Great cofusion about how, why and when exactly it all began.
This article sheds some light, and not surprisingly adds to the confusion! 
Some good background info on the contacts and their dynamics.
Makes you wonder more where we’re headed and how…
http://dawn.com/2007/07/22/nat1.htm
The story behind ‘Benazir-Musharraf contacts’
LONDON, July 21: The Guardian has pieced together what is, according to the newspaper, the story behind the negotiations between Benazir Bhutto and President Gen Pervez Musharraf for a power-sharing arrangement after the general election.
Tracing what they have described as “The Plot to bring back Benazir” Adrian Levy and Cathy Scott-Clark said in the paper’s Friday issue it all began three years ago, on June 20, 2004, at a low-profile dinner in Blackburn where Ms Bhutto received a call from the then British foreign secretary Jack Straw, who it is said invited her to the Foreign Office.
The conversation marked the first official communication the PPP had had with a British minister in more than a decade.
One morning the following month, Ms Bhutto was brought to a side entrance of the Foreign Office. The meeting lasted more than an hour.
Mr Straw reassured the PPP chief that his government favoured democracy in Pakistan, but stressed that Musharraf, too, was important. Ms Bhutto thought it hopeless. But within weeks, Mark Lyall Grant, the then British high commissioner in Islamabad, flew to Dubai to convey a message to Ms Bhutto from Musharraf.
The president was willing to make a gesture: her husband was to be released from jail. Perhaps she should now consider working with him? Ms Bhutto remained suspicious, the daily said.
In early 2005, the PPP chief was invited back to the Foreign Office. “The talk was of a post-Musharraf world,” one of Ms Bhutto’s inner-circle says. “What London feared was chaos,” a Foreign Office spokeswoman says. “What everyone wanted was a smooth transition, from Musharraf to something sustainable, preferably democratic. Ms Bhutto had a chance of winning an election if that day came.”
At that stage, the US was still apparently backing President Musharraf, although, according to a Ms Bhutto aide, Straw advised her that it was beginning to think about change.
Condoleezza Rice, US secretary of state, was at that very moment in Islamabad pressing Gen Musharraf to ‘allow free elections’.
A series of bombings on London’s transport network four months later, in July 2005, killing 52 people and injuring hundreds more, brought a new urgency to the Straw-Bhutto talks. Three of the four British suicide bombers were of Pakistan origin.
Mr Straw noted that, in 2001, President Musharraf had pledged to outlaw militant groups. But no action followed, the Guardian said.
Ms Bhutto warned Mr Straw that the PPP would have little chance, unless the Bush administration, too, was willing to look beyond Musharraf and back the call for elections. Straw insisted he had talked to Rice and Washington was reconsidering its position.
Under cover of providing aid to the earthquake victims, the columnists write, 17 Sunni extremist groups previously banned by Musharraf (under pressure from the US state department) re-emerged with new names. The outlawed Lashkar-i-Taiba was there, running a field hospital in Muzaffarabad. “Why should we not allow our own people, to go there and assist… whether they are jiihadis or anybody,” Gen Musharraf said at the time.
Yet only a few months later, in early 2006, he was sending a new message to Ms Bhutto, asking that she list her demands. She wrote: free elections; political prisoners released; an independent election commission formed; the Constitution restored. The reply came back almost immediately: Musharraf was not ready for this kind of deal.
By now the Americans were on track and Musharraf at last agreed to hold a poll. It was to be staged after November when the National Assembly’s term ran out. But he insisted that Ms Bhutto and Mr Sharif should not to be allowed to return until after the election, the article said.
As direct contact was established between the US and Ms Bhutto, the newly appointed US assistant secretary of state for South and Central Asian affairs, Richard Boucher, urged her not to encourage PPP supporters to take to the streets in protest, as they had done on previous occasions. The PPP agreed.
The former prime minister and Gen Musharraf continued to sound each other out through emissaries. It seemed that a major sticking point was the president’s pride. He had never forgiven Ms Bhutto for embarrassing him during a discussion they had about starting a war with India over Kashmir in 1993, when Musharraf had wanted the Pakistan army to launch a full-scale invasion on its own initiative. “This country is run by a civilian government,” Ms Bhutto recalls snapping. “I am still the prime minister.”
In early 2007, President Bush made his first public criticism of Musharraf, warning that he had to be more aggressive in hunting down terrorists. Under pressure, Musharraf leaned toward a deal with Ms Bhutto - if he could stay on as president. The talks stalled again, this time because Ms Bhutto’s supporters resented her being in cahoots with the general. Then Musharraf’s emissaries came up with an even stranger proposal: if the PPP chief stayed away from Pakistan during the election, Musharraf would “adjust the vote”. A Ms Bhutto aide said, “We could not believe it. He was offering to rig the election.”
In Pakistan, unrest was building up, especially after Musharraf suspended Chief Justice Iftikhar Muhammad Chaudhry.
Ms Bhutto stepped up her demands. “We wanted a free vote and I told them I was going back home to campaign for one.” Then she made a remarkable concession: if she fought and won the election and became prime minister, Musharraf could stay on as a civilian president for the next five years.
In another seismic shift, the PPP chief proposed that the military retain responsibility for foreign affairs and national security over this five-year period, while her government would concentrate on the domestic agenda.
Publicly, all sides denied the talks. Nevertheless, a US state department spokesman, briefing the media on June 11, was positively bullish. “There are going to be some important elections coming up in the fall,” he said, adding that Musharraf had pledged that, if he “continues in political life”, he will “put aside the uniform”.
A chill has descended over “Mush and Bush"(relationship). And the storming of the Red Mosque 11 days ago is unlikely to put him back in favour: this was a seminary flourishing despite its endorsement of suicide bombings and the Taliban.
While Washington and London continue publicly to characterise Musharraf as the west’s best hope of stopping Pakistan’s descent into Islamic extremism, in reality they have concluded that it is the general who is easing the path of the militants. And he must be stopped.
Ms Bhutto is committed to returning to Pakistan in September, and informal polls have shown that, despite the rampant extremism in the country, she is likely to dominate the elections. Her constituency in Sindh had been battered but could be salvaged and built into a movement, she claims, while the tribal areas, in which the Taliban and militant groups had made the most inroads, are electorally insignificant.
For the PPP chief, the recent siege at the Red Mosque was evidence of the calamity facing Pakistan. “The country is experiencing its darkest hour,” she says. “Nothing is as General Musharraf portrays it,” she says. “He talks of the army battling militants who are trying to get a toe-hold. In fact, in the border regions, there are thousands of new madressahs. And they are not just madressahs, they are mini-cantonments, ruling the tribal areas through terror. Free and fair elections are the last chance to halt the expansion of Al Qaida and the neo-Taliban.”
Musharraf has reiterated that he is still committed to holding an election, but the pressing question now being asked is whether Ms Bhutto, if elected, is capable of bringing Pakistan back from the brink.
The Pakistan military, with its enormous economic clout, has become a new political class and ultimately might not care who wins the elections. Regardless of whether or not Benazir Bhutto returns to triumph at the polls, it is the military who will remain in power, the columnists observed.
