By Syed Shoaib Hasan
BBC News, Islamabad
Hundreds have been arrested under emergency rule
Is Pakistan's military ruler General Pervez Musharraf stepping back from the brink?
His announcement that elections will be held before 15 February suggests a softer approach to some.
Many believe Wednesday night's phone call from US President George W Bush played an important part in the declaration.
President Bush said he had told Gen Musharraf he expected him to hold elections as scheduled and step down as army chief.
Subsequently, the White house upped the ante saying US patience with Gen Musharraf was "not unlimited".
Observers say Ms Bhutto's presence has been critical in forcing Gen Musharraf into a position where he has to give up substantial power
Those watching Pakistan's crisis say domestic pressure from former Prime Minster Benazir Bhutto has also been instrumental.
She has threatened to call her supporters onto the streets if Gen Musharraf does not agree to restore the constitution, announce a schedule for elections and quit his military post.
Ms Bhutto also added a demand that those rounded up since the emergency was declared should be released.
Hundreds of demonstrators have been arrested - including students, human rights activists, judges, lawyers and opposition leaders - under emergency rule.
Ms Bhutto's motives are mistrusted by many
Most are still in detention, facing charges which include armed robbery and treason.
Some observers feel that the international community should be making much more noise about the need to free those who have been arrested.
President Bush's statement, they point out, has once again put the focus on elections and his military post.
"That is quite to Gen Musharraf's satisfaction," one analyst says.
While the Pakistani leader has talked about taking on the militants, the emergency has been used to crack down on the liberals, he argues.
"Look at who is behind bars? Lawyers, media men, students and human rights activists."
"In fact, the first thing they did post-emergency was release 30 prisoners, including six convicted of being involved in suicide attacks."
He is alluding to the release of 30 pro-Taleban militants by the government in exchange for nearly 300 soldiers held captive by militants in the Waziristan tribal region.
Observers say the freeing of the militants - within hours of the emergency being declared - has been ignored.
They point out that the president has to listen to demands from his main constituency - the army.
President Musharraf's promise to step down as army chief is at the heart of a power-sharing deal he has been negotiating with Ms Bhutto.
"The problem was the judges who wouldn't, or couldn't, accept him as president," an observer says.
Constitutional safeguards on life and liberty curtailed
Police get wide powers of arrest
Suspects can be denied access to lawyers
Freedom of movement restricted
Private TV stations taken off air
New rules curtail media coverage of suicide bombings or militant activity
Chief justice replaced, others made to swear oath of loyalty
Supreme Court banned from rescinding emergency order
"There was no leeway in the law to allow this."
The media was also a problem for the authorities with its increased coverage of the excesses and failures of the government.
Both, analysts point out, have been largely neutralised, at least for now.
According to one: "It's a clear two-horse race now, with Musharraf and his cronies on one side and Benazir on the other.
"It's a game of who can get the maximum gains before the contest begins."
Observers say Ms Bhutto's presence has been critical in forcing Gen Musharraf into a position where he has to give up substantial power.
But, they point out, it has been more to further her own ends, rather than to champion the rule of law.
"The only thing Ms Bhutto is interested in is her party being in power," said one.
Ms Bhutto's political rivals are highly critical of her, and want her to distance herself from the general.
Those watching her latest replies to President Musharraf's announcements remain sceptical.
She called his announcement "vague" and demanded a specific date for elections.
Ms Bhutto also repeated that the general must remove his uniform by 15 November or face
But she added that she needed a more detailed look at the announcement to decide her future course of action.
"A mutually agreeable arrangement is likely in the next two weeks," says an observer.
"The apparent casualty is the judiciary and civil society... but then the 'deal' was never about justice or the people anyway."