Some officials of PML (N), have hinted their ministers could quit Prime Minister Yousaf Raza Gilani's cabinet over the issue. Any coalition cracks would heighten concern that Pakistan, a US ally under Musharraf, will suffer prolonged political instability at a time of challenges from militants and acute economic problems.
"A lot of progress has been made ... There is consensus on most issues but difference of opinion on some legal and constitutional matters," Chaudhry Nisar Ali Khan, a senior minister and close aide to Nawaz Sharif, told reporters in Dubai. That deadline passed on Wednesday, with Zardari in Dubai where he went last weekend to see his daughters.
"The fact of the matter is that a final decision on the issue will be made Thursday and I can say that very categorically," Khan said at an upmarket hotel in Dubai, a UAE emirate, where the talks were held.
The PPP leadership wants to avoid an early confrontation with Musharraf. It also harbours reservations about some judges, notably Iftikhar Chaudhry, the Supreme Court Chief Justice whose defiance of Musharraf last year galvanised the opposition. The PPP wants to link reinstatement of the judiciary to a constitutional reform package that will include measures to shorten the tenure of senior judges.
Under such a formula, Chaudhry could be reinstated with honour and then immediately packed off to retirement. The alliance between the PPP and PML-N marked the first time two mainstream parties have come together to assert civilian rule in a country that has been run by generals like Musharraf for more than half the 61 years since its formation.
A week ago Nawaz Sharif said rivals hoping the coalition would split would be disappointed. The PPP leadership has clearly calculated Nawaz Sharif will not go to the brink over the judges. "We're optimistic of a positive outcome," Farhatullah Babar said.
Analysts say the PPP is cautious about restoring Chaudhry because last October he had admitted legal challenges to a pardon that Musharraf granted Benazir Bhutto and Zardari to allow them to return to Pakistan without fear of prosecution in a slew of graft cases they maintained were politically motivated.