How would finance minister Shaukat Aziz, a technocrat with a track record but with no formal schooling in politics, shape as the next prime minister?

His nomination has cheered the market but some business executives supporting him are not sure whether it was a very wise decision.

A technocrat thrown into the midstream of turbulent politics! They would watch with abiding interest Shaukat's entry into a territory where rules of the game are ill-defined.

For the prime minister-in-waiting, it may be a question of no risks, no gains like the banking business he has handled for three decades. No less hazardous was his assignment as a finance minister with unsustainable fiscal deficits and the country on the verge of a foreign debt default.

The resignation of Prime Minister Zafarullah Jamali and the subsequent nomination of Shaukat Aziz, to eventually replace him, say financial analysts at a leading security house, "was welcomed by the market but speaks poorly of the political process."

No doubt, Shaukat faces tough challenges. When he joined the federal cabinet in 1999, his first priority was fiscal stability. Now, it may turn out to be political stability. In the past, the normal average tenure of the prime minister has ranged between 1-2 years with rare exception of Zulfiqar Ali Bhutto who completed his first full term.

There is a lurking fear that by "once again favouring personalities rather than building institutions", reckons the corporate research report, "political insecurity could increase rather than decrease in the long run."

Shaukat Aziz draws his strength from a powerful president, his respectable creditability with Western donors and the confidence he enjoys of the capital market at home. On the eve of his nomination, he gave incentives to industrialists and farmers that would reinforce his support. More importantly, he represents a strong financial fraternity.

In the past decade or more, the strongest to emerge world-wide has been the financial community, which controls flow of money, the lifeblood of the economy. The "financial aristocracy" in developed markets enjoys higher ranking than "industrial barons" and "rural gentry".

They have effective access to corridors of powers. In national economies and within the governments, the control of financial ministries (or the Treasury in the US) is all-pervasive. Going by his professional roots in the financial community, Shaukat may be a stabilising factor. But domestic politics is the least predictable.

The nomination of two prime ministers, one to follow the other, is an unfamiliar political move and is little understood in terms of political stability and democratic change. The in-house changes have however kept the assemblies intact.

Shaukat's exposure to some politics, whatever its substance, is restricted to his position as the country's finance minister. He may have managed political risks in business as an eminent banker at the Citibank but he had not made politics so far as his career.

His support of the ruling political party, a house divided against itself, is not the outcome of his own leadership. He is a nominee of a president who is under constitutional mandate to take off his uniform by December 31 this year. But the issue of political stability is not merely a domestic concern. The United States supports stability to advance its strategic interests in the region. Soft spoken, Shaukat does not offend even his strongest critics.

He has a positive approach geared to extract outcomes in difficult times, as demonstrated in his initial negotiations with the IMF. This would be an asset in dealing with parliamentarians.

To get to the position that Shaukat did as vice-president corporate planning at Citibank, says a former country head of a multinational, one has to be a good professional. He has to be strong in public-relationing.

Also when needed, one has to be capable to elbow out corporate and professional rivals. That is global corporate culture. But he may need more than his boardroom skills to survive in politics, says a foreign observer.

Even much before the October 2002 elections were held, some business executives tipped Shaukat as the next prime minister. When confronted with such remarks, his typical reaction was: "I am a small fry" for such a big job.

But at the book launching ceremony recently, a casual observation from a guest speaker that the 2005 budget would be last one by Shaukat Aziz as finance minister and he would the next prime minister, did not draw any response. It was only after the resignation of Jamali that his nomination was announced.

In the field of policy making, Shaukat Aziz as prime minister, would face much greater challenge than he has encountered so far. The macro-economic policies, formulated in consultation with international lending agencies, were reinforced by their conditionalities and loans from the IMF, the World Bank and the Asian Development Bank. The finance minister enjoyed full support of a powerful military ruler.

The prime minister has to formulate policies from a much broader perspective. He has to recognize that different policies affect different people differently. All voices have to be heard and taken into account. Politics provides the arena for trade-offs to be evaluated and choices to be made.

He has yet to discover what causes poverty, unemployment and discrimination and find the right remedies. And no success would have been achieved if the prime minister is not seen to be promoting democratic values and social justice. His promises to the electoral constituency however indicate that he is capable of making quick adjustments.

As it appears, the economy is bringing new challenges that he would encounter. Though macro-economic management has improved since Shaukat Aziz took over in 1999, the enormous impact of the sudden favourable shock of massive external capital inflows made the turnaround of the economy happen quickly.

Like business cycles of boom and bust, the growth in developing economies and the recent slow down in developed economies is the outcome of global/regional historical economic trends. Most of the development economies are witnessing high growth rates. Pakistan is no exception. The issue is how long will this trend last.

The not so favourable trends in the external sector are already visible. The exchange rate is under pressure because of rapidly widening trade deficit and a narrowing current account surplus, provoking some suggestions that pre-payment of expensive foreign debts should be postponed.

The State Bank is now in discomfort zone with rising inflation and pressures to hike interest rates. Low interest rates combined with stable exchange rate had encouraged short-term investments in modernization and balancing of running plants.

The interest rate hikes and depreciating rupee would raise cost of investment and impact adversely on capital spending. Financial analysts do not see the growth in liquidity as fast as witnessed last year.

An investment-led growth is still not in sight. The WTO deadline is just six months way. Its impact on industry is yet to be properly assessed. Asset prices (stock/real estate) appear to have hit their peak. The market growth witnessed last year would not be there this year. In fact, the market may come under pressure because of rising interest and exchange rates.

To sum up, Shaukat appears to have strong support to make a success of his prime ministership, if he is able to tackle the political and economic challenges he would face as the chosen prime minister of President Pervez Musharraf.