Pakistan's President Pervez Musharraf, the dictator who reinvented himself as a US ally against terrorism, resigned to avoid facing impeachment charges for illegally seizing power and mishandling the economy.

    "This is not time for individual bravado. I lose or win in impeachment proceedings, the Pakistani nation will be the loser," Musharraf, 65, said in a one-hour address to the nation. "After taking advice from my supporters and friends, I have decided to resign in the best interests of the nation."

    Musharraf's departure after a six-month standoff frees up the coalition government to tackle an economy growing at the slowest pace since 2003, leaving half the population short of food. It will also test the durability of a fragile coalition that has been criticized by the U.S. for not doing enough to fight militants on the border with Afghanistan.

    "This is the opportune moment for the government now," said Alok Bansal, an analyst at the Institute of Defence Studies and Analyses in New Delhi. "Unless they show tenacity now, the coalition may splinter."

    The president said he will tender his resignation to the speaker of the house today. He'll be replaced by Mohammedmian Soomro, chairman of the Senate and a Musharraf loyalist, pending a parliamentary vote to choose a new president within 30 days. Pakistan's benchmark stock index rose the most in seven weeks and the rupee gained after the announcement.

    Army Commander

    Musharraf was the army commander in 1999 when he overthrew Prime Minister Nawaz Sharif, who has led calls to remove the president since returning from exile late last year. Pakistanis were frustrated with a decade of corrupt and ineffective governments under Sharif and Benazir Bhutto, and opinion polls showed 70 percent of people supported the coup.

    A former special services commando, Musharraf put Sharif on trial for alleged corruption and in a deal brokered by the Saudi royal family, the two-time former prime minister was sent into exile in Saudi Arabia. Musharraf's government also pursued corruption charges against Bhutto, leading her to remain in Dubai and London until she returned last year, only to be assassinated 10 weeks later. Musharraf didn't say today whether he plans to remain in Pakistan or go into exile.

    Under Pressure

    The former general has been under pressure to quit since he fired 60 judges, including Supreme Court Chief Justice Iftikhar Muhammed Chaudhry last year, leading to nationwide street protests. The government led by the Pakistan Peoples Party, which came to power in March after defeating pro-Musharraf parties in the Feb. 18 elections, vowed to reinstate the senior judiciary but has been unable to agree on how to do so.

    "When he saw impeachment coming, he decided to resign because he couldn't sack the government," Sharif's spokesman Siddiq-ul-Farooq said in a telephone interview from Islamabad. "We hope the judiciary will be reinstated very soon now."

    Pakistan's coalition partners including Sharif and Asif Ali Zardari, co-chairman of the Peoples Party, will meet today to discuss the reinstatement of judges, spokesman Farhatullah Babar said by telephone.

    "After a long struggle, democratic forces have won and uncertainty has ended," Information Minister Sherry Rehman, a member of the Peoples Party, said. "Its difficult to give a deadline for the reinstatement of judges."

    Handed Control

    Musharraf assumed the presidency in 2001 and was re-elected by parliament in October. Opposition parties claimed the law barred Musharraf from standing while he still headed the military. Musharraf handed over control of the army to Ashfaq Parvez Kayani in November.

    After the attacks of Sept. 11, 2001, Musharraf abandoned the Pakistani army's long sponsorship of the Taliban regime in neighboring Afghanistan and allied with the U.S. His government was the largest recipient of U.S. aid in Asia after Afghanistan, amounting to more than $10 billion in six years.

    Musharraf was credited for steering Pakistan's economy out of trouble in 1999 when the government had less than $1 billion in foreign exchange reserves. He brought in former Citigroup Inc. executive Shaukat Aziz to run the finance ministry and the nation's economy expanded at an average annual 7.5 percent in the four years ending June 30, 2007.

    The benchmark Karachi Stock Exchange gained 10-fold since 2001 and investment from overseas corporations including China Mobile, Standard Chartered Plc and Emirates Telecommunications Co, reached a record $8.4 billion last year.

    The main stock index, which has fallen 24 percent this year, rose 4.5 percent to 10,719.62. The rupee rose 1.1 percent to 75.60 against the U.S. dollar, paring its 22 percent decline this year.

    Faced Criticism

    Since January, Musharraf has faced criticism for a slowdown in economic growth, a widening budget deficit and an inability to reign in inflation running at a 30-year high.

    In the speech, Musharraf denied charges his policies had stunted economic growth, calling allegations against him "baseless."

    The coalition government "may succeed in removing me but it can damage the country," Musharraf said in the speech. "I deny the charges that economic crisis is caused by policies of my government in the past nine years."

    At an electronics store less than a mile from Musharraf's office, a dozen men applauded when he announced his resignation.

    "We are very conscious that problems will remain with us," said Khurram Mughal, a lawyer from Rawalpindi, who stopped in the store to watch the speech.

    Peace Process

    As president, Musharraf started the India-Pakistan peace process by initiating a cease-fire across the border in October 2003 and pushing several so-called confidence-building measures including bus services and cultural exchanges.

    "I don't think any other leader would have had that kind of commitment," said Suba Chandran, deputy director of Institute of Peace and Conflict Studies in New Delhi. "He is the person behind the peace process and he was the first Pakistani leader to reorient Pakistan's policy toward Kashmir and ensure intra-Kashmiri interaction. His leaving would create a void."

    Musharraf considers himself a religious moderate who enjoys playing bridge and listening to classical music. He preached "enlightened moderation" as a way forward for Pakistan, the world's second most populous Muslim nation after Indonesia.

    During his tenure, Musharraf survived at least four assassination attempts by Islamic extremists since he ended support for the Taliban regime.

    Emigrated to Pakistan

    The former army chief was born on Aug. 11, 1943, in Delhi, emigrating to Pakistan after the partition of the subcontinent in 1947 at the age of five. He lived in Turkey from 1949 to 1956 where his father was a diplomat. He attended St. Patrick's school in Karachi and then joined the army, graduating from the Pakistan Military Academy.

    Musharraf was commissioned in the artillery regiment of the army in 1964 and later joined the Special Services Group as a commando, according to his profile released by the army. After serving in two wars with India - in 1965 and 1971 - he became a general in 1991 and chief of the army in October 1998.

    He has been frequently criticized by the U.S. for "not doing enough" to fight terrorists hiding along the Pakistan- Afghanistan border. As many as 2,000 people were killed in suicide attacks and other bombings in Pakistan last year.

    "Pakistan's economy is in a poor condition, politics is in complete chaos and there's a rise in militancy and violence," said Jawaharlal Nehru University's former professor Bahadur. "He was personally tolerant and liberal but his positive contributions are not enough to overshadow his negative ones."

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