Even though paramilitary police have failed to restore order, neither solution seems palatable to Ms Bhutto, whose forces are waging urban warfare against gunmen of the Mohajir Quami Movement (MQM), a party which represents the millions of Urdu-speaking Muslims who fled from India to Pakistan after Partition in 1947. This weekend, Karachi was the scene of a small but vicious civil war in which more than 50 people were killed - often at random.
The conflict between the government forces and the Mohajirs flared anew this weekend after an MQM leader, S M Tariq, was murdered. Soon after, the 16-year-old sister of another Mohajir activist was gang-raped, allegedly by a rival faction with shadowy government ties.
In revenge, Mohajir militants went on a killing spree. Gunmen mowed down a group of old men waiting at a bus stop; they exploded a bomb in a financial centre and then shot at the firemen and ambulance drivers who rushed to the blaze. They sprayed a military aircraft with automatic gunfire and lobbed a rocket-propelled grenade into a police compound where children were playing. Some of their victims were tortured before having their throats slit.
Ms Bhutto's response to this mayhem has been predictable. She blamed the violence in Karachi on "foreign" meddling, meaning Pakistan's neighbouring enemy, India. "The Altaf group is foreign-funded, foreign-trained, foreign- motivated and involved in an insurgency against the state," Ms Bhutto said, referring to the MQM's leader, Altaf Hussain, who is living in exile in London.
So far, no proof has emerged of India's direct involvement, but many diplomats in both New Delhi and Islamabad say there are grounds for suspicion: India accuses Pakistan of backing Muslim separatists in Kashmir, and Karachi, with its festering ethnic feuds, is tailor-made for Indian retaliation.
Not only are the Indian refugees challenging Ms Bhutto's political elite for a share of power, but the city has also been racked by communal killings between Sunni and Shia extremists. Everybody is armed. Weapons left over from the Afghan war are plentiful.
The strife in Karachi might ease if Ms Bhutto were willing to give the Mohajirs the political recognition they deserve. The MQM is the main opposition group in the Sindh provincial assembly and the several-million strong Mohajir community is probably the largest ethnic group in Karachi, Sindh's capital. Ms Bhutto said she refuses to open talks with Mr Hussain until his organisation "lays down arms, surrenders criminals and condemns terrorism". But such rhetoric ignores the fact that Karachi, which is Pakistan's main port and financial centre, has turned into a battleground.
The Mohajirs have warned Karachi citizens to stay indoors and maintain a blackout and said they can expect a long, decisive battle. Unless Ms Bhutto is willing to meet some of the MQM's immediate demands, such as the arrest of the teenage girl's alleged rapists, Karachi will continue to burn. It is now doubtful whether even the army could control the problem. When the troops were called into Karachi in 1992, it only served to escalate the fighting.Reuse content