Pakistan’s PM Zafarullah Khan Jamali resigned 26 June under pressure from President Musharraf and dissolved cabinet. In 2-step succession plan, premiership will pass to outgoing finance minister Shaukat Aziz, after interim period of 45-50 days under leadership of Chaudhry Shujaat Hussain, who heads ruling pro-military Pakistan Muslim League party. Jamali’s removal signifies Musharraf’s desire to improve his government’s domestic image, and to also retain Western support through Aziz’s appointment. Major South Waziristan military operation against al-Qaeda suspects and local supporters left 72 dead, including 17 security officers. Operation launched after foreign militants killed 15 security officers near town of Shakai, 350km west of Islamabad. Pakistan continued tests of nuclear-capable Ghauri ballistic missile 4 June.

Sectarian violence resurfaced in Karachi: separate blasts in Shiite mosques killed at least 30, 7 and 31 May; pro- Taliban Sunni cleric, Mufti Nizamuddin Shamzai, shot dead 30 May; ensuing riots killed 3; 5 killed in by-election clashes mainly between armed militants belonging to Muttahida Qaumi Movement (MQM) - key partner in ruling coalition - and opposition Islamic Muttahida Majlis-e-Amal (MMA); blast 26 May killed 1, injured 30, 2 days after police arrested 6 members of Harkat-ul Mujahideen al-Alami, group linked to al-Qaeda. Elsewhere, rockets fired at education minister Zobaida Jalal's residence in Quetta. Pakistan readmitted to Commonwealth despite lack of democratic reform - decision justified on grounds of democratic progress, President Musharraf’s peace steps with India. Talks on nuclear confidence-building measures postponed by new Indian government. Pakistan successfully test-fired ballistic missile 29 May capable of carrying nuclear warheads. President Musharraf and new Indian government quick to confirm commitment to peaceful resolution of outstanding issues. Musharraf vowed further action against al-Qaeda in South Waziristan province.

Tribal leaders accused of sheltering al-Qaeda members in Pakistan's South Waziristan province given amnesty. Next day Islamabad released 50 tribesmen who were among 163 militants arrested in March. Foreign militants given 1-week extension on 30 April deadline to 'register'. Controversial bill creating national security council (NSC) and affording military permanent role in Pakistan's governance passed 14 April. Opposition walked out in protest. President Musharraf insisted NSC will be consultative body only.

Despite precautions, violence erupted on Shiite holy day of Arusha 2 March. Suspected Sunni Muslim extremists attacked Shiites with automatic rifles and grenades in southwestern city of Quetta, killing 44 people, wounding more than 150. Attacks sparked mob violence and rioting. Army ended 12-day offensive in South Waziristan 28 March, after 150 deaths including 60 soldiers. President Musharraf had claimed ‘high-value target’ in area. Operations came as U.S. troops in Afghanistan stepped up hunt along that side of border and coincided with visit of U.S. Sec. State Colin Powell to Islamabad and declaration that Pakistan will be granted ‘major non-NATO ally’ status. Pakistan test fired intermediate- range nuclear-capable ballistic missile 9 March.

Basic roadmap for peace’ announced by Pakistan and Indian governments 18 February involves series of meetings over 6 months. Nuclear scientist Abdul Qadeer Khan publicly confessed involvement in nuclear proliferation 4 February; pardoned by President Musharraf 5 February. Recipients of nuclear technology claimed to be Iran, Libya and North Korea, but not terrorist groups. After calling for support from Islamic scholars Musharraf commenced military operations 24 February in tribal regions along Afghan border. Eleven suspected militants killed by troops in possible accident 28 February. Leader of banned party Laskhar e Tayyaba addressed audience of 3,000 jihadis in Islamabad. More than 300 mostly Sunni, hardline clerics banned from travelling during month of Muharram in government bid to prevent sectarian violence. Suicide bomber died 28 February in Rawalpindi mosque in attempt to target Shiites gathered for Muharram.

Parliament’s vote of confidence extended President Musharraf’s presidency until end of 2007. Vote followed deal with Islamist coalition (MMA) in exchange for promise to retire as chief of army staff by end of 2004. Musharraf addressed parliament for first time since coup 4 years ago, promised to clamp down on extremism; heckled by opposition lawmakers during speech. Two planes containing some opposition members diverted, preventing members’ attendance at address. Karachi car bomb outside Anglican cathedral 15 January wounded 11. Western intelligence sources said Pakistani scientists traded uranium enrichment technology with North Korea, Libya and Iran. Government admitted nuclear scientists may have been involved in proliferation deals. Officially 9 nuclear scientists detained, causing domestic upheaval as supporters condemned arrests of ‘national heroes’. Dr Qadeer Khan, ‘father of the bomb’, sacked as government scientific advisor 31 January.

Two suicide bombers attacked motorcade of President Pervez Musharraf 25 December in second unsuccessful assassination attempt in under 2 weeks. Pakistani intelligence blamed al Qaeda; security under scrutiny. U.S. security personnel targeted in 7 December rocket attack in Northwest Frontier Province. Commonwealth countries said Pakistan to remain suspended until it undertakes democratic and judicial reforms. Deal between Islamist coalition MMA and Musharraf on Legal Framework Order (LFO), incorporated into constitution as seventeenth amendment, formalises Musharraf’s special powers to sack PM and dissolve parliament.

Karachi and Quetta appear stabilised after bouts of sectarian violence in recent months. Hunt for militants in northwest continues; dozens of militants rounded up in raids across the country, including hundreds of illegal Afghan immigrants in Quetta, after outlawed organisations regrouped under new names. Groups banned in recent weeks were, for most part, already banned and Lashkar-e-Taiba, key Kashmiri militant group, only put under surveillance, raising questions about seriousness of crack-down. U.S. has lauded government’s efforts; Afghanistan says Pakistan should do more.

Karachi on high alert after September violence and warnings of terrorist attacks. Prominent Sunni leader Maulana Azam Tariq killed by unknown gunmen in Islamabad 6 October. In response angry mobs rioted, torching cinema and destroying property. Violence flared again in Quetta 10-11 October: rocket and grenade attacks killed two. Government carried out three tests between 3-14 Oct of new missile capable of carrying nuclear warhead. Hunt for militants in northwest continues with little success, leading observers to question seriousness. Government began fencing parts of Afghan border 22 October.

Several violent incidents in Karachi: seven killed by unknown assailants on 2 September and bombs exploded on 3 September in Sunni seminary and 19 September in office complex. Authorities detained a number of South East Asian students on suspicion of terror links. A tape attributed to Ayman al-Zawahri, Osama Bin Laden’s deputy, called for Pakistanis to overthrow President Musharraf. Kashmir violence undermining chances of normalising relations with India - Pakistani foreign minister cancelled scheduled October visit.