Musharraf declared himself the chief executive of Pakistan, suspended the constitution, and dissolved the legislature. He appointed an eight-member National Security Council to function as the country’s supreme governing body. Many Pakistanis, already chafing under Sharif’s increasingly autocratic rule and suffering from a sagging Pakistani economy after ten years of government excesses and corruption, welcomed the coup. Sharif was arrested, and in April 2000 he was convicted of abuse of power and other charges and sentenced to life imprisonment; his sentence was subsequently commuted and he was allowed to live in exile in Saudi Arabia. Meanwhile, the Supreme Court of Pakistan set a deadline of October 2002 for holding national elections to restore civilian rule. The Commonwealth of Nations, however, formally suspended Pakistan’s membership because the coup ousted a civilian government.

After assuming power, Musharraf’s military government adopted a reformist posture. It identified economic reform as the most urgent measure needed to restore the confidence of foreign and local investors. As part of this strategy, Musharraf initiated an ambitious program based on accountability, improved governance, and widening of the tax net.

However, in the wake of the coup new international sanctions were imposed to oppose the military regime. Donor agencies such as the International Monetary Fund (IMF) were unwilling to provide new loans or reschedule Pakistan’s foreign debt.

In 2001 Pakistan established itself as a vital U.S. ally and key regional player after the September 11 terrorist attacks in the United States. Pakistan became a frontline state of high strategic importance as the U.S.-led war on terrorism unfolded in neighboring Afghanistan. Pakistan had been an ally of the Taliban, which had established a fundamentalist Islamic regime in Afghanistan in 1996. The Taliban was accused of harboring the suspected mastermind of the terrorist attacks, Osama bin Laden. The Taliban and bin Laden’s international terrorist network, al-Qaeda, became the target of U.S.-led air strikes in Afghanistan that began on October 7. The Musharraf government agreed to provide logistical support and use of Pakistan’s airspace for the offensive, and to share military intelligence to fight global terrorism. Formally breaking with the Taliban, Pakistan withdrew all of its diplomats from Afghanistan and officially closed its shared border. On September 22, meanwhile, the United States lifted most of the economic sanctions it had imposed after Pakistan exploded nuclear devices in 1998, brightening prospects for Pakistan’s economy.

Musharraf pledged to hold provincial and parliamentary elections in October 2002. In a bid to secure his position as president, a title he had adopted in 2001, Musharraf called a referendum in April 2002 on extending his presidency for five years. The referendum returned a majority of votes in favor of the proposal, although low voter turnout, loose voting rules, and the absence of poll monitors tainted the results. In addition, political parties denounced the referendum because under the constitution, the president is to be selected by members of the national and provincial legislatures.

In August Musharraf decreed 29 amendments to Pakistan’s constitution, granting himself sweeping new powers. The amendments allow him to dissolve the parliament, force the resignation of the prime minister, appoint military chiefs and Supreme Court justices, and chair a new National Security Council. The council is to include top military leaders and provide oversight of elected representatives, thereby giving the armed forces a formal role in governing the country. Prior to the October elections, Musharraf banned former prime ministers Sharif and Bhutto, who both live in exile, from running as candidates in the election. Musharraf also imposed new requirements for candidates, allowing only individuals with college degrees and no outstanding loans to participate.

In the October elections, no single party or coalition of parties won a majority of seats in the National Assembly (lower house). The Pakistan Muslim League (Quaid-e-Azam), a new PML faction formed prior to the elections as a pro-Musharraf party, won the largest number of seats. However, pro-democracy opposition parties and hardline Islamic parties also made a strong showing in the election. The second largest number of seats went to Bhutto’s Pakistan People’s Party (PPP), which led the 15-party Alliance for the Restoration of Democracy. An alliance of six Islamic parties, the Muthida Majlis-e-Amal (United Council of Action), finished in third place, winning the largest number of seats of any religious grouping in Pakistan’s history. The Pakistan Muslim League (Nawaz), Sharif’s PML faction, finished in a distant fourth place.