ISLAMABAD (Reuters) - Pakistan’s government agreed on Monday to reinstate Iftikhar Chaudhry as chief justice in a surprise bid to defuse a crisis and end agitation by lawyers and activists that had threatened to turn into violent confrontation.
Chaudhry’s reinstatement will cool tension but friction is likely to persist between President Asif Ali Zardari, seen as weakened by the controversy over the judge, and his emboldened rival, former prime minister Nawaz Sharif.
“It’s the first time in the history of Pakistan that a movement launched by the middle class has proved successful,” said retired judge Tariq Mehmud, a leader of the lawyers.
Chaudhry became a cause celebre after being dismissed in late 2007 by then-President and army chief General Pervez Musharraf, apparently because Musharraf feared the judge would challenge his strategy for holding on to power.
Sharif had thrown his support behind the anti-government lawyers’ campaign, which was bringing added turmoil to nuclear-armed Pakistan, where the government has already been struggling to stem militancy and revive a flagging economy.
Prime Minister Yousaf Raza Gilani announced Chaudhry’s reinstatement in a televised address to the nation. Afterward, Sharif called off a “long march” protest making its way to the capital, Islamabad.
U.S. officials said Secretary of State Hillary Clinton telephoned both Zardari and Sharif on Saturday to warn that U.S. aid could be at risk unless they defused the crisis.
The officials said Clinton, who coordinated with British Foreign Secretary David Miliband, had exerted strong pressure for a deal.
The crisis gripping the Muslim nation had alarmed the United States and Britain, which fear a slide into chaos would help the Taliban and al Qaeda become stronger in Pakistan.
The United States welcomed Chaudhry’s reinstatement.
“This is a statesmanlike decision taken to defuse a serious confrontation, and the apparent removal of this long-standing national issue is a substantial step towards national reconciliation,” the U.S. embassy said.
The main stock index, which has been hurt by political worry, ended 5.4 percent higher. It had fallen 1.9 percent this year after a 58.3 percent slide last year.
Some analysts saw Chaudhry’s comeback further complicating the situation in Pakistan.
“Nobody knows what his allegiance is, in terms of Pakistan’s constitution,” said Brian Cloughley, a British defence analyst familiar with Pakistan.”
Zardari, elected by parliament six months ago, had feared Chaudhry could wage a vendetta against Musharraf, which could threaten Zardari’s own position.
Zardari yielded after Sharif and the lawyers held a day of protest in Lahore and set off for a sit-in outside parliament. Authorities had put shipping containers and trucks on roads to keep the protesters outside the capital.
Chaudhry will be reinstated on March 21 when the incumbent retires.
Some analysts saw the reinstatement as helping stability, although divisive issues remained between Zardari and Sharif.
“There will be greater faith in the political order and in that sense, it will contribute to stability,” former government minister and analyst Shafqat Mahmood said. “All the players are a bit chastened with what has happened over the past two years and I don’t foresee any precipitate adventurism.”
Jubilant lawyers gathered outside Chaudhry’s residence. He stepped outside to greet and thank supporters.
Western diplomats had tried to make Zardari pull out of a collision that could have destabilized the year-old coalition and forced the military to intervene. Army chief General Ashfaq Kayani was involved in talks that led to the restoration.
Musharraf overthrew Sharif, a two-time prime minister with conservative, religious-nationalist support, in 1999. Since returning from exile in 2007 he has become Pakistan’s most popular politician, thanks partly to his stand on the judge.
Sharif congratulated Zardari and Gilani.
“We have got the fruit of our two-year struggle,” Sharif told supporters. Authorities later released hundreds of activists who had been rounded up in a crackdown aimed at stifling the protest.
Sharif latched onto Chaudhry’s cause two years ago, but the latest crisis began when Zardari, widower of assassinated former prime minister Benazir Bhutto, ejected Sharif’s party from power in Punjab last month, after the Supreme Court barred Sharif and his brother from holding elected office.
In a first step towards reconciliation, the government said on Saturday it would seek a review of that court ruling.
Additional reporting by Zeeshan Haider, Robert Birsel and Sue Pleming; Writing by Simon Cameron-Moore and JoAnne Allen; Editing by Paul Tait and Patricia Zengerle