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Houses are being rebuilt. Hotels are being reopened. But the reconstruction masks some lingering problems for the city's economy.

Two years after Katrina, New Orleans is doing its best to lure businesses to the city, but the city's image problems are still scaring some people away.

Frankie and Johnny's has been selling furniture on St. Claude Avenue since 1971. It's one of the few stores that have come back to the neighborhood since Katrina.

But business is down 40 percent. Johnny Treppani says that only about 30 percent of the people in the surrounding neighborhood have returned, and many houses have been abandoned.

President Gen. Pervez Musharraf has agreed to step down as head of Pakistan's military, the country's exiled former prime minister said Wednesday.

Benazir Bhutto, who is negotiating a power-sharing deal with Musharraf, said the deal would allow the president to serve another 5-year term.

"We're very pleased that Gen. Musharraf has taken the decision to listen to the people of Pakistan by taking the decision to take off the uniform," Bhutto told The Associated Press from her office in London.

A close Musharraf ally confirmed that the two sides have reached an agreement regarding the president's military role. "Both sides have agreed on the issue of uniform," said Railways Minister Sheikh Rashid Ahmed. Musharraf's office has not issued a comment.

Bhutto said she expects Musharraf to drop his military role before the presidential election this fall. "I expected that he will step down (as army chief) before the presidential elections, but that is for the president to say."

In an interview with the Pakistani independent television channel Aaj, Bhutto said she and Musharraf have found common ground on most issues. "Eighty to 90 percent of the issues have been settled. Ten to 20 percent have yet to be decided," she said.

If an agreement is finalized, corruption charges would be dropped against Bhutto and dozens of other lawmakers as part of negotiations to restore civilian rule, Bhutto said.

Bhutto and other opposition leaders have argued that the constitution obliges Musharraf, who seized power in a coup in 1999, to give up his post as military chief before he asks lawmakers for a fresh mandate in September or October.