President Gen. Pervez Musharraf has agreed to step down as head of Pakistan's military, the country's exiled former prime minister said Wednesday.
Benazir Bhutto, who is negotiating a power-sharing deal with Musharraf, said the deal would allow the president to serve another 5-year term.
"We're very pleased that Gen. Musharraf has taken the decision to listen to the people of Pakistan by taking the decision to take off the uniform," Bhutto told The Associated Press from her office in London.
A close Musharraf ally confirmed that the two sides have reached an agreement regarding the president's military role. "Both sides have agreed on the issue of uniform," said Railways Minister Sheikh Rashid Ahmed. Musharraf's office has not issued a comment.
Bhutto said she expects Musharraf to drop his military role before the presidential election this fall. "I expected that he will step down (as army chief) before the presidential elections, but that is for the president to say."
In an interview with the Pakistani independent television channel Aaj, Bhutto said she and Musharraf have found common ground on most issues. "Eighty to 90 percent of the issues have been settled. Ten to 20 percent have yet to be decided," she said.
If an agreement is finalized, corruption charges would be dropped against Bhutto and dozens of other lawmakers as part of negotiations to restore civilian rule, Bhutto said.
Bhutto and other opposition leaders have argued that 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.
Musharraf has insisted that the constitution allows him to remain in uniform until the end of 2007 and has left open what will happen after that.
U.S. State Department spokesman Tom Casey would not comment directly on the reports that Musharraf, a key U.S. ally, 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 Pakistani Supreme Court's top judge. The move triggered violent 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 accepted 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. 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 Sharif 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.
The prospect of Sharif making a tumultuous return has added to the urgency of an accommodation between Musharraf and Bhutto, who share a relatively secular, 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 both former leaders 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 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 to lift bars to Bhutto again becoming prime minister.
From NPR reports and The Associated Press