KARACHI (BLOOMBERG) - Marking Pakistan's Defence Day in a northern military garrison town, army chief General Raheel Sharif presided over a highly-choreographed ceremony playing propaganda films. One showed troops battling an Indian incursion in the disputed region of Kashmir.

While the powerful 60 year-old general is set for retirement in November after his three-year term, serving and former officers at the Sept 6 event were tight-lipped about who might replace him.

Less than two weeks later, militants killed 19 Indian soldiers in the Kashmiri town of Uri, elevating tensions between the nuclear-armed rivals. While Pakistan denied responsibility, India in late September said it struck at terrorists attempting to infiltrate across the border.

For Prime Minister Nawaz Sharif, 66, the turmoil complicates his decision on what to do with his army chief - including the option to extend his tenure. General Raheel Sharif's move to take an over-sized role in foreign affairs and meet foreign leaders abroad has garnered attention. The military has ruled Pakistan for most of its history, controls large parts of the economy and dominates ties with India and other neighbours.

Despite expectations Gen Raheel Sharif would retire, "the current turmoil would be grounds for his tenure to be extended," said Dr Gareth Price, a senior research fellow at foreign affairs institute Chatham House in London. "The fact that Pakistan would seem to have created this situation is the thing that causes eyebrows to be raised."

After Indian Prime Minister Narendra Modi's action against Pakistan, a hawkish military head could further set back efforts to bolster South Asia's economic integration. When it comes to ties, the army often calls the shots, said Mr Najam Rafique, the director of the Islamabad-based Institute of Strategic Studies.

"Kashmir, which is in the midst of some of the worst unrest in years, will undoubtedly feature in Nawaz Sharif's thinking," said Ms Emily Winterbotham, a research fellow at the Royal United Services Institute for Defence and Security Studies in London. "The next army chief will also have to look internally at the extremist threat" and preside over the military's withdrawal from operations in the tribal areas, she said.

Gen Raheel Sharif, who was appointed in late 2013, enhanced the army's image with a public campaign to root out insurgents after more than 100 students were massacred by the Pakistani Taleban in Peshawar in December 2014.

He garnered praise for a crackdown on militias and gangsters in the business capital of Karachi, along with securing the country as China invests billions in projects in South Asia's second-largest economy, including a big port.

His predecessor, General Ashfaq Kayani, secured an extension of three years amid increasingly bloody fighting in the country. On Thursday (Oct 6), Gen Raheel Sharif said while Pakistan wants good relations with its neighbours, the military will ensure the country's defence at all cost. India has also been maligning Pakistan's fight against terror, he said in a speech in Risalpur.

"Retaining General Sharif would basically ensure continuity amidst the critical geopolitical situation surrounding the country," said Mr Imtiaz Gul, executive director at the Centre for Research and Security Studies in Islamabad. China also has an eye on its investments, Mr Gul said, and will not want a disruption in the chain of command.

Mutual distrust has strained relations between politicians and the military. The armed forces are seen as one of Pakistan's better-run institutions and the military often views politicians as corrupt and responsible for letting the country slide into dysfunction. To civilian leaders, the military takes 20 per cent of the budget, is unaccountable and has a history of removing democratically elected leaders.

For Mr Nawaz Sharif, the distrust isn't paranoia. During a previous stint at the helm, his chosen army chief, General Pervez Musharraf, toppled him in a coup in 1999.

"No meeting has yet been scheduled for this, rather, we don't want it to be discussed at this point of time" given tensions with India, Mr Musadiq Malik, a spokesman for Mr Nawaz Sharif, said late last month. "We'll cross the bridge when we get there."

The military has repeatedly said Gen Raheel Sharif intends to step down. But if he stays on, Mr Nawaz Sharif will have to contend with potential discontent within the ranks from those who feel their advancement has been impeded.

"This is not time to talk about such a subject," Lieutenant General Asim Bajwa, the military's top spokesman, said on Tuesday (Oct 4) in an interview. "We will just stay focused on tackling this escalation and preparing ourselves for responses" to India.

With Gen Raheel Sharif having earlier ruled out an extension, it's more likely another senior general will get the job, Ms Sasha Riser-Kositsky, an Asia analyst at Eurasia Group, said in an interview with Bloomberg Radio. "Raheel being very, very popular could either end up going into politics at some point or in the interim pursue some sort of career in the Middle East."

If Nawaz Sharif decides against an extension, he "is likely to base his decision on seniority," said Ms Winterbotham. "Ignoring this aspect is dangerous in Pakistan."

Top choices for a new army chief may include Lieutenant General Zubair Mahmood Hayat, now chief of general staff, a key post that oversees operations and intelligence. Previously, he commanded a corps in southern Punjab and led the Strategic Plans Division that controls the nation's nuclear and missile programs.

Another choice is Lieutenant General Ishfaq Nadeem Ahmad, from the Kashmir regiment and commander of the Multan Corps in southern Punjab. He was among the first key appointees under Gen Raheel Sharif and previously served as chief of general staff and director general of military operations. He led the first major anti-terrorism offensive in the north-west in 2009.

Another contender is Lieutenant General Qamar Javed Bajwa, the Inspector General of Training and Evaluation - the role Gen Raheel Sharif held before he became army chief. Lt Gen Bajwa commanded 10 corps responsible for security at the armed forces' headquarters and installations and policing the Line of Control, the de facto border in Kashmir.

One more candidate is Lieutenant General Javed Iqbal Ramday, the commander of a corps in Bahawalpur who served as president of the National Defence University. His family has a political affiliation with the prime minister and one of his relatives is a lawmaker.