Dhaka: Bangladesh's army-backed interim government released former Prime Minister Begum Khalida Zia on bail on Thursday after a year in prison on alleged graft charges, paving the way for a credible election to restore democracy.

She was arrested on September 3 last year in an anti-corruption drive by the interim authority, but the High Court granted her bail yesterday on the last of four charges she faced.

Analysts said the release of Khalida and her rival, former Prime Minister Shaikh Hasina, who is now on parole, was important to ensure their parties take part in a parliamentary election planned for December that would be fair and peaceful.

The government moved to bail Khalida after diplomats, analysts and civil society leaders said no credible election could be held if she remained behind bars, because her party would boycott and try to thwart it.

Flower shower

Thousands of her supporters and party leaders greeted her after she came out of the jail and drove to the graveside of her slain husband, former president Ziaur Rahman.

Wearing a white sari, Khalida, 63, waved to the crowd, who showered her with flower petals, witnesses said. Then she went to a city hospital to see her ailing son Tareque Rahman.

"Khalida's release has ended an imbalance in the country's political situation," said Professor Emajuddin Ahmad, a former vice-chancellor of the Dhaka University. "Keeping her in jail after Hasina was paroled was both impolitic and illogical."

Khandaker Ebrahim Khalid, a leading economist and former deputy governor of the central bank, called Khalida's release a "positive initiative to hold a meaningful election to help economy and investment."

"But it would be unfortunate if she or her party had made her release a precondition to participate in the polls," he added.

Khalida heads the Bangladesh Nationalist Party (BNP) and Hasina the Awami League - the country's two biggest political parties, which retain massive popular support, though their top leaders have been tainted by a series of corruption charges.

About 170 key politicians, mostly from the BNP and Hasina's Awami League, were detained in a huge anti-corruption drive after the interim administration imposed a state of emergency and cancelled a national election due in January 2007.

It promised to hold a free, fair and credible election by the end of 2008 after cleansing politics of widespread corruption.

But over the past two months more than 50 of the detained leaders, including former ministers and Khalida's son and political heir apparent Tareque Rahman, have been freed on bail so they can contest the poll.

While freeing the detainees seems at odds with the government's declared mission of making Bangladesh a clean and sustainable democracy, officials say it had no other alternative in order to induce major parties to contest the polls.

"We are leaving no stones unturned to make the election fair and credible, but it is impossible without participation of the major parties," said Hossain Zillur Rahman, an adviser to the interim government.

Fakhruddin Ahmad, head of the interim administration, said he was bound by a pledge to leave the country in the hands of an elected government in January 2009. "So we are doing whatever is possible to achieve that goal," he told officials at the weekend.

Khalida's release came while an appeal by the government against her bail was still pending at the Supreme Court.

Lawyers said the Supreme Court could cancel the bail after hearing the appeal, probably on September 15, but it is unlikely in light of the country's political situation.