Islamabad, June 16. The West is taking an increasingly tough line with Pakistan’s military Government. According to extremely well-informed sources here the Aid to Pakistan Consortium will almost certainly not meet in July as planned. This postponement, which could be several months, would amount to an effective suspension of both commodity loans and some project aid to Pakistan. New commodity loans are unlikely to be agreed by the consortium until, as one Western diplomat here put it, the West sees not only promises, but efforts to restore civil rule and genuine law and order as opposed to mere military control in East Bengal.

Another key official spoke of the need for an overt, credible, and obvious move towards return to civil rule. These commodity loans, which Pakistan uses to buy essential raw materials for her industries and fertilizer and pesticides for her agriculture, are the most immediately vital form of aid. The country’s usable foreign reserves are believed to have fallen to between $100 millions to $200 millions and are expected to drop to zero by late September unless there are new commodity loans.

The impact on West Pakistan’s industry and trade of the loss of commodity loans would be extremely serious. With inevitably reduced supplies of raw materials allied to the effective loss of the East Bengal market (which normally takes some 30 per cent of West Pakistan’s manufactured products), industrial production is bound to fall even further than it has already done, and prices and unemployment will inevitably rise. Pakistan has already lost an US $80 millions commodity loan which has been in the pipeline for some months.

Aid to Pakistan in recent years has been running around $500 millions annually, the bulk of it provided by the United States and most of the rest by Canada, Japan, West Germany, Britain and France. This is equivalent to over half of what Pakistan normally earns for herself in foreign exchange on these export earnings. Half in turn come from East Pakistan and these will inevitably be greatly reduced in the next 12 months. West Pakistan’s export earnings have recently shown a fair rise, but few experts believe this will continue. And, in any case, it is not remotely enough to make up for the loss of East Pakistan export earnings on the one hand and Western commodity aid on the other.

Project aid for major irrigation and other long-term development schemes is likely to continue, sources here say. But even this is like to be reduced. In fact the only form of aid which Pakistan can expect to receive unstintingly during the next few months is humanitarian aid for East Bengal to be distributed under international supervision. A variety of ways are being thought up to prevent the army getting its hands on relief supplies or equipment. One American suggestion is the hiring of small steamships from third countries so as to reduce the chance of the army requisitioning either the ships or the supplies. It is believed that Mr. Peter Cargill, a World Bank official who is chairman of the Aid to Pakistan Consortium and has just returned to Islamabad after a visit to East Bengal, has put these unpleasant facts before President Yahya Khan.

The President’s national economic council is meeting here tomorrow. Much will depend on the details of President Yahya’s plans for the return to civil rule which he was expected to announce this week. It is now thought he will make the announcement towards the end of the month, perhaps after the Pakistani budget due on June 26. The delay is thought to be connected with the failure of attempts to recruit more than a handful of Awami Leaguers and other Bengali politicians to the Government’s side. The impact of any lengthy cessation of Western aid, according to an economic expert here would be that West Pakistan will simply run out of foreign exchange and the effect on the 30 per cent of the population in the urban sector will be immense and politically explosive.

Mr. Zulfikar Ali Bhutto, the leader of the People’s Party, commenting yesterday on the possibility of the suspension of Western aid told me: “If aid is used as a naked and open lever there will be a revulsion of public opinion in Pakistan. We can then turn in another direction. China has assured us of its backing".