As president, Bhutto addressed the nation via radio and television, saying "My dear countrymen, my dear friends, my dear students, labourers, peasants… those who fought for Pakistan… We are facing the worst crisis in our country's life, a deadly crisis. We have to pick up the pieces, very small pieces, but we will make a new Pakistan, a prosperous and progressive Pakistan." He placed Yahya under house arrest, brokered a ceasefire and ordered the release of Sheikh Mujib, who was held prisoner by the army. To implement this, Bhutto reversed the verdict of Mujib's court trial that had taken place earlier, in which the presiding Brigadier
Rahimuddin Khan (later General) had sentenced Mujib to death. Appointing a new cabinet, Bhutto appointed Gen.
Gul Hasan as
Chief of Army Staff. On
January 2, 1972 Bhutto announced the nationalisation of all major industries, including iron and steel, heavy engineering, heavy electricals, petrochemicals, cement and public utilities. A new labour policy was announced increasing workers rights and the power of trade unions. Although he came from a feudal background himself, Bhutto announced reforms limiting land ownership and a government take-over of over a million acres (4,000 km²) to distribute to landless peasants. More than 2,000 civil servants were dismissed on charges of corruption. Bhutto also dismissed the military chiefs on
March 3 after they refused orders to suppress a major police strike in Punjab. He appointed Gen.
Tikka Khan in a bid to assert control over the army. Bhutto convened the National Assembly on
April 14, rescinded martial law on
April 21 and charged the legislators with writing a new constitution.
Bhutto visited India to meet Prime Minister Indira Gandhi and negotiated a formal peace agreement and the release of 93,000 Pakistani
prisoners of war. The two leaders signed the
Shimla Agreement, which committed both nations to establish a
Line of Control in Kashmir and obligated them to resolve disputes peacefully through bilateral talks. Bhutto also promised to hold a future summit for the peaceful resolution of the Kashmir dispute and pledged to recognise Bangladesh. Although he secured the release of Pakistani soldiers held by India, Bhutto was criticised by many in Pakistan for allegedly making too many concessions to India. It is theorised that Bhutto feared his downfall if he could not secure the release of Pakistani soldiers, the return of territory occupied by Indian forces. Bhutto established an atomic power development programme and inaugurated the first Pakistani
atomic reactor, built in collaboration with
Canada in
Karachi on
November 28. In January 1973, Bhutto ordered the army to suppress a rising insurgency in the province of
Balochistan and dismissed the governments in Balochistan and the
Northwest Frontier Province. On
March 30, 59 military officers were arrested by army troops for allegedly plotting a coup against Bhutto, who appointed then-Brigadier Zia-ul-Haq to head a military tribunal to investigate and try the suspects. The National Assembly approved the new constitution, which Bhutto signed into effect on
April 12. The constitution proclaimed an "
Islamic Republic" in Pakistan with a parliamentary form of government. On
August 10, Bhutto turned over the post of president to
Fazal Ilahi Chaudhry, assuming the office of prime minister instead.
Bhutto officially recognised Bangladesh in July. Making an official visit to Bangladesh, Bhutto was criticised in Pakistan for laying flowers at a memorial for Bangladeshi "freedom fighters." Bhutto continued to develop closer relations with China as well as Saudi Arabia and other Muslim nations. Bhutto hosted the Second Islamic Summit of Muslim nations in Lahore between
February 22 and
February 24 in 1974. However, Bhutto faced considerable pressure from Islamic religious leaders to declare the
Ahmadiya communities as non-Muslims. Failing to restrain sectarian violence and rioting, Bhutto and the National Assembly amended the constitution to that effect. Bhutto intensified his nationalisation programme, extending government control over agricultural processing and consumer industries. Bhutto also, with advice from
Admiral S.M. Ahsan, inaugurated
Port Qasim, designed to expand harbour facilities near Karachi. However, the performance of the Pakistani economy declined amidst increasing bureaucracy and a decline in private sector confidence. In a surprise move in 1976, Bhutto appointed Gen. Zia-ul-Haq to replace Gen. Tikka Khan, surpassing five generals senior to Zia.