Dec. 30 (Bloomberg) -- The Pakistan Peoples Party named Benazir Bhutto's son, Bilawal, as its new leader and said it would participate in parliamentary elections next month.

``I stand committed to the principle of federation,'' Bilawal, a 19-year-old student at Oxford University, told reporters today in a televised news conference from Bhutto's hometown of Naudero in southern Pakistan. ``My mother always said, `democracy is the best revenge.'''

Following the PPP's announcement, former Prime Minister Nawaz Sharif reversed his earlier decision to boycott the election, which is scheduled for Jan. 8 but may be delayed.

Bhutto's assassination in a gunfire-and-suicide bomb attack on Dec. 27 threatened to derail the election and the hope of stabilizing Pakistan's political situation, especially after rioters rampaged through Pakistani cities and towns turning their fury on the government of President Pervez Musharraf.

The decision by both parties to contest the election following the mass outpouring of grief and sympathy suggests elections may be well supported by the public -- and also may spell trouble for the parties allied with Musharraf, who controlled the previous legislature.

The ballot will be a ``war against the people in the government of Pakistan now,'' Bhutto's widower, Asif Ali Zardari, said at the press conference.

Amin Fahim

Bhutto, who led the party since her father, former Prime Minister Zulfikar Ali Bhutto, was executed in 1979, named her husband Zardari as her successor in a will, party vice-chairman Makhdoom Amin Fahim told reporters. Zardari, who will be co- chairman of the party, nominated his son Bilawal to lead the party, he said. Zardari is 54, according to the Associated Press.

Since neither Zardari nor Bilawal have registered as candidates for the election, neither can run nor be named prime minister if the PPP wins. Fahim will be the party's candidate for prime minister, Zardari said.

Bilawal read out Bhutto's will, written on Oct. 16, to leaders of the party at a meeting today. The text wasn't released. Bilawal and his sisters Bakhtawar and Aseefa have made ``Bhutto'' their middle name to honor their mother's memory, Zardari said.

Party workers cheered Bilawal's nomination and chanted slogans of ``Benazir is still alive,'' and ``Take a step forward Bilawal, we are all behind you.''

Sharif's Reversal

Bilawal said he will return to Pakistan after he completes his education to run the party. Until then, his father will lead the party.

As many as 38 people were killed in two days of rioting across the country as Bhutto supporters took to the streets, burning offices, shops and cars, according to the interior ministry.

The nation's election arrangements have been ``adversely affected'' by riots that erupted after the assassination, according to the Election Commission, the agency in charge of supervising the national ballot.

``The law and order situation in the country has deteriorated,'' according to a statement released yesterday by the agency in capital Islamabad. The agency, whose offices in the Sindh province were set on fire, will meet tomorrow to review the security situation.

U.S. Pressure

U.S. President George W. Bush's administration, which has been supplying Pakistan with financial and military aid to fight extremists, has been pressing Musharraf to proceed with steps toward more democracy in the country. The U.S. also has been reaching out to Sharif and other opposition leaders.

State Department spokesman Tom Casey said the U.S. is encouraging all political parties to participate in the elections.

Bhutto's party rejected government claims that a Taliban commander linked to al-Qaeda was behind the assassination and has demanded an independent investigation. Zardari said his sister, a doctor, bathed Bhutto's body before burial and saw a bullet wound. That is contrary to the government's report that Bhutto wasn't hit by any bullets or shrapnel and was killed when she hit her head on a lever for the sunroof of her vehicle following a suicide blast. No autopsy was performed.

Al-Qaeda Link

Interior Ministry spokesman Javed Iqbal Cheema told reporters on Dec. 28 that Baitullah Mehsud, a Pakistani Taliban commander linked to al-Qaeda, is suspected of plotting the Dec. 27 attack. Mehsud has denied the claim, Agence France-Presse reported, citing a spokesman.

Cheema said Mehsud was also behind the Oct. 19 assassination attempt on Bhutto when she held a public rally in Karachi after arriving in Pakistan from exile. The attempt, Pakistan's worst terrorist attack, left 136 people dead.

The 54-year-old opposition leader was standing in the open sunroof of her blast-proof, bullet-proof car as she came out of the venue after addressing a public rally in Rawalpindi, near Islamabad. She ducked into the car, possibly to escape gunshots that preceded the bomb blast or because she was thrown off balance by the explosion.

Bhutto was buried on Dec. 28 in the family mausoleum in Garhi Khuda Baksh, in the southern province of Sindh, about 480 kilometers (298 miles) north of the commercial capital Karachi as troops were sent to quell riots across Pakistan.

Musharraf allowed Bhutto to return to Pakistan to participate in the elections. She had lived in Dubai and London since 1999 after being charged in Pakistan with taking kickbacks on state contracts. She wasn't convicted on the charges.

To contact the reporters on this story: Khaleeq Ahmed in Islamabad at paknews@bloomberg.net.

Last Updated: December 30, 2007 17:22 EST