Addressing a gathering of MQM supporters and media in Karachi, the MQM chief said that if the government caves in to the demands of the militants, conditions in the country would become "worse than those in Somalia".
Altaf said that if Prime Minister Nawaz Sharif wanted to call another All Parties Conference (APC) to decide how to proceed with peace talks with the militants, he should do so.
"Go ahead with peace talks but maintain your dignity," he said, adding that the state's writ needed to be protected.
Arrest of party leaders
The MQM chief said that majority of the country's population was against terrorism and terrorists should be prosecuted according to the law, even if they held government offices.
"MQM will have no objection to that," he said but added that party workers and leaders who were not guilty of committing a crime should not be arrested.
Altaf's address came shortly after former MPA and MQM leader Nadeem Hashmi was released from police custody on not being proven guilty in a case which saw the killing of two policemen.
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