A fresh blow for Pakistan

(Fortune) -- The most pressing priority for nuclear-armed Pakistan -- and the world -- now that the Bhutto dynasty has been terminated is to avoid having this difficult country descend into civil war.

Pakistan is barely a unitary state, riven by centuries-old ethnic and clan rivalries constantly refreshed by revenge. The Bhutto family's stronghold was the massive southern Sindh province, centered on the country's biggest and richest city, Karachi. Benazir Bhutto easily carried the south, but her Pakistan People's Party has always struggled for ground in the politically dominant northern Punjab, hence her fateful decision to campaign yesterday for next month's election in Rawalpindi.

That she was killed doing so, in the Punjab, will incense the resentful south. Punjabis have traditionally dominated government in Pakistan, civilian and military, and often in coalition with the Pashtuns of the fractious NorthWest Frontier Province bordering Afghanistan. For Sindh, the Bhuttos were always a rallying point. But with their "Daughter of the East" champion dead and the dynasty defeated, the isolated Sindhis and Bhutto-sympathizers could be out for revenge.

Any conflict will be fanned by Islamist extremists, including Al Qaeda, which will be blamed by many for today's atrocity -- although it could easily have been anyone; the government, the military, and even rivals within Bhutto's own party have had fingers pointed at them. A religious war is the West's worst nightmare and the situation will be enough to justify President-General Pervez Musharraf again declaring martial law, with Western acquiescence.

There are surely more convincing grounds for him to do so now, as Pakistan genuinely descends into deep crisis, than the phony reasons he cited for last month's state of emergency following Bhutto's return from a decade in exile. Musharraf is almost certain to cancel next month's elections on security grounds. The chaos plays to Musharraf's hand and while his opponents will complain, it will also buy time for the PPP.

The Sharif brothers, Bhutto's old rivals but now her erstwhile allies in the bid to oust Musharraf and his generals, are Punjabis and hated by Musharraf. They are already exploiting the vacuum of her death, though with limited success. Musharraf will not proceed with the election now for them to walk away with victory.

There is no logical successor to Bhutto in the PPP, a party founded by her father before he was hanged by the Pakistani military in 1979 for corruption. Indeed, the Bhutto dynasty that has been such a feature -- and often a poisonous one -- of Pakistani politics for much of the country's 60-year history has been extinguished with Benazir's death. Her two elder politician brothers both died violently and their 20-something children hated their aunt and exhibit no particular fondness for her PPP machinery or politics generally.

Foreign investors are understandably spooked by all of this. The Musharraf reign has been generally good for business, with Pakistan recording 8-9 percent GDP growth in recent years as the economy stabilized, stocks boomed and officialdom became less corrupt. But this year has been bad; sustained turmoil, directionless and dysfunctional government, and a rise in extremism. At least 2-3 points have been cut from growth, with less reason than ever now for investors to scale up commitments to keep restive Pakistanis in jobs and away from fanatics.

Bhutto will be generously eulogized, particularly by the West, as a flawed and fateful democrat who championed moderation. But that will only be partially correct. Her flaws were profound; it was on her watch in the late 1990's that Pakistan sponsored the rise of the Taliban in neighboring Afghanistan (Bhutto's government was the first and only one of three governments to formally recognize Taliban rule in Kabul). Her two prime minister-ships were marred by chronic corruption, and terminated by the judiciary.

The Bhuttos have, in some shape or form, been a factor in Pakistan politics for generations, sometimes for Pakistan's betterment but very often not. With her death may well come an opportunity for renewal, but only if the country is strong and cohesive enough to grasp it. Sadly, it exhibits little evidence it can.