Bhutto Seeks to Consolidate Power. Challenge from religious right, confrontation with chief rival threaten political balance. PAKISTAN: TRANSITION TO DEMOCRACY

THREE months after taking office, Prime Minister Benazir Bhutto still walks a political tightrope. Pakistan's new leader is cautiously chipping away at the vestiges of the 11-year, iron-fisted rule of late military ruler, President Mohammed Zia ul-Haq: She has freed political prisoners and the press, and has traveled overseas and promoted closer links with India, the subcontinental rival that has fought Pakistan in three wars.

But many observers say that, as she strives for a delicate balance in Pakistan's uneasy experiment with democracy, Ms. Bhutto is hamstrung by the political deals she struck to come to power. Among them was a post-election compromise in which Bhutto supported the election of President Ghulam Ishaq Khan, who headed the interim regime after Zia's death last August and has the support of the powerful military.

In addition, a well-entrenched bureaucracy and religious conservatism pose stiff challenges to Bhutto, the first woman to lead a Muslim nation. The Army has dominated much of the country's 41-year history, including eight years of martial law under Zia. Foreign policy, defense, and the economy are the prerogative of the political establishment, which has close ties to the United States. And Muslim fundamentalists publicly challenge the right of a woman to run the country.

``She is hemmed in on all sides,'' says Ayaz Amir, a political analyst in the capital, Islamabad. ``Her government seems to lack direction and an agenda.''

Still, Western diplomats say, Bhutto has acted pragmatically during this transition to democracy, especially given the added problems of rampant gun- and drug-running, ethnic violence, and caring for 3 million Afghan refugees.

Bhutto remains the country's most popular politician and, as a native of volatile Sind Province, provides a counterpoint to the dominant influences of Punjab, Pakistan's largest and wealthiest province.

``Politically, the need of the hour was national reconciliation,'' Bhutto said in a recent radio interview. ``The years of military rule have fragmented our country.... But we feel that with the process of democratization, these wounds will begin to heal.''

But this process may take a long while. By shedding her father's left-wing policies, Bhutto has antagonized old-line loyalists of her Pakistan People's Party. The mohajirs, immigrants from India who are key Bhutto supporters in Sind, are increasingly disgruntled with the power-sharing arrangement there. And, analysts say, Bhutto is hampered by inexperienced advisers.

Her biggest threat, however, comes from the religious right, which has called for her downfall.

Wed in a traditional arranged marriage and now the mother of an infant son, Bhutto has taken steps to underscore her Islamic image, observers say. A chiffon scarf always covers her head. She has visited major Islamic shrines in the Middle East. And she has even issued an order to government officials that men should not shake hands with women.

But recently, while Bhutto was away in China, a fundamentalist protest against the controversial Salman Rushdie novel, ``The Satanic Verses,'' turned violent outside the US Cultural Center in Islamabad. Five protesters were killed by police.

Bhutto has pledged to remove restrictive laws on women which Zia imposed to forge an ``Islamic society'' and, many observers charge, to keep Bhutto out of power. But women activists say dramatic changes are unlikely soon.

``This has exposed her Achilles heel,'' says Abida Hussain, a prominent member of parliament. ``She will always be vulnerable to attack from the orthodoxy on any religious issue that may come up.''

CAPITALIZING on the religious issue are Bhutto's political opponents, led by Punjab Chief Minister Nawaz Sharif. A Zia prot'eg'e, Mr. Sharif emerged as leader of the fragmented, right-wing Islamic Democratic Alliance. Bhutto's party is the largest in the national parliament, but the alliance controls Punjab, whose natives dominate the military, government, and the economy.

Bickering between the two sides threatens to break into the open. Bhutto's party is backing a revolt against Sharif by dissidents within the loose-knit alliance. Sharif charges that Bhutto is engineering the effort by offering patronage and bribes. So far, the prime minister has managed to remained above the fray.

But some Pakistanis worry that the confrontation could escalate and bring new political turmoil. Backed by volatile fundamentalists and student groups, Sharif has threatened that his ouster will bring supporters into the streets.

His removal also could make the military and bureaucracy anxious, some analysts say. Sharif is believed to have close ties to the Army and is seen in some quarters as a check on Bhutto.

So far, the Army has kept a low profile. Still, after years under martial law, Pakistanis remain uneasy.

``The Army would still like Nawaz Sharif to be around. They feel he is a countervailing force against Benazir,'' says Mushahid Hussain, an analyst who closely follows the military.

``Sharif also could unleash the mullahs [religious leaders] and the students on the streets,'' Mr. Hussain says. ``They could prove to be a lethal combination.''