KARACHI, Pakistan—The powerful army chief who is credited with being the architect of the country’s counterterrorism drive will retire this year, the military said on Monday. In a country dominated by its military, which has periodically staged coups and exercised decisive influence over policy, the position of army chief is closely watched and speculation over whether Gen. Raheel Sharif’s term would be extended had intensified in recent weeks. An army chief retiring on time would be a boost to the country’s fragile democracy, though it would raise questions about the future of the country’s battle against terrorism, politicians and analysts said. If Gen. Sharif retires, he would be the first army chief since 1998 who didn’t have an extended tenure. Gen. Sharif often overshadowed the country’s elected leader, Prime Minister Nawaz Sharif, winning praise for the improvement in the country’s security situation and some foreign-policy initiatives. Gen. Sharif and Mr. Sharif aren’t related. “In Pakistan, an army chief is one of the pivots of power,” said Hasan Askari Rizvi, a military analyst based in the eastern city of Lahore. “Gen. Raheel is strong because he was able to deliver on terrorism.” The two Sharifs tussled over the levers of power early in their tenures, analysts said, in a contest that was won by the army chief, giving him critical say over security and foreign policy, some government aides said. Gen. Sharif launched an offensive against militants in the northwest, oversaw an operation against criminal gangs and jihadist groups in the country’s biggest city, Karachi, and forces under his control started to tackle corruption in politics. He was also instrumental in foreign policy, especially efforts to bring the Afghan Taliban into peace talks, and relations with India, the U.S. and the Middle East. Acclaim for military operations often came to him personally. His predecessor was criticized for inaction and for taking a three-year extension in his term as army chief. Last year, giant billboards put up in Karachi by the business community had thanked Gen. Sharif for “saving” the city. Security officials in Karachi have privately questioned whether the operation there would be continued with the same force if Gen. Sharif retired. “Pakistan’s army is a great institution. I don’t believe in extension,” said Gen. Sharif, according to a statement from the military. “Efforts to root out terrorism will continue with full vigor and resolve.” The military said it made the statement in response to “baseless” speculation about an extension in his tenure, which was being discussed in the media. Some stories had said the government had decided to offer him a further period in office. There was no immediate comment from the government. Democracy was restored in Pakistan in 2008, following the most recent coup, a 1999 takeover by Gen. Pervez Musharraf. The 2013 election that brought Nawaz Sharif to office was the country’s first handover of power by one civilian government to another after completing its full five years in office. “We are passing through an era in Pakistan in which political governments complete their tenure and hand over power to the next, and one chief justice makes way for the next,” said Tallal Chaudry, a lawmaker from the ruling Pakistan Muslim League-N. “Similarly, in this institution [army] as well, one chief will hand it over to the next. In this era, the law is being followed, and should be. A senior Pakistani military official said that the announcement showed Gen. Sharif’s faith in the strength of the army as an institution and “belief in the system.” Although overall bloodshed from terrorism has diminished sharply over the last two years, militants continue to show that they can stage attacks, such as the assault last week on a university in the north west that killed 21 people, mostly students. Abroad, Gen. Sharif was often treated as a visiting head of state. On a trip to Washington last year, he had meetings with Vice President Joe Biden and Secretary of State John Kerry. Analysts said the two favorite contenders to succeed as army chief are Lt. Gen. Zubair Mahmood Hayat, the current chief of general staff, who formerly oversaw the country’s nuclear weapons program, and Lt. Gen. Ishfaq Nadeem Ahmed, corps commander in the central city of Multan. What surprises does he have in his pot belly? Musharraf did Kargil.Kayani did his part in 26/11. What's this Gernail up to?