The assassination on Thursday of former Pakistani Prime Minister Benazir Bhutto by a suicide bomber is a huge tragedy for the country, which now enters a new phase of uncertainty and instability. The killing of Ms Bhutto is very bad news for the war on terrorism, Pakistani democracy as well as secular and moderate politics in Pakistan.

Various international media reports are saying that Al-Qaeda has already claimed responsibility for the killing. This may or may not be true, as Ms Bhutto had many enemies among rogue elements within the security services - the military hanged her father, also a former Prime Minister, in 1979 - but there is no doubt that Al-Qaeda and Islamic extremists stand most to gain by her murder and the volatility and chaos that follows. It also has to be pointed out that Pakistani President Pervez Musharraf has also been the target of suicide bombers.

Although it is an exaggeration to say that Pakistan is on the verge of becoming a failed state - the ultimate nightmare scenario considering that the country possesses nuclear weapons - Al-Qaeda and the Taliban are doing everything they can to make the country fall apart. It is no wonder that Nawaz Sharif, the leader of the opposition Muslim League said after Ms Bhutto's death: "It is not a sad day, it is the darkest, gloomiest day in the history of this country."

Ms Bhutto, leader of the Pakistan People's Party, was hoping to stage a political comeback after next month's elections in which she was widely expected to win. Her victory would certainly not have been welcomed by Islamic militants - she pledged to be tough on terrorism and represented a modern, secular, pro-Western and moderate face of Pakistani politics. She has already been the target of suicide bombers shortly after her arrival back in Pakistan in October when extremists blew up and killed 140 people at one of her rallies. She escaped unscathed then, but luck was not on her side this time.

Bhutto was certainly a leading figure in the struggle for the return of democracy in Pakistan; however, in the past she was twice sacked as Prime Minister by the country's President on corruption charges. Furthermore, before returning from exile in October she made a deal with Musharraf for a return to civilian rule in which certain presidential appointments would remain intact and all corruption charges against her would be dropped. This certainly raised eyebrows among some observers.

Nevertheless, her death leaves a huge void in Pakistani politics and makes a volatile situation even worse. Despite being an obvious target for extremists Ms Bhutto showed tremendous courage and bravery by defying them and continued to campaign for democracy. Her death is also a huge blow to the US-led 'war on terror' in which a secular and democratic Pakistan would offer an alternative to Islamic extremism.

Before Ms Bhutto's death it seemed that things were slowly stabilising in Pakistan. Both Ms Bhutto and Nawaz Sharif - also a deposed former Prime Minister - were allowed by Musharraf to return to Pakistan, elections were scheduled for January, the state of emergency was lifted and Musharraf stepped down as head of the army.

Of course the situation was still very fluid, Mr Sharif said he would not participate in the elections unless Musharraf reinstated judges he sacked last month and the conditions for a fair and free election were certainly questionable. However, this latest outrage makes things much worse; Bhutto's party is now leaderless and violence has erupted throughout the country.

An unstable Pakistan is bad news not only for the country and the region, but for the whole world. Pakistan is a key player in the war against terrorism, the Taliban conduct their war against NATO in Afghanistan mainly from the border areas with Pakistan, the country possesses nuclear weapons and pro Al-Qaeda and pro Taliban sentiment is on the rise in certain areas of Pakistan.

Military rule over the past nine years - which marginalised the mainstream political parties and many of the state's institutions - has unfortunately done little to stamp out Islamic extremism. One can in fact argue that such extremism thrives under military rule because there is little else to turn to.

Bhutto recently remarked that "only democracy can defeat Pakistan's extremists". She was right, of course. It is imperative that elections are held soon - even if they have to be postponed and are not held as scheduled on January 8 - and democracy is fully restored.

What is needed is a national accord among all the country's political forces with one aim in mind: to bring about a peaceful and stable transition to democratic rule and restore the country's institutions, which is the only way to defeat extremism.

If there is real stability this will be followed by foreign investment, which will result in economic growth and increased prosperity - which will eat away at the basis of any support for Islamic extremism.