ISLAMABAD: Prime Minister Nawaz Sharif is close to making a deal with the Pakistan Army, in the backdrop of the political events that are unfolding in the federal capital, The Wall Street Journal reported.

The report suggests that as per the proposed agreement, the armed forces would control strategic policy areas, such as relations with the United States, Afghanistan and India.

The military has extracted a promise of freedom for former president (retd) General Pervez Musharraf and that Sharif's government had secretly agreed to let Musharraf go abroad after a symbolic indictment over treason, which took place in March.

The Wall Street Journal says the government went back on the deal as a result of which trust had eroded between the military and Sharif.

Government aides said the military has seized on Sharif's weakened status during the political crisis and are now seeking guarantees from the prime minister that he will follow through on the agreement, the report suggests.

It also says that for the rest of his term, Sharif will be a ceremonial prime minister.

"If Nawaz Sharif survives, for the rest of his term, he will be a ceremonial prime minister—the world will not take him seriously," said Ayesha Siddiqa, an analyst based in Islamabad. "A soft coup has already taken place. The question is whether it will harden," the report says.

Government aides said in the report that the administration was also willing to let the prime minister's brother, Shahbaz Sharif, step down as chief minister of Punjab.

Thousands of protesters led by cleric Tahir-ul-Qadri and Pakistan Tehreek-i-Insaf Chairman Imran Khan have camped outside the parliament building in Islamabad to demand the resignation of Prime Minister Nawaz Sharif.

The two-week showdown at the heart of the capital has rattled the country and shaken Sharif's government just 15 months into a five-year mandate.

Imran Khan has remained defiant and refused to end his sit-in protest, saying he was seeking “independence or death” and would not rest until both Sharif brothers quit.

Khan has alleged massive cheating in the May 2013 poll, though international observers said the vote was largely free and fair.