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Pakistan reverses hike in fuel prices

By the CNN Wire Staff
Less than a week after the increases came into effect, the Pakistani government has reversed nationwide hikes in fuel prices.
Less than a week after the increases came into effect, the Pakistani government has reversed nationwide hikes in fuel prices.
  • One party quit governing coalition over fuel price hikes and other issues
  • MQM's move cost the prime minister's party its majority in the assembly
  • Another party withdrew in December
  • Prime minister wants to develop a strategy to combat price fluctuation

Islamabad, Pakistan (CNN) -- The Pakistani government has reversed a recent hike in fuel prices, an effort that could help shore up the country's crumbling governing coalition.

Prime Minister Yousuf Raza Gilani announced the move on Thursday in the National Assembly.

It comes days after the Muttahida Qaumi Movement quit the government over fuel price increases and other complaints -- a move that cost Gilani's Pakistan People's Party its majority in the assembly.

Gilani called for the establishment of a team that would devise a strategy to combat fluctuation in world petroleum prices and avoid harsh measures, such as the fuel price increase.

The government crisis comes at a turbulent time. The U.S. military has been counting on the government to do a robust job of taking on militants in the Pakistani tribal region, but the loss of support is putting Gilani's government on shaky ground.

The MQM is one of the largest and most liberal parties in Pakistan, with its stronghold in the southern city of Karachi.

Its exit follows December's withdrawal of the Jamiat Ulema-e-Islam-Fazal ur Rehman, a leading religious party.

Muhammad Anwar, a senior coordinator for the MQM, told CNN that the last straw for the party was the fuel price increases that took effect Saturday.

Pakistan's government had raised gasoline prices by 9.2% and increased kerosene prices by nearly 6%, blaming higher crude oil costs for the move.

Anwar also said the government had failed to crack down on "rampant" corruption and maintain law and order -- particularly in Karachi and the surrounding southern province of Sindh. Businessmen in Karachi "are virtually hostage" to extortion and kidnapping rings, he said.

MQM leader Faisal Sabzwari said Sunday that the PPP-led government also has imposed unfair taxes on the poor and allowed an energy crisis to fester.

The Pakistan Muslim League, another political party, said Wednesday said it will not support the government in its quest to regain a majority.

Gilani said recently the ruling PPP would be able to function without a majority in the National Assembly.