* MQM protests decision to drop murder charges
* Blow to ruling party as it prepares for elections
* MQM has rescinded previous threats to quit
By Matthew Green
KARACHI, Pakistan, Feb 16 (Reuters) - Pakistan's Muttahida Qaumi Movement (MQM) threatened to quit the ruling coalition on Saturday, piling fresh pressure on President Asif Ali Zardari ahead of elections due this spring.
The MQM, which dominates the commercial capital Karachi, said it would leave the coalition to protest against the authorities' decision to drop charges against a group of murder suspects accused of links to Zardari's ruling Pakistan People's Party (PPP).
"The government has given a free hand to criminals," senior MQM leader Farooq Sattar told a news conference in Karachi, Pakistan's biggest city and capital of the southern Sindh Province.
Zardari's government could survive a walk-out by the MQM since his ruling coalition would still retain a majority in the national assembly in Islamabad.
Nevertheless, the potential loss of one of its key coalition partners would be a blow to the PPP, which is gearing up for a tough election battle after a five-year tenure marred by allegations of corruption, cronyism and incompetence.
Critics say Pakistan's politicians have been so preoccupied with the intricacies of coalition politics that they have devoted too little attention to tackling issues from militant violence to a chronic power crisis and the soaring cost of living since the last general elections in 2008.
The MQM has a record of repeatedly rescinding previous threats to leave Zardari's coalition after wringing concessions from his government and it was unclear how quickly law-makers and ministers belonging to the party would implement their latest pledge to quit.
A party spokesman said MQM's members of the federal and provincial cabinets were in the process of preparing their resignation letters late on Saturday.
In the face of past ruptures, senior PPP leaders have rapidly intervened to convince the MQM to stay with the coalition.
The Sindh provincial government angered the MQM this week by deciding to drop murder and other serious charges against eight suspected criminals who MQM believes form the core of a Karachi militia force allied to the PPP.
Human rights activists say, however, that it is the MQM itself that controls the most formidable armed wing of any political party in the city, where hundreds of people were killed last year in turf wars between rival factions.
Some observers believe the MQM's main motive for leaving the coalition is to assert its independence from the PPP ahead of the polls, which are expected in May.
The volatility of the pre-election landscape was laid bare in January when cleric Muhammad Tahirul Qadri triggered Pakistan's latest political crisis by leading tens of thousands of followers on a march on the capital to demand electoral reforms.
The stand-off was resolved after talks with the government, but the episode served as a reminder of the difficulty of predicting what may happen at the polls.
The PPP-led coalition is hoping to become the first civilian-led, elected government to complete a five-year term and hold elections, which would be a milestone in Pakistan's attempts to bury the legacy of decades of military rule. (Additional reporting by Jibran Ahmad; Editing by Rosalind Russell)