In an attempt to make his martial-law regime more acceptable, Yahya dismissed almost 300 senior civil servants and identified 32 families that were said to control about half of Pakistan's gross national product. To curb their power Yahya issued an ordinance against monopolies and restrictive trade practices in 1970. He also committed to the return of constitutional government and announced the country would hold its first general election on the basis of universal adult franchise in late 1970.

Yahya determined that representation in the National Assembly would be based on population. In July 1970 he abolished the One Unit, thereby restoring the original four provinces in West Pakistan. As a result, East Pakistan emerged as the largest province of the country, while in West Pakistan the province of Punjab emerged as the dominant province. East Pakistan was allocated 162 seats in the 300-seat National Assembly, and the provinces of West Pakistan were allocated a total of 138.

Civil War

The election campaign intensified divisions between East and West Pakistan. A challenge to Pakistan's unity emerged in East Pakistan when Sheikh Mujibur Rahman ("Mujib"), leader of the Awami League, insisted on a federation under which East Pakistan would be virtually independent. He envisaged a federal government that would deal with defense and foreign affairs only; even the currencies would be different, although freely convertible.
Mujib's program had great appeal for many East Pakistanis, and in the December 1970 election called by Yahya, he won by a landslide in East Pakistan, capturing 160 seats in the National Assembly. Bhutto's Pakistan People's Party (PPP) emerged as the largest party in West Pakistan, capturing 81 seats (predominantly in Punjab and Sind). This gave the Awami League an absolute majority in the National Assembly, a turn of events that was considered unacceptable by political interests in West Pakistan because of the divided political climate of the country. The Awami League adopted an uncompromising stance, however, and negotiations between the various sides became deadlocked.

Suspecting Mujib of secessionist politics, Yahya in March 1971 postponed indefinitely the convening of the National Assembly. Mujib in return accused Yahya of collusion with Bhutto and established a virtually independent government in East Pakistan. Yahya opened negotiations with Mujib in Dhaka in mid-March, but the effort soon failed. Meanwhile Pakistan's army went into action against Mujib's civilian followers, who demanded that East Pakistan become independent as the nation of Bangladesh.

There were many casualties during the ensuing military operations in East Pakistan, as the Pakistani army attacked the poorly armed population. India claimed that nearly 10 million Bengali refugees crossed its borders, and stories of West Pakistani atrocities abounded. The Awami League leaders took refuge in Calcutta (now Kolkata) and established a government in exile. India finally intervened on December 3, 1971, and the Pakistani army surrendered 13 days later. East Pakistan declared its independence as Bangladesh.

Yahya resigned, and on December 20 Bhutto was inaugurated as president and chief martial law administrator of a truncated Pakistan. Mujib became the first prime minister of Bangladesh in January 1972. When the Commonwealth of Nations admitted Bangladesh later that year, Pakistan withdrew its membership, not to return until 1989. However, the Bhutto government gave diplomatic recognition to Bangladesh in 1974.