraf and former rival Benazir Bhutto have reached an agreement regarding Musharraf’s military role, a key step toward a power-sharing deal, a senior official said Wednesday.

“Both sides have agreed on the issue of uniform,” Railways Minister Sheikh Rashid Ahmed, a close Musharraf ally, told reporters, referring to the president’s military role.

Bhutto was quoted in a British newspaper making a similar comment, although neither she nor Ahmed said explicitly that Musharraf had agreed to her demand that he step down as army chief.

Envoys for the U.S.-allied president are trying to work out a pact with Bhutto, an exiled former prime minister, that would rescue his bid for another five-year presidential term.

Bhutto and other opposition leaders argue the constitution obliges Musharraf, who seized power in a coup in 1999, to give up his post as military chief before he asks lawmakers for a fresh mandate in September or October.

However, Musharraf has insisted the constitution allows him to remain in uniform until the end of 2007 and has left open what will happen after that.

Bhutto was quoted in Wednesday’s Daily Telegraph as saying that the “uniform issue is resolved.”

“The uniform issue is key and there has been a lot of movement on it in the recent round of talks,” Bhutto told the London-based daily.

Both Bhutto and Ahmed said the two sides were close to an agreement but that there were still outstanding issues.

Eroding authority
In Washington, State Department spokesman Tom Casey would not comment directly on the reports that Musharraf and Bhutto had come to a deal.

“Our principal concern in Pakistan is that there be free, fair and transparent elections held in which all legitimate political forces in the country have an opportunity to participate,” Casey said. “We certainly want to see the Pakistanis have an electoral process that results in a government that they feel represents their interests.”

Musharraf has seen his authority erode since March, when he tried unsuccessfully to remove the Supreme Court’s top judge. The move triggered protests that grew into a broad campaign against his continued rule.

The court reinstated the judge in July, raising expectations that it will uphold legal challenges to Musharraf’s re-election. The court on Wednesday admitted a petition filed by Qazi Hussain Ahmad, head of the Islamist Jamaat-e-Islami party, against Musharraf’s dual role as president and military chief.

Last week, the court ruled that Nawaz Sharif, the prime minister toppled in 1999 who is also living in exile, can return to Pakistan ahead of parliamentary elections due by January.

Sharif quickly denounced Musharraf as a dictator who must be removed from the political scene.

Musharraf urges Sharif exile
In an interview published in Wednesday’s Financial Times, Sharif said he would return before the start of the holy month of Ramadan in mid-September.

Government threats to arrest him on charges dating back to the coup would strengthen his support, he said.

“Today the people, civil society, the judiciary, the political forces and the media are on one side, and the dictator and his shrinking support are on the other side,” Sharif was quoted as saying.

He said he felt “let down by the United States,” which he has accused of confusing Musharraf’s interests with those of Pakistan as a nation.

Musharraf urged Sharif on Wednesday to abide by an agreement he signed in 2000 to spend a decade in exile in Saudi Arabia in exchange for his release from a jail term.

Sharif should “show character and not violate the agreement,” Musharraf said, according to the state-run Associated Press of Pakistan news agency.

Musharraf: I forsee threats
The prospect of Sharif making a tumultuous return has added to the urgency of an accommodation between Musharraf and Bhutto, who share a relatively liberal, pro-Western outlook and stress the need to prevent the political crisis from destabilizing the nuclear-armed nation.

“I can foresee the external and internal threats and the vested interests that want to create an atmosphere of uncertainty, and urge the people to be wary of it,” Musharraf said.

Musharraf had vowed to prevent either former leader from re-entering Pakistan.

He blames them for the corruption and economic problems that nearly bankrupted the country in the 1990s, when Bhutto and Sharif each had two short-lived turns as prime minister.

But with the United States pressing for more democracy as well as a redoubled effort against al-Qaida and Taliban militants near the Afghan border, Musharraf recently began calling for political reconciliation and an alliance of moderates to defeat extremists.

Ahmed, the railways minister, said an understanding between Bhutto’s Pakistan People’s Party and Musharraf was expected to be finalized this week.

An accord is expected to include constitutional amendments to allow Musharraf to continue as president and lift bars to Bhutto again becoming prime minister.

Bhutto, wary that Musharraf could revive the corruption cases that she fled into exile in 1999, also wants immunity from prosecution for herself and her old foe, Sharif.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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