As Ismet Pasha was to realize in Lausanne, Switzerland, that while the Turkish Nationalists (under the visionary leadership of their new leader Ataturk) with their sheer capacity for extreme sacrifice, grit, belief, modern military strategy and an iron grip on governance were able to successfully overcome numerous internal and external challenges pertaining to territorial, political and foreign affairs matters, it was the economic front, which proved to be the most difficult to tackle. The Allies (as they called themselves even in the early twentieth century) wanted to control the economic destiny of the re-born Nation, whereas, the new Turkish leadership was keen to prove to the Turkish people that their future stands brighter now under a democratic system as against what it was under a decadent Caliphate. Ismets message from Lausanne to Ataturk read as follows, To develop and to feed our people we need further economic assistance from the Allies who are willing to loan more money and also give a five-year moratorium on the existing debt. In return they want access through exclusive contracts to Turkeys natural resources of choice and a part in framing local economic policies to ensure they can recover their loans from the revenues to be collected by the government from its people. To me it appears to be a trap. - Halil Inalcik. Ismet remained in Lausanne for three years and in the end came back with mainly a reputation of being branded as a 'Third and a New type of Turk who is stubborn set smart and simple yet astute. Nearly a century on, Pakistan, the new fortress of Islam born in 1947, faces the same challenges. Sadly our Ismet Pasha went missing, with the result being that here we are with primarily a debt driven economy and ironically yielding a yardstick that awards full marks to any economic manager able to further build on this already huge pile of debt. Key ingredients pertaining to a visionary planning cum exercise on making the economy self-sustaining or on devising a way to pay back what has thus far been borrowed seems to be conveniently missing. What in turn we see are the same traditional demands that were once put on Turkey through the joint European Council, now being put on us through Messrs IMF and World Bank for a) implementing a grossly high taxation structure domestically, b) indiscriminate withdrawal of any type of governmental subsidy or relief to the people, and c) Making money supply short cum expensive. All this to see to it that the borrower (Pakistan) not only pays back with interest what it took, but that it does so with a display of subservience reserved for ones master. In the event that loans go bad, which is more than likely in our case, the IMF will then force, as done in other countries, the socializations of its losses, meaning further tightening of screws on the population, which is likely to lead to social unrest. It may be important to mention here that the new economic giants of the world - China and India - managed their economies their own way by refusing such pressures, pursuing continuous growth and look where they are today. In fact, in Joseph Stiglitzs words, Developing countries are increasingly convinced that western economic ideals are ideals to run from rather than embrace. Part of the key to Chinas long-run success has been its almost unique combination of pragmatism and vision. China has always made it clear that it seeks sustainable and more equitable increases in real (peoples) living standards. This is why it is important to understand when managing economies and the market-places within that great it may be the concept of Market Based Economies, these are not self-regulating and cannot be left on autopilot, especially if one wants to ensure that their benefits are shared widely; the most glaring proof of this is hitting us hard in the shape of first flour and now sugar crises in our domestic consumer markets. Having said this, one must keep in mind that managing market economies is no easy task, which surely our economic managers must have realized by now. Their timely action vis-a-vis import of sugar in February/March 09 could have gone a long way in averting the current sugar disaster. Managing them is a balancing act that must constantly respond to economic changes. What we need to be clear about, however, is that monetary policy alone and last minute rescue operations can at best slightly postpone a meltdown of the economy; it cant resuscitate it. As Keynes pointed out, 'its like pushing on a string - and even more in this era of globalization where pressures are not just from within but also from the outside forces. Sadly though for Pakistan, it appears that we suffer from more than just trade and fiscal deficits; the ailment we have in addition is a leadership deficit. If the present economic managers are not able to get their act together quickly, the result can mean an economic trap for Pakistan from which it may find it difficult to escape for many years to come.