Major U.S. Ally Pakistan President Pervez Musharraf Resigns

Pervez Musharraf, the former military general who became Pakistan's president and accepted more than $10 billion in aid from the United States to fight the war on terror, resigned in a speech broadcast to the nation today, saying the country would benefit from his stepping aside before impeachment proceedings against him could begin.

"Can the country face more confrontation? Can the country's economy face more destruction?" Musharraf asked during an hour-long address carried live on all Pakistani channels and on Western cable channels. "The honor and dignity of the country will be affected, and in my view, the honor of the office of president will also be affected."

"Therefore, after taking everything into consideration," he continued, "I am resigning from the presidency."

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Musharraf took power in 1999 after a bloodless coup, and between that time and early 2007, he received nearly 70 percent approval ratings. But in the last year, he fired the Supreme Court chief justice and imposed emergency rule as the economy dropped and inflation spiked. Today, inflation is running higher than 24 percent, and more than six in 10 Pakistanis wanted to see him go, according to a recent Pakistani Gallup poll.

"We are facing calamity. Everything is expensive. Behind the government is his hand," 20-year-old Adnan Abbasi told ABC News while shopping in an Islamabad market. "When he goes, there will be a new government, and prices will go down."

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U.S. Secretary of State Condoleezza Rice said in a statement today that "President Musharraf has been a friend to the United States and one of the world's most committed partners in the war against terrorism and extremism. Musharraf made the critical choice to join the fight against al Qaeda, the Taliban and other extremist groups that threaten the peace and security of Pakistan, its neighbors and partners throughout the world. For this, he has our deep gratitude."

But today, with Musharraf gone, the United States fears that his successor will not carry as much sway with the nuclear-armed military and will be less interested in fighting the militants than in making peace with them.

His resignation came 10 days after the ruling coalition announced it planned to impeach him, and it frees the coalition to choose a new president. The chairman of the Pakistani senate will temporarily become the new president until the national and provincial assemblies can choose a successor. According to the constitution, the next president must be chosen in the next 30 days.

Musharraf's opponents had indicated that they would be ready to impeach him in the next few days for violating the constitution.

He protested his innocence to the end.

"No charge can be proved against me because I never did anything for myself. It was all for Pakistan," he said. "Unfortunately, some elements acting for vested interests leveled false allegations against me and deceived people."

Who Will Succeed Him?

Musharraf leaves behind him a precarious power vacuum, with both sides of the coalition government wanting to put their man, or woman, in power.

Who will succeed Musharraf is still very much in the balance, and the scene is set for horsetrading between the two main parties -- the Pakistan's People's Party, the former party of assassinated prime minister Benazir Bhutto and the Pakistan Muslim League party headed by Nawaz Sharif, another former prime minister, whom Musharraf deposed in the 1999 coup.

Zardari, Bhutto's widower and co-chairman of the PPP has said that the new president will come from his party, one likely candidate is Aftab Shaban Mirani, Bhutto's former defence minister. Zardari also said it could even be a woman, hinting at his sister Faryal Talpu, who is a member of Pakistan's parliament.

Sharif's party on the other hand wants someone apolitical, perhaps someone from the judiciary. This will prove a major bone of contention between the two major coalition parties, which may start to disintegrate if an agreement cannot be reached within the 30 days given for the process.

According to Rahul Roy-Chaudhury at the London-based think-tank, the International Institute for Strategic Studies, the new president will most likely be a consensual candidate, "not a big charismatic figure or a future player in Pakistani politics." Chaudhury speculates it's likely to be someone from the judiciary or a "has-been politician."

Musharraf's departure signals a major change in Pakistani politics, and whoever succeeds him will not be able to have the same "special relationship" with the United States that Musharraf did.

"Instead of one principal player, you now have four or five," Chaudhury told ABC News.

The United States will now no longer have one go-to person in Pakistan but several. "You'll have Zardari, Sharif, the ISI [Pakistan's Secret Service], the army, the judiciary. ...the multifaceted political dynamics in Pakistan will be more complex than it has been."

The Army Is Key

The head of Pakistan's army, Gen. Ashfaq Parvez Kayani, who Musharraf installed, has remained largely silent throughout the recent political turmoil but, according to Chaudhury, must have given his nod to the impeachment plans or at least his assurance that he would not interfere with them.

Since Kayani became commander in chief the army has backed away from political involvement, and Kayani has presented himself as more of a soldier's soldier. He has also built up a good relationship with the United States. "While not necessarily a substitute for Musharraf, he is a person the United States is working with," said Chaudhury.

The United States has been nurturing this relationship, as Kayani's role will likely become more important in the campaign against terrorism. America will need his support as head of the army, especially if the critics of the U.S. in Pakistan's government become more vociferous.

Nawaz Sharif, who Musharraf deposed in a 1999 coup, has publicly criticized U.S. policy in Pakistan.

After a recent meeting with the U.S. ambassador to Pakistan, Anne Paterson, Sharif told the media only Pakistanis could decide how to fight militancy.

"I told her that this war, the way you are fighting here, is not in anyone's interest. And we have to look into Pakistan's interests and we don't want our army to fight against the Pakistani state."

But in his speech today, Musharraf argued that he had always done everything for Pakistan's best interests, and that he was leaving a country that has never been more important to the world.

"Before 1999, where was Pakistan? Pakistan had no international identity. Nobody knew Pakistan. We gave Pakistan a status," Musharraf said. "And when we go abroad, there is some weight in our words. We put Pakistan on the map, gave it importance, gave it status, which by the grace of God is still there."