This again is not the case. Check out Ray McGovern article on CounterPunch:

http://www.counterpunch.org/mcgovern10312007.html

The second part is true, although oil is only part of the story; the main reason is the US ambition of establishing a dominant position on the Eurasian landmass. The first part isn’t: Israeli ambitions matter to the USA only when they coincide with those of the USA; tails do not wag dogs.

‘How is this ‘civil war’ likely to end? In one scenario, at some point, an alliance of Muslim nationalists — the fighters and their allies in the army and civil society — will enforce their own regime change, and create an Islamist Pakistan.’

Unlikely: the Islamicist extremists control considerable areas of the north of Pakistan and have influence elsewhere, including in the intelligence services. They can certainly cause considerable mischief, I wouldn’t be surprised if it were they who nearly blew away Ms Bhutto, but I very much doubt if they could actually take over the whole country. Another military coup, backed by the USA, is much more likely, and may well occur if, as is likely, the Bhutto-Musharraf coalition collapses.

From Asia Times article http://www.atimes.com/atimes/South_Asia/IJ20Df01.html
- She is the only opposition politician who supported the military attack earlier this year on Islamabad’s Lal Masjid (Red Mosque), a hotbed of Islamist radicalism, and she coninues to condemn the Lal Masjid ideologues;
- She has stated that she would allow incursions by US forces into Pakistan in pursuit of Osama bin Laden;
- She has stated that she would allow the International Atomic Energy Agency to question Dr A Q Khan, the former leading nuclear scientist accused of passing Pakistani nuclear technology to anti-Western countries.

Regarding the US punishing Pakistan for being ” a sponsor of jihadis in Kashmir” I think the opposite is true – attacks in Kasmir and regular bomb explosions in the heart of India are being coordinated by Pakistan’s secret service at the behest of US/Britain.

India was cleverly split when the British left to avoid the emergence of a united powerful India. Each time their leaders get together for peace talks, an attack happens in Kashmir or a bomb goes off somewhere else in India.

The Muslim Nationalists don’t look strong enough to take over.

As for why US/Britain/Israel with European backing will contonue to wage war and not follow a more sensible course – that’s simple – they are addicted to continuing their current World Domination one way or the other – allowing independent states to flourish is not part of the plan.