ISLAMABAD -- The prospect that Pakistan's president, Gen. Pervez Musharraf -- who seized power in a bloodless coup five years ago -- will remain head of the military looms as a major setback in the political outlook for South Asia's second-largest nuclear-armed country.

Although Pakistan has been under military rule for more than half of its 57-year history as an independent nation, Musharraf's status as president and military chief provokes fresh concerns in a number of areas.

A year ago Musharraf's promise to step down as head of the military by yearend was viewed as crucial to weaning Pakistan's powerful defense forces off politics. If Musharraf had retired, he would have still served as president till 2007, retaining most of his powers including that to sack an elected Parliament.