Pakistan ex-PM Sharif to return

LAHORE, Pakistan (CNN) -- Pakistan's embattled leader, Gen. Pervez Musharraf, could face a key challenge to his rule in the coming months following the expected return of two major opposition leaders.

Pakistan's Supreme Court Thursday lifted the exile imposed on former Prime Minister Nawaz Sharif, ousted from power eight years ago by Musharraf in a bloodless coup.

The move is expected to clear the way for Sharif to run for office in elections scheduled for later this year or early next year.

In addition, opposition leader and former Prime Minister Benazir Bhutto also plans to return to Pakistan from self-imposed exile and take part in the upcoming elections.

While Bhutto has said she would consider a role in Musharraf's government if he abandons his post as army chief, Sharif ruled out that possibility at a news conference in London.

"I don't believe in power-sharing with Musharraf -- he is a dictator, we are democrats," Sharif said Thursday, shortly after the Pakistani court's ruling. "How can a democrat share power with a dictator?"

Musharraf wielded a tight grip on power after imposing military rule in 1999, but has seen an increased backlash after failed attempts to control Islamic militants within the country's borders as well as his controversial suspension of the country's top judge in March.

The Bush administration continues to support Musharraf, who it views as a key ally in the war on terrorism. Administration officials have toned down that support in recent months after intelligence assessments indicated Musharraf's agreement with tribal leaders gave al Qaeda and Taliban militants free rein along the Afghan border.

That agreement has since been scrapped and the Pakistani military has resumed operations in the tribal regions.

Thursday's ruling was the latest blow to Musharraf, who is currently facing the most serious challenge since seizing power. The ruling was expected after the top court freed the acting president of Sharif's opposition party from prison in Pakistan several weeks ago.

The court is led by Chief Justice Iftikhar Chaudhry, who was recently reinstated after he was suspended in March by Musharraf.

His suspension triggered massive protests and accusations that the Pakistani president was trying to influence the Supreme Court's upcoming ruling on whether he can run for another five-year term under Pakistan's constitution.

Musharraf recently reached out to Bhutto in an attempt to consolidate his power, meeting face-to-face in Abu Dhabi in late July, according to senior officials on each side of the talks.

Despite her opposition to Musharraf, Bhutto told CNN that she would be open to serving as prime minister under his government if he resigns his post as chief of the country's powerful military.

That would significantly weaken Musharraf's grip on power.

Sharif, who retains his Pakistani citizenship, has been in exile in Saudi Arabia since 2000 and has not been allowed to travel or take part in Pakistani politics.

Both opposition leaders are demanding free and fair elections in Pakistan.

Musharraf was elected president in a 2002 vote that was widely viewed as rigged. His five-year presidential term expires in November and he is seeking to retain his position as president and army chief. E-mail to a friend

CNN's Syed Mohsin Naqvi contributed to this report

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