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Clinton warned Pakistan of aid cut if no deal

WASHINGTON, March 16 (Reuters) - U.S. Secretary of State Hillary Clinton told Pakistan's president and opposition leader over the weekend U.S. aid could be at risk unless they defused a crisis over a top judge, U.S. officials said on Monday.

In a surprise move, Pakistan's government announced on Monday it would reinstate Iftikhar Chaudhry as chief justice, aiming to defuse a crisis and end protests by lawyers and activists that threatened to turn violent.

The officials said Clinton telephoned on Saturday both President Asif Ali Zardari and his rival, former prime minister Nawaz Sharif, who had backed the anti-government lawyers.

The officials said Clinton, who coordinated with British Foreign Secretary David Miliband, had exerted strong pressure for a deal.

Clinton told reporters the decision to reinstate Chaudhry was a first step for much-needed reconciliation and political compromise in Pakistan.

She avoided answering when asked if she had linked continued U.S. aid to a deal.

The stability of nuclear-armed Pakistan has emerged as a key worry in Washington, which also needs its help to combat a Taliban insurgency in neighboring AfghanistanAsked if the political turmoil was distracting Islamabad from taking on the militants, Clinton replied:

"They understand what is at stake."

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