Situation worsened in Balochistan while internal political dispute destabilised Sindh provincial government. Baloch parties - with support of major Pashtun party - called province-wide strike 12 February, describing strike as referendum on Musharraf government. Two Islamic extremists blew themselves up after gunbattle with police in Quetta 18 February while attacks on infrastructure increased. In Sindh accusations of corruption between chief minister and his revenue minister continued after latter dismissed, destabilising ruling party and provincial government. Peace agreement signed between government and South Waziristan militant leader Baitullah Mehsud and supporters: militants pledged to end attacks on government installations and support for foreign groups in return for exemption from legal and punitive action for past activities - no pledge to end cross-border attacks against Coalition and Afghan government.

Balochistan violence escalated: 13 killed, over 40 injured, while natural gas supply to half the country disrupted. Angry Bugti tribesmen fired rockets at gas installations between 7 and 12 January after army personnel allegedly raped female doctor in Sui City. Paramilitary forces reacted by bulldozing houses belonging to tribesmen. Pakistan army decided to set up military base in Sui despite Baloch opposition. Senior Shia leader shot dead in northern city of Gilgit 8 January - ensuing sectarian violence killed 15 before curfew imposed.

Quetta blast 10 December killed 10; claimed by Baluch Liberation Army (BLA) as targeting army personnel as warning to government against construction of Gwadar port and new military bases. President Pervez Musharraf announced intention to remain as army chief 18 December, reneging on January 2004 deal with Islamist coalition (MMA) to retire by 31 December. Asif Ali Zardari, husband of opposition leader Benazir Bhutto, briefly re-arrested, ostensibly for failing to appear at court hearing, but in fact prevented Islamabad party rally. Violence continued in South Waziristan as local Pashtun politician shot dead 29 December.

Pakistani forces announced end of operations in South Waziristan, claiming to have killed at least 302 al- Qaeda-linked militants, arrested 600. Upper house of parliament passed bill 1 November allowing General Pervez Musharraf to remain as both president and army chief until 2007, to come into effect 31 December. Asif Zardari, husband of former PM Benazir Bhutto, released after 8 years in prison amid speculation he may revitalise opposition Pakistan People's Party and encourage Bhutto return from exile. Cinema blast in North West Frontier Province killed 2 and injured at least 29, while 2 explosions in Balochistan 24/25 November left 1 person dead.

Sectarian violence erupted: at least 75 killed in series of retaliatory attacks following 1 October bombing of Shia mosque in eastern city of Sialkot, killing 30; 40 killed in Multan city 7 October when 2 car bombs targeted meeting of banned radical Sunni group; Sunni cleric shot dead 9 October in Karachi; and Shia mosque in Lahore attacked by suicide bomber 10 October, leaving 4 dead. Military operations continued in South Waziristan tribal region. Attempt to free 2 Chinese engineers held hostage resulted in death of 1 hostage and all 5 kidnappers 15 October, prompting widespread search by security forces for militant leader Abdullah Mehsud, who orchestrated kidnapping. Investigation underway into 28 October Islamabad Marriott hotel explosion that injured 7. 342- member National Assembly (lower house of parliament) passed controversial bill 14 October by simple majority allowing General Pervez Musharraf to remain as both president and head of army until 2007.

Operations intensified in South Waziristan tribal region where security forces reportedly killed 70 al-Qaeda- linked militants in 9, 13 September attacks; alleged heavy civilian casualties, human rights abuses by army. Security forces killed Amjad Farooqi 26 September, said to have plotted President Pervez Musharraf assassination attempts and involved in killing of U.S. journalist Daniel Pearl. Nation divided over Musharraf’s position as chief of army staff - despite January 2004 deal with Islamist coalition (MMA) to retire by 31 December. Balochistan National Party continued call for protection of rights and withdrawal of army from province; blast in capital Quetta killed 1, 28 September. First meeting between Musharraf and Indian PM Manmohan Singh 24 September.

Finance Minister Shaukat Aziz appointed prime minister following resignation of caretaker PM Chaudhry Shujaat Hussain. Balochistan Chief Minister Jam Muhammad Yousuf’s convoy attacked 2 August in Khuzdar, killing 2; claimed by Balochistan Liberation Army in protest against ongoing army operation and construction of new cantonments in province. Further violence in Balochistan killed 7. Military operations continued in South Waziristan tribal region in hunt for al-Qaeda suspects and local supporters. Bombs on rail tracks in Peshawar 25 August and Sindh province 16 August narrowly missed disastrous derailing. President Pervez Musharraf and visiting Afghan President Hamid Karzai vowed 23 August to enhance cooperation in fight against terrorism.

Clashes continued in South Waziristan as military hunted al-Qaeda suspects and local supporters; at least 12 killed in separate incidents. Government continued to close South Waziristan Afghan refugee camps, alleged to be militant strongholds. As of 21 July, approximately 25,000 refugees had fled back to Afghanistan. PM nominee Shaukat Aziz survived assassination attempt 30 July; 7 killed. Attack by militants claimed 6 in western province of Baluchistan 31 July. Karachi explosion killed employee of hardline Islamic charity 24 July. Fighting between Solangi and Jagirani tribes 25 July in Khairpur left 8 dead. Bilateral talks and confidence building measures continued with India.

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.