Western hopes of reviving a power-sharing deal between Benazir Bhutto and General Pervez Musharraf looked dimmer than ever on Tuesday. As hundreds of police and paramilitaries held Ms Bhutto under house arrest for the second time in a week, preventing her from leading her supporters on a “long march” from Lahore to Islamabad, the former prime minister declared that she had terminated all negotiations with the Pakistan president.

“How can there be any understanding between us?” Ms Bhutto asked in a telephone interview with the Financial Times. “There’s no chance of those [negotiations] being revived. This is a very difficult situation for me and my party. I have decided there can be no further negotiations.”

Ms Bhutto also ruled out political cohabitation with the army chief, for the first time telling reporters, in a different telephone call cited by Reuters, that she would “not serve as prime minister as long as Musharraf is ­president”.

With that move, Ms Bhutto crossed a threshold, deciding that the political cost of providing a civilian front to Gen Musharraf’s rule was too great for her Pakistan People’s party to bear, according to Shafqat ­Mahmood, a Lahore-based political analyst.

“What she is saying today is totally new and, although I would like to wait a day or two to be sure, suggests that she has decided to scuttle the deal,” said Mr Mahmood. “If the deal is off, it’s a totally new ball game. If Benazir Bhutto now joins the opposition and all ­parties boycott the general elections, then I think Musharraf is as good as history. The US will have to go back to the drawing board.”

The PPP’s new stance reflects in part the growing nervousness in Ms Bhutto’s camp following her failure to bring large crowds out on to the streets for recent rallies.

The momentum created by her homecoming parade in Karachi on October 18 – a boisterous affair cut short by a terrorist attack that left 140 dead – seems to be fast slipping away. In last week’s rally in Rawalpindi, a ­suburb of Islamabad, journalists and cameramen comfortably outnumbered the PPP’s half-hearted – and well-heeled – protesters. Only handfuls turned out on Tuesday for Ms Bhutto’s “long march” to the capital. Even if she had been released, there was no march for her to lead.

“There are two ways of looking at the protests,” says Farzana Raja, a PPP leader. “In Karachi you saw there was a very large turnout because there was no crackdown. In Islamabad and Lahore, you can see the government cracking down very badly and forcing our people back. But the mere fact that the government has to engage in such a big crackdown tells you that the government has no legitimacy and is not confident about letting Benazir Bhutto go freely across this country.”

The PPP has been alarmed at the strength of public distaste for Ms Bhutto’s deal-making with the army chief and has been pushing her to take a tougher line against Gen Musharraf’s decision to impose martial law on November 3.

While some western diplomats believe Ms Bhutto is unlikely to have irrevocably abandoned a deal that promised to lead to the dropping of corruption charges against her, others are increasingly doubtful that the power-sharing arrangement can survive amid the present distrust.

“The US is still very keen for Musharraf and Bhutto to have a working relationship,” said one western diplomat. “But on the ground, that plan is badly slipping. How will you have these two people come on the same platform after so much bitterness? [Is] either one of these two going to be in position to say to the other, ‘Let’s go and have lunch’.”

Another diplomat said: “The US is privately still urging Musharraf and Bhutto to work towards the final objective which is to become partners. No matter how problematic it is to put this together, the US view is still that only a Musharraf-Benazir team will fight militancy. But given political trends, such an alliance doesn’t look likely.”

Ahmed Mukhtar, a senior PPP leader, denies that Ms Bhutto is playing for the ­gallery while simultaneously leaving scope to resume discussions with Gen Musharraf. The PPP, he warns, is now considering boycotting the elections due to be held by January 9.

“Any chance of a rapprochement with President Musharraf is all over,” he said. “Benazir Bhutto tried very hard to secure a deal which would have at least facilitated an orderly exit for the army from politics. It now seems, General Musharraf is just not willing to accept an orderly exit. He is being overly confrontational and the way the government has behaved essentially means that we just can’t deal with them.”

Ms Bhutto told the FT she had been told she would be taken away from Lahore in a military aircraft. “I am told I will be taken away to my home base but they are not telling me where they want to take me. I am also told there is a C-130 to take me. When you have commercial flights to Karachi, Sukkur and Larkana (close to her homes in Karachi and Larkana) why do they need a C-130?”

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