Pakistan's embattled President Pervez Musharraf said Sunday that an "era of democracy" has begun, a day after his political foes named their candidate to lead a coalition government united against him.

The U.S.-backed leader spoke early Sunday at a military parade celebrating Pakistan's national day. Flatbed trucks rolled past his viewing stand displaying pieces of Pakistan's nuclear-armed arsenal: camouflage-painted Shaheen missiles about 12 meters (yards) long.

"The journey toward democracy and development we started eight years ago is now reaching its destination," said the former army strongman, who seized power in a 1999 coup. "A new era of real democracy has begun."

Military helicopters swooped past Musharraf flying huge Pakistani flags and spewing decorative, multicolored smoke. Fighter jets flew overhead in formation of a heart.

Musharraf quit the military in November but retains sweeping presidential powers to fire parliament and the prime minister. The parties who defeated his allies in the recent elections are hoping to strip away some of his powers, as well as reverse his decision to purge the courts and review his U.S.-backed terrorism policies.

"I hope the new government can maintain peace and the fast pace of socio-economic development in Pakistan," Musharraf said Sunday. "And I hope it will also continue our struggle against the curse of terrorism and extremism with the same force."

On Saturday, the party of slain opposition leader Benazir Bhutto named former parliament speaker Yousaf Raza Gilani as its candidate for the country's next prime minister. The party has the customary right to name a premier after it routed Musharraf's allies to win the most seats in last month's elections.

Bhutto's Pakistan People's Party is forming a majority coalition with the party of the prime minister ousted in Musharraf's coup, Nawaz Sharif, which came in second in the elections. Neither group took enough votes to govern alone.

The new administration faces massive challenges, including a wave of Islamic militancy, high inflation and electricity shortages. And a confrontation still looms between Musharraf and Sharif, who has been one of the most vocal in calling for the unpopular president's resignation or impeachment.

Gilani was a close aide to Bhutto and spent four years in jail on allegations he abused his authority as speaker under Bhutto's second term as prime minister in the 1990s. His convictions were overturned and he was freed in 2005. Party spokesman Farhatullah Babar announced the nomination at a news conference Saturday night in Islamabad.

"Yousaf Raza Gilani is not afraid to lead and he knows the way," Babar said, reading a statement from Bhutto's widower, Asif Ali Zardari.

The naming of a candidate for premier was stalled for weeks, fueling speculation that Zardari wanted the job for himself. He now shares control of the party with his and Bhutto's 19-year-old son.

A confirmation vote for Gilani is scheduled for Monday in parliament, and the prime minister would be sworn in by Musharraf a day later.

Gilani will likely face an opposition candidate from Musharraf's Pakistan Muslim League-Q. However, that nomination is largely symbolic because Musharraf and his allies lack a majority in parliament.

The choice of Gilani came as a clear snub to PPP vice chair Makhdoom Amin Fahim, who was long presumed the front-runner after leading Bhutto's party during her nearly eight years in exile.

Still, Fahim said he would not quit the party.

"I have the best wishes for him," Fahim told The Associated Press just after Gilani's name was announced.

Bhutto returned to Pakistan last year only to be assassinated in a suicide attack in December. Since then, Zardari has risen to become a key figure in Pakistan's politics, and he may have considered Fahim a threat to his own political ambitions.

Bhutto's son, Bilawal Bhutto Zardari, was appointed party chairman after his mother died, but his father is running things while the 19-year-old continues his studies at Oxford University.