A Vision for the future from Kazakhstan: Eurasian Monetary System and Strategies for Development
by Come Carpentier de Gourdon on 11 Jun 2012 2 Comments

Historical Context: Before he became President of a newly independent Kazakhstan, Nursultan Nazarbayev was chairman of the Kazakh Supreme Soviet in the last days of the USSR. Chairman Mikhail Gorbachev had tapped him to be the Prime Minister of the reformed Federation he was trying to set up when the August 1991 Coup took place and, by default, brought to power in Moscow Boris Yeltsin who, with the blessings of the West, hurriedly proceeded to disband the Soviet Union, thereby hatching with one blow fifteen sovereign nations.

Among all those new countries, Kazakhstan can with some reservations be regarded as the greatest success story, and much of that relatively peaceful transition out of the post-Soviet quagmire can be credited to Nazarbayev who always acted with the conviction that independence was not an end in itself and had to be utilized to build prosperity, both in his nation and in the wider region. From the early 1990s, he consistently championed the reorganization of the common former Soviet space through such vehicles as the CIS, the CSTO and the EURASEC, while proposing at the same time a common currency and economic community for all Central Asian states, including Iran.

Eurasian interdependence and solidarity were not empty words in his vocabulary, a view especially
valuable in that it could not be attributed to Russian or Pan-Slavic chauvinism. Nazarbayev defines himself as a proud descendent of the nomadic rulers of the vast steppes who on various occasions in the last three thousand years unified much of the Eurasian continent under various historical avatars, such as the Scythians or Sakas, Turks and Mongols, all members of the loose commonwealth of horse riding herdsmen and warriors who held sway from the Caspian to Manchuria and from Southern Siberia to Northern Afghanistan.

Nazarbayev draws much of his supra-nationalist inspiration from the late Prof. Lev Gumilev (son of Anna Akhmatova) after whom he has named the new university in Astana. Gumilev, who enjoys a wide following in the Russian and Central Asian academic community, believed that Russians were related, within the Eurasian “superethnos”, to the Turko-Mongols and other peoples of the steppes and that the Tsar’s empire was a continuation of the earlier Scythian and Genghiskhanid continental states.

Kazakhstan, territorially the largest of the Central Asian States, occupies the core of the Eurasian mass which Halford Mackinder defined as the heartland. As such it is the cradle of the founders of the Seljukid, Ottoman, Mughal, Qajar (Kadjar, Persian) and other empires, and it separates or connects, depending upon our perspective, China and Iran, Russia and South Asia. Like the empire of the Kushans in the 1st and 2nd centuries AD, Kazakhstan is deeply influenced by all those neighbouring cultures and it is Nazarbayev’s vision not to artificially homogenize his young nation state by ignoring or understating those “foreign elements,” but rather to highlight them in the process of building a synthesis conceived as a union without assimilation. The new capital built by his decision illustrates that syncretistic spirit through clear allusions to the various architectural styles of the civilizations which have shaped modern Kazakhstan: Astana, in its contemporary, often futuristic architecture, deploys facades, spires and prospekts reminiscent of Romanov and Stalinist Moscow and Saint Petersburg alongside Chinese pagodas, Turkish domes, Mongol Yurts, Egyptian pyramids and Arab minarets.

One distinguishing aspect of Nazarbayev’s action, however, is that he is not satisfied with merely building a pharaonic capital, like the fabled Karakota of Genghis Khan, the Xanadu of Kubilai or the Samarkand of Timur. Neither is he merely trying to make Kazakhstan one of the states that matter on the global scene in view of its size, mineral wealth and strategic location. He sees Kazakhstan as a fulcrum and a testing ground for a new international architecture to integrate the Eurasian continent and eventually the world as a whole, and for several years he has advocated a number of measures designed to bring about that ambitious goal which, in the context of unfolding events, appears increasingly necessary.

It would seem rather futile for the head of a remote, landlocked, sparsely populated newly independent state with has a short track record in global diplomacy to pursue such lofty objectives. However, Nazarbayev’s background experience near the pinnacle of the Soviet State and his privileged relations with both the Russian and Chinese leadership as well as his cordial rapport with the governments of the United States and the European Union give him unusual outreach and a rare ability to be heard far and wide. He has made Kazakhstan a member of both the Organization for Security and Co-operation in Europe (OSCE), the Shanghai Cooperation Organization (SCO) and the Organization of the Islamic Conference (OIC), thereby affirming its vocation as the archetypal Eurasian state, similar to Russia in that sense. Further, in consonance with the ideal of global peaceful coexistence and disarmament, the Kazakh nation under his leadership renounced and dismantled the nuclear weapons it inherited from its past in the USSR, although it joined the CSTO as a structure intended to protect common regional security from outside threats.

Diagnosis and Goals

Beyond merely vying to make his country win in the global economic casino on the strength of its large reserves of oil, gas and strategic minerals, Nazarbayev has conducted a scholarly, sharp-sighted analysis of the current system which he has defined, “Neoliberal ideology with its hegemonic monetary system does not promote the creation of global, innovative, technological and socio-cultural preconditions for transition to a new cycle of evolutionary development” (“Anti-Crisis Plan of N A Nazarbayev”, by S N Nugerbekov, 2011).

He accordingly calls for “a cardinal transformation of the economic system”. To that effect he has taken a number of initiatives, beginning with the annual convening of the Astana Economic Forum, gathering many top ranking economists, scientists, business and political leaders and resulting in the creation of G-Global, a more broad based response to the Western-sponsored G-8 and G-20 that he sees as a tool for building “Global Partnership among civilizations” according to the principles defined between India and China in 1954 as the basis for the famous Panchsheel agreement and in tune with the Russian-led World Public Forum Dialogue of Civilizations. An interface between G-Global and G-20 is an informal think tank referred to as Think20 which met in Guadalajara, Mexico, prior to the last G-20 Summit in that country in March 2012 and issued a report to the G-20 Sherpas.

On the spiritual and cultural level, the Kazakh President is a promoter of the traditional Asian notion of unity in diversity as an alternative to the French Jacobine irreligious secularism or “laicite” which assumes permanent mutual suspicion and estrangement between any “church” and faith and the state. In that view, all religions – and Kazakhstan is inhabited by Turkic and Iranian Muslims, Orthodox Slav and Protestant Germanic Christians, Jews and Buddhist-Confucians of Korean origin, along with several other ethno-religious minorities - can commune in the awareness of the universal transcendent principle which in the Turco-Mongol spiritual realm is honored as “Tengri” the father Sky or Heaven.

In that spirit Astana hosts every year a World Spiritual Forum of religious leaders, metaphysically aware scientists and independent seekers.

Like his peers in Russia, Putin and Medvedev, who support him in his politico-economic initiative, Nazarbayev takes a technical, pragmatic approach to the fulfillment of his broader goals. Having concluded that “old financial instruments have lost their credibility and (that) new ones have yet to be developed” (ibid., p. 13), the President advocated the creation of a new global reserve currency based no longer on a virtual “fiat” dollar, whose emission is under the sole control of a public-private US financial cartel, but on a basket of the world’s most influential economies, according to objective criteria of real assets and productivity. His recommendations find support in the Think20 2012 report which prescribes “economic policy measures leading to investment-led and innovation-driven growth, transforming energy production and use in advance and developing countries,” as the new currency he proposes is envisioned as a tool to achieve this innovative process of development.

Nazarbayev has mustered the support of both the Russian and Chinese Governments as well as a general endorsement of his diagnosis by Nobel Prize winning economist Robert Mundell and several other luminaries in the field. His analysis dovetails with the conclusions of the Italo-Russian Modena initiative of 2008, coordinated by Paolo Raimondi, Yuri Gromyko and Mikhail Baydakov which resulted in the creation of the international Long Term Investors Club (LTIC), gathering a number of major public investment institutions.

A consensus on a strategy for real, inclusive and sustainable development, inspired by John Maynard Keynes’ theses has thereby emerged and it represents an alternative to the current quest for arithmetic, statistical growth of the economy, bereft of any wider interdisciplinary considerations and criteria. One of the seminal documents for that “dissident” perspective is the D8-D20 statement issued by the International Economic Forum West-East (Integration and Development) at its meeting of 26 June 2009 in Moscow, used for the May 2012 Astana Meeting dedicated to the definition of monetary currencies and other financial instruments that can act as catalysts to trigger and shape a new wave of inclusive global economic growth.

The presidential views are reflected in the earlier quoted essay: “In order to instigate the crash of capitalism it is enough to start paying out the bare minimum to market participants or even worse, create a faulty measure of the market economy” (ibid. p. 18), which is precisely what has happened in the neoliberal scenario where globalised capital moves across borders at the speed of light, seeking ever higher return for its owners at the expense of the workforce and of the very welfare of the nations in which it has been accumulated. This outcome vindicates the predictions of Keynes who, in the words of H Minsky, made “(…) a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from tending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff”.

As part of the process for integrating Eurasia and making it a pivot for a new global monetary system as well as an incubator for industrial transformation, the Government of Kazakhstan has in the last few years set up a series of institutions, including the Eurasian Business Congress, the Eurasian Club of Scientists and the Eurasian Bank of New Technologies.

Ways and Means to Eurasian Integration

For that integration to be functional, a cutting edge network of transport and communication must be built, thereby stimulating the economies of the greater region through the creation of new financial instruments intended to fund those ambitious projects of technological and human development which are envisioned as the infrastructure for a new silk road connecting East Asia with Europe and Africa across Russia, Kazakhstan and their neighbours, extending eventually to the South Asian subcontinent and the Near East through Afghanistan, Iran and the Caspian Sea.

India and Pakistan both have major stakes in such a plan, as illustrated in practice by the recent launch of the TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline project as also by the long-standing Indo-Irano-Russian design for the “Southern corridor”, a highway for rail, road and telecommunications stretching from Bandar Abbas on the Persian Gulf to the Baltic and Western Europe.

One vital artery of that network would be the high speed magnetic levitation railways carrying people and goods from Korea and China all the way to Istanbul and Amsterdam with considerable savings in money and time over the oceanic route. In the centre of that web, Kazakhstan would resume its traditional situation as a bridge between the four quarters of Eurasia “from ocean to ocean”. There is even a perspective of extending that multi-mode communication highway through the Behring Strait to North America and due account is taken of similar schemes in the works for Latin American integration from Mexico to Tierra de Fuego.

Building such a transcontinental physical framework requires considerable financial means which can hardly be found in the current global predicament, marked by unsustainable indebtedness and concentration of capital in speculative short-term operations. The President of Kazakhstan has often pointed out the disturbing fact that “only 10 to 20% of the world monetary base is channeled towards actual production of commodities”, while up to 90% is made up of virtual and derivative financial instruments used solely for speculative transactions. The present world currency system, he emphasizes, known as the 1976 Jamaica regime is “not supervised by anyone and not democratic” (Nazarbayev’s Speech at the 3rd Astana Forum, 2010). As an alternative, he proposes a single supra-national currency, towards whose creation he defined three necessary steps:

1.      Defining a new paradigm in accordance with current realities and challenges.

2.     Adjusting monetary and financial systems to basic interests, purposes and values of all key actors.

3.     Aligning monetary and financial instruments with proposed solutions for a radical reinvention of the global system.

Rather than a global new “coin” as a “super-dollar” in the literal sense, what emerges as the Astana Consensus looks more like a stable conversion regime between the major world currencies, including some regional ones still to be created (in EURASEC, South America, East and South Asia or Africa) as the expression of an agreement between the most important members of the international community from all continents on the basis of their real natural, human, technological and scientific resources. In the context of the present widening and worsening crisis, such a proposal acquires an aura of inevitability.

However, before a global agreement can be forged to implement Kazakhstan’s proposal (which has some trappings of a joint Kazakh-Russian-Chinese initiative), specific ad hoc credit instruments can and should be generated to fund large scale national or international projects intended to catalyse an economic recovery and the transition to new technologies. This is perhaps the most practical proposal, in the short and medium term, to emerge from the Modena, Moscow and Astana deliberations.

New Global Currency System

In the broader framework, the initial basket of SDR (Special Drawing Rights of the IMF) conceived by the Bretton Woods system and since substantially modified, should be expanded to include the Chinese Yuan, the Korean Won, the Russian Rouble, the Brazilian Real, the Indian Rupee, the South African Rand, the Saudi Rial and perhaps also the Turkish Pound and the Iranian Rial, but consideration is being given to the option of linking this new global fixed exchange regime to gold or to a basket of strategic commodities in order to enhance its stability and win trust.

Although this proposal seems too wide ranging and radical to be implemented in short order, some steps are being taken day after day in the general direction indicated by Nazarbayev. For instance, the rapid rise in the use of currency swaps for trade between BRICS countries, the non-Dollar trade in oil and gas between Iran, China and India, the moves towards coordination between the Chinese and Japanese currency policies and the massive bilateral yuan-rouble transactions between Russia and China, together with the emergence of a EURASEC single economic space and planned monetary union (EAU) between Russia, Kazakhstan and Belarus (later to extend to other CIS members) all pave the way towards an alternative international financial system not based on a hegemonic national currency.

The shaken European Union is now uncertain of its fate and in doubt about the survival of the Euro. In this context, the growing and officially acknowledged partnership between Germany and Russia signals that the centre of gravity of the continental economy is moving East and that Berlin is readying for an alternative arrangement if the Euro system cannot be maintained. On the other hand, it appears likely that if Greece and other Southern and Eastern European nations are either cut loose from the common EU currency or are unable to join it, they will gravitate towards the Eurasian hub of monetary and financial stability which is developing between Moscow, Beijing and Astana.

Opinions are divided between economists as to whether a drastic downsizing of the Eurozone or even a disintegration of the single European currency would lead to a reassertion of Dollar hegemony over the world, or would on the contrary precipitate the advent of a global multi-currency basket regime as an alternative since the Euro’s downfall might trigger the Greenback’s demise.

At the 5th Astana Economic Forum in May 2012, the recommendations of two eminent economists, among others, deserve to be noted as they are being taken into account in the design of the new financial system being devised. Prof. Henry CK Liu strongly advocated that all major exporting countries demand payment in their own currencies and not in Dollars, while Prof. Jeff Sommers emphasized that, rather than accumulating “fiat” financial capital, inherently fragile and elusive as it is inevitably wiped in course of time, national policies should focus on investing in public infrastructure and human welfare (including health, education, recreational amenities etc…) for which, as Liu has pointed out, human capital is needed and not so much financial resources, as the latter can be created through the emission of instruments of public credit. Both experts agree that priority must be given to “growth in jobs and livelihoods (as opposed to) the mistaken policy of “expansionary contraction” which is bringing about depression (THINK-20 Meeting Report, March 2012). This is also the view held in Latin America by the governments of the UNASUR member states.

In this perspective the intractable and never ending accumulation of public and private debt whose sheer weight is crushing the real world economy may be viewed as a conceptual burden which can be at least partly eliminated by canceling it, as most of it is usurious seniorage levied by those who hold a monopoly on the creation of a virtual global currency supported by nothing except faith in the ability of the US government to keep its promises (or fear of American military power).

Accordingly, the Think20 Report highlights the need for a systematic sovereign debt restructuring process in order to “liberate sovereign credit for domestic development” as Ellen Brown, Michael Hudson and Henry Liu prescribe. The report also advocates “open source technology development and transfer” and increasing “transparency in commodity markets through the development of price discovery mechanisms”.

Some Final Considerations

An expert on the Japanese and American economies who also participated at Astana, Eamon Fingleton, provided a unforgiving analysis of the American economy which has become a Dollar printing machine controlled by speculative capitalists and has systematically encouraged the outsourcing of the country’s technological and manufacturing base to foreign nations in order to buy most goods abroad with its virtual currency. As a result, the USA is now sinking under a pyramid of public and private debt which is fast approaching the size of its shrinking GDP, fed mainly by domestic consumption of imports and a hypertrophied real estate market. Most of its major companies have moved abroad – and offshore – for all practical purposes and are no longer meaningfully contributing to the national tax base, whereas the country has lost its industrial and high tech productive autonomy.

In Fingleton’s view, the US’ chaotic collapse is inevitable because of its inability to reform a system which is highly beneficial to the hegemonic financial corporate and “rentier” elites. Henry Liu has a less pessimistic take, although he agrees that America will have to undertake some drastic and painful reforms if it wishes to survive as a powerful nation. The American government may continue to oppose and block as much and as long as it can, radical reforms to the current status quo, especially those not under its control, and many of the measures advocated from Kazakhstan and other like minded states will probably have to be implemented against Washington’s will, given that the ability of the USA to enforce its choices on the rest of the world is already reduced, although the country may still resort to military means, internally or abroad, to prevent outcomes it does not agree with.

It should be noted in conclusion that the United States is still going through the successive stages of a slow-motion socio-political coup, which arguably began under the pressure of its economic predicament with the manipulated election of George W Bush to the presidency in 2000, leading to the events of September 11 the following year. The administration of Barack Obama has only, despite appearances, stayed the course with minor adjustments, thereby vindicating those US watchers who define it as a one-party state.


The author is Convener, Editorial Board, World Affairs Journal. In 1999, he co-founded the Telesis Academy in Switzerland, dedicated to the study of the ancient wisdom of East and West in the contemporary scientific context. He has been associated with the Nuclear Disarmament Forum and the Foundation of Global Dialog in Switzerland

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