Aug. 19 (Bloomberg) -- Pervez Musharraf's resignation as president removed a thorn in the side of Pakistan's six-month- old civilian government, leaving the reinstatement of judges he fired as the biggest hurdle to the ruling coalition.

Asif Ali Zardari, co-chairman of the Pakistan Peoples Party, and Nawaz Sharif, the former prime minister, are meeting in Islamabad and a decision on the judges will be made today, Law Minister Farooq Naek told reporters in the capital.

Musharraf quit yesterday to avoid facing impeachment charges that he illegally toppled Sharif in a 1999 coup and abrogated the constitution when he fired 60 judges in November. Zardari's stalling in reinstating the judges prompted Sharif to withdraw his ministers from the coalition cabinet in May.

``The judges issue can cause a rift in the coalition,'' said Ayesha Siddiqa, an Islamabad-based political analyst and author of Military Inc. ``That's why it is now critical the judges are reinstated so that the system doesn't collapse and there is some semblance of stability.''

Musharraf's departure leaves the coalition to tackle a slowing economy and rising militancy on the border with Afghanistan. U.S. Secretary of State Condoleezza Rice praised Musharraf's cooperation in the war against al-Qaeda yesterday and called on Pakistan's leaders to ``redouble'' their focus on fighting terrorism.

Coalition partners also discussed candidates for the post of president, Aaj Television reported, without giving details. The president was replaced by Mohammedmian Soomro, chairman of the Senate and a Musharraf loyalist, pending a parliamentary vote to choose a new head of state within 30 days.

Bitter Rivals

Sharif and Zardari's wife Benazir Bhutto, who was killed in an election rally in December, were bitter rivals before the two parties united against Musharraf, alternating power twice each between 1988 and 1999. The former general fired the judges, including Supreme Court Chief Justice Iftikhar Muhammed Chaudhry, before a judicial panel was about to rule on the legality of his re-election as president.

While the two parties pledged to reinstate the judges in a March 9 agreement that formed the basis for the coalition, the leaders differ on how to achieve this.

Sharif wants the judges restored through a parliamentary resolution to the position on Nov. 2, before Musharraf imposed emergency rule. Zardari prefers reinstatement through a constitutional package that also retains the current judges appointed by Musharraf on Nov. 3.

Corruption Charges

This bench of the Supreme Court in November backed legislation issued by Musharraf that withdrew decade-old corruption charges against Bhutto and Zardari, as part of an agreement that saw them return from exile.

Zardari has repeatedly denied the corruption charges and says the law isn't the reason why he opposes reversing Musharraf's November reshuffle of the bench.

``Now will be the time for the coalition to test their bond,'' said Zafar Nawaz Jaspal, assistant professor of international relations at Quaid-e-Azam University in Islamabad. ``The bond may weaken after the completion of their first common agenda.''

Musharraf's departure marks a victory for Zardari and Sharif, who pledged on Aug. 7 to remove the president. The government, which came to power in March after defeating pro- Musharraf parties in Feb. 18 elections, vowed to reinstate the senior judiciary but has been unable to agree on how to do so.

Reinstate Judges

``Our party's effort is to reinstate the judges as soon as possible,'' said Siddiq-ul-Farooq, Pakistan Muslim League- Nawaz's spokesman.

The judges should now be immediately reinstated, Aitzaz Ahsan, president of the Supreme Court Bar Association told reporters yesterday. Lawyers had led nationwide protests for more than a year calling for Musharraf to resign.

``If a tussle for the next president ensues between the coalition partners or if the judges restoration issue is still not resolved quickly, then pressure on the coalition could build, taking away government focus from the economy,'' AKD Securities Ltd. in Karachi said in a report yesterday.

Musharraf may move to Saudi Arabia, the U.S., U.K. or Turkey, Dawn newspaper reported, citing unidentified diplomats. He didn't say in his speech whether he would live in Pakistan.

``Musharraf's brazen disrespect for human rights and the rule of law for nearly a decade finally caught up with him,'' Ali Dayan Hasan, senior South Asia researcher at New York-based Human Rights Watch, said in a statement today. ``By undoing Musharraf's unlawful acts and holding him to account for his crimes, the Pakistani government would advance human rights and national security in the country.''

Slowing Growth

Since January, Musharraf has faced criticism for slowing economic growth, a widening budget deficit and an inability to rein in inflation running at a 30-year high. That's a reversal from his first eight years in office when he was credited for reviving the economy after the government had less than $1 billion in foreign exchange reserves.

Musharraf ordered offensives against al-Qaeda and Taliban guerrillas that failed to wipe them out, killing civilians and destroying villages in the process. With the president gone, the coalition can pursue militants free from any association with the U.S. and an unpopular leader, increasing public willingness to help government forces gather intelligence.

Islamic militant violence killed more than 2,000 Pakistanis last year, suicide bombings increased by 800 percent and many attacks targeted Pakistan's police, military and intelligence facilities.

To contact the reporters on this story: Khaleeq Ahmed in Islamabad at paknews@bloomberg.net; Farhan Sharif in Karachi, Pakistan at paknews@bloomberg.net.

Last Updated: August 19, 2008 05:52 EDT