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 Key opposition leader Benazir Bhutto welcomed the belated step, but she said her party had yet to accept him as head of state.
Britain, which shares the United States' deep concern about Islamic terrorism emanating from Pakistan, said Musharraf's move was "an important part" of his plan to restore constitutional order.
"We understand the threat to Pakistan's peace and security, but I have urged President Musharraf to use the normal democratic process to respond," Prime Minister Gordon Brown said.
An emotional Musharraf relinquished his post by handing over his ceremonial baton Wednesday to his successor, Gen. Ashfaq Kayani, who is widely expected to maintain the army's pro-Western policies.
"(You) are the saviors of Pakistan," Musharraf said in a final speech to the troops, sniffing repeatedly and appearing to blink back tears.
Hundreds of senior officers, politicians and other civilians watched from the stands as an unsmiling Musharraf
-- wearing a phalanx of medals and a green sash across his uniform -- reviewed the ranks to the strains of "Auld Lang Syne."
"I'm proud of this army and I was lucky to have commanded the world's best army," Musharraf said. "I will no longer command ... but my heart and my mind will always be with you."
Since seizing power in a 1999 coup, Musharraf has served as president while retaining his post as head of the armed forces. Musharraf insists that his continued rule as president is vital if Pakistan is to remain stable as it returns to democracy.
But he will have to jostle for power with Bhutto and Nawaz Sharif -- two former prime ministers just returned from exile and itching to return to office.
Both are threatening to boycott January parliamentary elections, though they also have registered as candidates and say they only will shun the elections if the entire opposition unites behind that drastic step.
A senior leader of Bhutto's party said Wednesday that Musharraf's quitting the army was "too little, too late."
"Now the political forces and civil society are moving in a different direction, to change the country along purely democratic lines," Mian Raza Rabbani said. "Doffing his uniform will in no way help him to consolidate his rule."
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 Sharif spokesman Pervez Rasheed said: "Musharraf hasn't taken off his uniform under his own will, rather under pressure from the powers who installed him and kept him in power eight long years," an apparent reference to the United States.
Musharraf had promised to give up his army role at the end of 2004. But he reneged on that pledge, saying the country still needed strong leadership in the face of Islamic extremism.
He has given it up now, in line with the constitution, only after securing a fresh term as president.
Musharraf was re-elected by Parliament in October, but the Supreme Court held up his confirmation following complaints that a military man could not constitutionally serve as an elected head of state.
He reacted by proclaiming a state of emergency on Nov. 3, firing the chief justice and other independent judges and replacing them with his appointees. The reconstituted top court then approved his election.
Officials have indicated that the emergency could be lifted soon after Musharraf takes the presidential oath, but have not set a firm date.
Sharif, who arrived from Saudi Arabia on Sunday, has taken a hard line against Musharraf, who ousted Sharif's second government in the 1999 coup.
A conservative with good relations with Pakistan's religious parties, Sharif is reaching out to the many Pakistanis who oppose Musharraf's close alliance with the United States.
Musharraf's declaration of emergency rule also has strained relations with Bhutto, who shares his secularist, pro-Western views. Bhutto, who has twice been put under house arrest to stop her from leading protests, has joined Sharif in denouncing Musharraf's backsliding on democracy.
[Associated
Press; By MUNIR AHMAD]
Associated Press writers Sadaqat Jan and Slobodan Lekic in Islamabad and Zarar Khan in Lahore contributed to this report.
Copyright 2007 The Associated
Press. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
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