ON Sunday EU leaders who had earlier ignored the wake-up call from the US finally agreed on a battle plan to cope with the financial crisis. Within weeks of the collapse of Lehmann Brothers, the US financial downturn had turned into a financial tsunami, which after striking the developed economies is now rocking East Asia and the oil-rich Arab countries. The global crisis is likely to put at risk whatever economic gains have been made by the countries in South Asia. With decrease in demand from the developed world, the exports from the region would be badly hit. These countries would also find it increasingly difficult to have access to funding. It is only a matter of weeks, if not days, before Pakistan starts feeling the effects of the worldwide turmoil. President Zardari's assurance that the country's economy is not weak and faces no threat of default is fine as long as it is accompanied by a well-thought out strategy to deal with the emerging challenges, which is unfortunately nowhere in sight. The Karachi Stock Exchange, which had been artificially immunised during the outgoing week through a price floor against the impact of the global sell-off and other problems, has finally opened amid mounting fears. Worst of all is the liquidity crunch of Rs 20 billion. It also remains to be seen how foreign investors, believed to be holding shares worth $1.5 billion, behave as soon as the floor is removed. Complaints of lack of liquidity in the banking system remain, despite a cut in the cash reserve ratio by the State Bank of Pakistan. All eyes are set on the arrival of Mr Shaukat Tarin and his team with hopes that funds brought by them could be released both into the stock market and the rest of the financial system. The country is suffering from other woes also, like power outages and gas loadshedding, that would reportedly worsen during winter. A shortfall of 4000 MW that has hit the system is causing four to six hours of power outages. Untimely maintenance activity has led the SNGPL to curtail gas supply to cement and textile sectors. There are also reports of unprecedented gas shortages occurring in the coming winter, caused by thousands of new connections. Something needs to be done to deal with these vulnerabilities, that are having an extremely negative impact on agriculture, industry and exports, thus exacerbating the financial crunch. What is needed is a well-thought out emergency plan. With the unresolved Kashmir issue continuing to deprive SAARC of vitality, there is hardly any possibility of a regional plan to cope with the global financial crisis. Pakistan has therefore to evolve its own strategy. One hopes that the team of financial managers currently holding talks with the World Bank, IMF and other financial institutions would take up the issue on a priority basis soon after its return.