ISLAMABAD, 1 July 2004 — Pakistan’s President Pervez Musharraf swore in one of his key loyalists yesterday as caretaker prime minister ahead of an ex-banker’s assumption of the top post, in a reshuffle flayed by critics as a military-directed puppet show.

Musharraf, who hailed the move as smooth and democratic, also swore in the Cabinet, which was largely unchanged apart from the addition of two new ministers.

The reshuffle began with the sudden weekend resignation of Zafarullah Jamali, who has repeatedly denied that Gen. Musharraf, the unelected president and army chief who still wields ultimate power, was fed up with his lackluster 18-month performance.

Musharraf called the rotation the “smoothest transfer of power” in Pakistan’s history, but critics fumed that it was a blatant maneuver designed to bolster his powers ahead of the December deadline for him to quit the army.

“I think history has been created. There has never been such a smooth transfer in the history of Pakistan before,” Musharraf told reporters after administering the oath to new caretaker premier Chaudhry Shujaat Hussain. “Good democracy is going on in the country. Democratic values and democratic institutions will be strengthened.”

Later he won confidence of the Parliament, securing 189 votes from the 342-member house. Shujaat, who heads the ruling military-backed party Pakistan Muslim League-Quaid (PML-Q) was elected leader of the house on Tuesday when he got 190 votes.

Addressing Parliament, he said “We will continue to follow the policy of dialogue initiated with India” to resolve all issues including the Kashmir dispute.

Shaukat Aziz was named by ruling party figures as Jamali’s eventual successor, but the senator requires some two months to contest a by-election to win a seat in the National Assembly.

Aziz, a technocrat with no political background, named by Musharraf as his finance minister within weeks of his October 1999 coup, is credited with salvaging Pakistan’s economy.

Analysts said the unexplained exit of Jamali and his replacement by Aziz was linked to Musharraf’s efforts to wriggle out of the deadline to shed his uniform and become a civilian president.

“It has everything to do with the Dec. 31 deadline,” political commentator Mohammad Afzal Niazi said.

“If the president decides to retire as army chief it allows him to have a prime minister with no political position, totally dependent on him and therefore his supporters.

“If he doesn’t decide to give up the uniform well and good he has got a very malleable prime minister.”

Shujaat, who turns 59 next month, is a wealthy industrialist and veteran politician who served as minister under Gen. Zia ul Haq and Nawaz Sharif.

After Sharif was exiled in late 2000, Shujaat led a breakaway faction of Sharif’s Pakistan Muslim League party.

Shujaat played the key king-making role after the October 2002 elections, held to restore the Parliament suspended by Musharraf after his coup three years earlier.

But he has been plagued by allegations of corruption from opposition parties since the 2002 election campaign. He denies the charges.

The opposition Pakistan People’s Party (PPP) and Pakistan Tehreek-e-Insaaf (Movement for Justice) allege he had defaulted on loans worth more than half a million dollars from government banks.

While the ruling party dismissed the allegations as false, Shujaat told lawmakers that his government would introduce a bill “to curb mudslinging” in politics so that people leveling false accusations could be punished.