Pakistan's Bhutto says talks with Musharraf stalled

"Most probably," she said when asked if that would be the decision. "I think that the resignation of the Pakistan Peoples Party MPs will be a severe blow to the legitimacy of the presidential elections," she told reporters in London.

Parliament and provincial assemblies are expected on Saturday to re-elect Musharraf as president.

More than 80 opposition members of parliament have resigned in protest against his standing for re-election while army chief.

Although the PPP is the largest opposition faction it is not in a position to stop his re-election. But it could damage the credibility of the process if it boycotted the vote.

"We don't want to resign. We don't want to take this step, but certainly we are being pushed into taking this step by the inability of the present regime to move towards the democratization of Pakistan," Bhutto said.

A meeting of PPP members in London ended later on Wednesday without comment. But Bhutto said it would resume on Thursday and would be followed by a news conference at 1100 GMT (7 a.m. EDT).

Bhutto, who plans to return to Pakistan on October 18 after eight years of exile, accused the military leader of failing to deliver on promises of a return to democracy.

"The Peoples Party is not in the business of saving military dictatorships. We want to save democracy," Bhutto, 54, said.

NUCLEAR NATION

Musharraf has vowed to step down as head of the military before being sworn in for a new presidential term, and on Tuesday named a former intelligence chief to take the post.

Bhutto said that, despite pledges from Musharraf in the power-sharing talks to introduce democratic reforms, "on the ground, nothing has changed from nine months ago."

Among the PPP's demands are a removal of the ban on anyone serving a third term as prime minister, which would disqualify Bhutto. A parliamentary election is due by mid-January.

Bhutto said there had been no movement on this and other issues, despite promises from Musharraf.

"He's not prepared to give a level playing-field," she said before entering the small, terraced London house where dozens of PPP members, most of them having flown in from Pakistan, had earlier gathered for the talks.

Musharraf's government said corruption charges against Bhutto relating to her two terms in power would be dropped. But Bhutto said her party had checked with the presidency and found this was not the case.

"This is just a typical disinformation campaign by the present regime," she said.

Musharraf, leader of the only nuclear-armed Islamic nation, is seen by the United States as a key partner in the war on terrorism. U.S. intelligence officials have voiced concern that al Qaeda is rebuilding its strength in remote tribal areas along the Pakistan-Afghanistan border.

Bhutto said extremism was growing.

"The longer the military regime continues in this fashion, the more anarchic the situation becomes," she said. "I am afraid we are heading for a situation which could lead to street agitation."