Pakistan's prime minister Yousuf Raza Gilani is in crisis talks with opposition leaders in a bid to hold on to government after a key partner left the ruling coalition.
The defection of the Muttahida Qaumi Movement (MQM), second-largest party in Pakistan's ruling coalition, means Pakistan's government has lost its parliamentary majority. Gilani is holding talks with opposition leaders in a bid to prevent a possible no-confidence vote and head off an early election.
Pakistan is vital to American efforts in Afghanistan. The U.S pledged billions of dollars in 2009 to help shore up the civilian government. The Taliban and Al Qaeda are based in Pakistan's border region, from where they launch attacks on NATO troops. But homegrown militants pose a rising threat to the Pakistani state.
Political paralysis would also make it harder for Pakistani leaders to tackle a wide array of problems frustrating millions of Pakistanis — from corruption to poverty to suicide bombings carried out by Taliban militants.
The MQM pullout came after a pro-Taliban religious party, Jamiat-e-Ulema-e-Islam (JUI), quit the coalition last month after Gilani sacked one of its ministers. It withdrew its seven seats from the coalition and its leader has called for Gillani's firing
An MQM statement said the government was "crushing the people."
"We'll support the government's positive steps while sitting in the opposition and will openly oppose the anti-people decisions," the statement said. "The government should immediately roll back the increase [of 9 percent] in petroleum prices and prices in general and take steps to eliminate corruption."
Popular anger with the government and politicians, President Asif Ali Zardari in particular, continues to grow, representing major risks for investors in the region and for geopolitical stability.
Pakistan's floods displaced millions of people, destroyed crops and livestock and caused an estimated direct loss to the economy of almost $10 billion.
The government's response was widely condemned as inadequate, and this was compounded by the fact that Zardari left the country during a critical period in the unfolding catastrophe for a visit to Europe that included a helicopter trip to inspect his French chateau.
The military is seen as having provided a much more organized and efficient response. The crisis has strengthened the hand of the Pakistani armed forces, a constant background threat to civilian politicians.
To retain a majority, the Pakistan People's Party — which took power in 2008 led by Zardari, widower of Benazir Bhutto — must win back the MQM or woo other opposition parties.
Gillani, speaking to reporters in Lahore, dismissed the notion of a crisis, saying the "government will not fall."