SPEECH OF PRESIDENT NURSULTAN NAZARBAYEV
SPEECH OF PRESIDENT NURSULTAN NAZARBAYEV
AT THE OPENING OF THE 2ND ASTANA ECONOMIC FORUM
Dear Ladies and Gentlemen!
Today, the 2nd Astana Economic Forum has brought together leading companies of the world, development institutions, politicians and scientists. I am very pleased to see you all here. We are in the capital of Kazakhstan to discuss global economic security issues, to share and exchange ideas and best practices. These discussions have great significance for the global economic crisis. Kazakh people use the saying “Forewarned is forearmed” so, I hope, by discussing urgent issues this Forum will bear fruit!
Ladies and Gentlemen!
I would like to welcome all participants to the capital of our country. The 2nd Astana Economic Forum takes place at a very difficult time. Every country is searching for ways of solving economic problems in the face of global crisis. I am sure that many interesting ideas and proposals – both regional and global - will be aired today. Kazakhstan is the first CIS country to have experienced the impact of global crisis, but we have done much over 17 years of independence - and we were prepared for a period of economic difficulty. Over the years – right up to the crisis - Kazakhstan has been able to build up significant financial stock due to the assets accumulated in the National Oil Fund. The Government has a clear programme of financial stimulus, which includes measures for macroeconomic and financial stability, solving property market issues, supporting small and medium size businesses and supporting public culture. Innovation, infrastructural and industrial projects play an important part in this programme. We have already allocated about 18 billion dollars to this stimulus package - which constitutes 14 % of our GDP. In the state-of-the-nation address I gave a couple of days ago [Friday, March 6th], I spoke of how Kazakhstan will overcome the crisis and how we will bring Kazakhstan to a qualitatively new level.
At the same time, the comprehensive nature of the economic crisis makes it impossible to solve problems separately or individually. No one country or group of countries can succeed. My vision for solving these problems can be found in a recently published article ‘Keys to the Crisis’ (you all have copies). The key to this crisis is the disconnection between gross value and speculative capital - not backed by real assets.
The gross global output (GWP) is about $40 billion while Global capital exceeds $400 billion. We must recognize that the existing financial system is out-of-step with reality and that the existing monetary system will break economic development.
The foundation for the development of anything is innovation and renewal of technologies. This is the first stage of all development. And, of course, renewal of technology calls for a new paradigm, and new paradigms require radical change and innovation. Any system of economic and social renewal consists of these three different stages. A system of economic and social renewal consists of three different stages. According to Thomas Kuhn, a paradigm shift must correspond to the terms of science, technologies and industrial renewal. Otherwise there will be stagnation. The existing paradigm on which the financial system is based is that of Adam Smith; it’s all about the ‘invisible hand’ of the market, and this paradigm was honed in the late18th century – contemporaneous with James White’s steam engine!
In other words, the existing paradigm of the financial system lags far behind the economic needs of the world and far behind of needs of technology. In this regard, it is perhaps easy to say that the light changes on global financial systems, but without deep analysis and research of the real reasons behind the problems - nothing will improve. It is convenient to make the ‘invisible hand’ of the market responsible for all economic complications, as well as the absence of initiative and lack of responsibility.
But it is time to take the responsibility for our future into our own hands. We must make the radical renewal of the basic economic paradigm - otherwise our world will have no chance of survival. Kazakhstan proposes a variant on a radical renewal plan. The drastic contradictions of the global financial system can show the way to fundamentally change its structure – and these, in turn, can suggest clear and simple agendas for such Forums as the G8 and G20, as well as for regional integrations.
Henceforth, high level agendas should include at least three points:
1. The search for a new paradigm - corresponding to the needs and challenges of the 21st century.
2. Renewal of global geo-financial technologies to 21st century levels - bending the global financial system to the basic interests, goals and values of its key participants.
3. Transforming currency and financial instruments to solve the problems of radical renewal of the world in the face of crisis.
This is the core of Kazakhstan’s proposals to the global community. The global community should embrace determined measures to make the defects of the global financial system less destructive for the economies of individual countries. I believe that the basic reason for this current crisis is the imperfection of existing global currency systems which are out-of-step with the changing world. First of all, we do not have a universally recognized juridical base for the world currency circulation. The procedure of the world currency issuer’s activity is non-democratic. The world currency market is not competitive. This means that the market is not civilized. Its entities are obliged to observe ‘somebody else’s’ game rules. These rules are formed by a narrow group and often infringe on the majority’s interests. Therefore, the generation and issue system of world currency is beyond the control of the world community. And this leads to the non-alignment of global finance systems to the goals of human development. The system has become out-of-date and cannot react to present-day challenges. I am convinced that the development of a new, harmonious system demands the foundation of a new world currency. First of all, it is necessary to adopt General Law on world currency - signed by the majority of countries and approved by the UN. Any privileges for separate world currency issuers must be strictly prohibited. Such a system could be the basis for the foundation of the world’s first absolutely legal and legitimate world currency. For this purpose it is necessary to relieve or reallocate the burden that the old defective world currency is carrying and partly transfer to regional and continental monetary units. This then is the transition stage for the establishment of a united world currency. The process of elaboration and foundation of regional, supranational intergovernmental monetary units has been developing for several decades all over the world. The pioneer was the euro. We watch such processes being carried-out everywhere – in Asia, Latin America, the Persian Gulf. Kazakhstan with its regional and continental integration partners has been promoting the formation of regional integrations for a long time. Today, the ideal Eurasian integrations framework is EAEC. The members of EAEC, as well as the SCO’s member-states, have all guaranteed to minimize the crisis burden of genetically defective world currency pressing the economies of our countries. We should commence the foundation of monetary integration. This integration could have its own single intergovernmental, supranational cashless stable monetary unit that can be brought into line with afore-mentioned monetary integration. Its rate should be free of the world currencies’ movement. The new monetary system will give opportunities to have stable, long-term and infrastructural investment as well as efficient current transactions to avoid the destruction of formed monetary systems. It should ensure stable cashless transactions between state entities, legal entities and individuals - inside and between members of EAEC.
This currency should be issued only for the interests of EAEC countries and the world community as a whole. Such an intergovernmental, supranational electronic unit could be named ‘Euras’, or ‘Eurazii’ or, as I have proposed previously – ‘Altyn’. For this purpose it is necessary to form a working group that will deal with all aspects of this integration foundation. We are ready to host such a group and ensure the right conditions for fruitful work. It should be mentioned that some people believe that under such conditions their currency and state could lose sovereignty. We refute the possibility that this would become a reality, but in terms of increasing crisis, resistance could bring about the loss of economic sovereignty at the very least. And there are precedents: only by combined efforts will the crisis in EAEC countries be overcome. Only this approach can guarantee the stable and strategic development of science, education and culture in EAEC countries. We can find ways to overcome the crisis only by systemic renovation. We have no other way. The crisis ends when we begin to operate sufficiently together.
Ladies and Gentlemen!
I understand that for an unprepared audience my idea of creating a single global currency as a way to emerge from the current economic blind alley may sound audacious. But my meetings yesterday with participants of this Forum - including [Nobel Prize winning economists] Edmund Phelps and Robert Mundell - suggests that they share these basic proposals, and think in the same way. However, as Franklin D. Roosevelt said, “The only limit to our realization of tomorrow will be our doubts of today.” Today in Astana representatives of the world’s intellectual elite can look into the future and evaluate the benefits of such audacity. I know that every person contributing to this Forum has his or her own opinion regarding the points I have mentioned. The issue of a world currency creation will, I hope, be included on the agendas of all major political and economic organizations, summits and forums - including the G8 and forthcoming G20. The Astana Forum can be the beginning of this discussion.
The ideas and proposals that will be expressed here will, we hope, become a subject of interest for the world’s elite. The ancient Romans said “Our thoughts are our lives”. The ideas discussed here will serve as the building blocks of a stable and prosperous world. It is planned that the 3rd Astana Economic Forum will be held in July 2010. And I believe that important decisions on world economic stabilization will be adopted between today’s and next year’s Forums. I sincerely hope that the dialogue laid down here in Astana will contribute to this. I wish you constructive and effective work!
Thank you for your attention.