Aug. 22 (Bloomberg) -- Pakistan's ruling coalition failed to repair deepening divisions as the biggest party nominated its leader, Asif Ali Zardari, to be president on the same day he skipped a meeting to resolve how to reinstate judges Pervez Musharraf fired when he was head of state.

The Pakistan People's Party picked Zardari, widower of former Prime Minister Benazir Bhutto, over the objections of Nawaz Sharif, the former premier who heads the coalition's second biggest member.

Clashes between Zardari's PPP and Sharif's Muslim League faction stalemated the government for six months, distracting it from tackling a slowing economy, faster inflation and increased terrorist violence, including twin suicide bombings at a factory near the capital city of Islamabad that killed 70 people yesterday. The Aug. 18 forced resignation of Musharraf, a key demand of Sharif's, has done little to bring the parties together.

``Both the PPP and the Muslim League have realized that keeping the alliance is no longer possible, it is just that both sides are trying to prove their points before they part ways,'' said Zafar Nawaz Jaspal, assistant professor of International relations at Quaid-i-Azam University in Islamabad.

Sharif, ousted as prime minister in Musharraf's 1999 coup, has threatened to quit the coalition if it doesn't replace Musharraf-appointed judges with the ones he ousted. Zardari wants to keep the Musharraf judges, who backed legislation withdrawing corruption charges against him and his wife, while also reinstating the fired ones. Zardari denies the corruption accusations.

Deadline Set

Sharif, who'd set a deadline for today to reinstate the 60 judges, predicted they will now be rehired by Aug. 27 after a parliamentary debate. That deadline may be missed, Maulana Fazl- ur-Rehman, the leader of the Jamiat Ulema-e-Islam party, said at a briefing with Sharif.

Zardari will decide on accepting his party's nomination in 24 hours, Information Minister Sherry Rehman told reporters in Islamabad. The PPP's executive committee authorized Zardari to choose another candidate if he declines the nomination.

The bickering within the coalition has repercussions for the Bush administration, which considered Musharraf an ally in fighting al-Qaeda and the Taliban, a Pakistan arm of which claimed responsibility for twin suicide bombings yesterday. U.S. President George W. Bush called Prime Minister Yousuf Raza Gilani to express sympathy over the attacks.

Musharraf resigned to avoid facing impeachment for heading the coup and violating the constitution by firing the judges in November. Stalling by Zardari in reinstating the judges prompted Sharif to withdraw his ministers from the cabinet in May, though the former premier remained in the alliance.

Resolution Planned

Sharif said a coalition committee will draft a resolution over the weekend, and that the judges will be reinstated after two days of discussion by lawmakers.

Zardari had agreed in a telephone call to present the resolution next week, Asfandyar Wali, the head of the Awami National Party, said at the briefing. Rehman and Wali's parties are smaller partners in the four-party ruling alliance.

Restoring former Chief Justice Iftikhar Muhammad Chaudhry has been the biggest obstacle to an agreement because he questioned the legality of a 2007 decree that protected Zardari.

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. In an Aug. 7 accord, the ruling alliance agreed to reinstate the judges soon after the impeachment or resignation of Musharraf.

`A Joke'

This month's accord with Zardari ``clearly stated that judges will be reinstated in 24 hours after Musharraf's resignation,'' Sharif said. ``Reinstating judges without deposed Chief Justice Chaudhry will be a joke.''

Chaudhry became an icon of resistance to Musharraf and military rule after he defied them with his legal rulings. When the president first suspended him in March 2007, hundreds of thousands of Pakistanis took to the streets in protest.

After defeating pro-Musharraf parties in a Feb. 18 election, the new civilian government ordered Chaudhry freed from four months of house arrest. As Zardari seeks to replace Musharraf as Pakistan's head of state, he may see Chaudhry's defiant independence as a potential threat, said Osama Siddique, chairman of law studies at the Lahore University of Management Sciences.

Criminal Charges

Under the Sharif and Musharraf governments, Zardari was imprisoned on criminal charges he says were invented by his political foes. Zardari ``has pointed out that the judiciary did not give him any sort of lifeline when he was in prison,'' Siddique said.

Zardari and Bhutto, who was assassinated last December, faced more charges, which they also dismissed as ``politically motivated,'' until they struck a deal in 2007 with a beleaguered Musharraf. This included the president's issuance on Oct. 5 of a National Reconciliation Ordinance, which granted immunity to the couple and other politicians facing charges from the 1990s.

A week later, Chaudhry led the Supreme Court in suspending the ordinance pending the court's decision on its legality. Chaudhry had earlier forced the military to free prisoners it was holding in secret, and halted a controversial government sale of a state-owned steel mill.

In November, Musharraf suspended the constitution. Accusing the judiciary of ``constant interference in executive functions,'' he replaced Chaudhry and other top judges with handpicked appointees who swore an oath to accept the legality of his actions.

Chaudhry declined to be interviewed. A close ally, lawyer Athar Minallah, said Zardari need not fear a reversal of the National Reconciliation Ordinance. ``That transaction is done now,'' he said.

To contact the reporter on this story: James Rupert in Islamabad at jrupert3@bloomberg.net; Khalid Qayum in Islamabad at kqayum@bloomberg.net.

Last Updated: August 22, 2008 14:20 EDT