UN Executive Secretary Shamshad Akhtar: INTEGRATION PROCESSES NEED TO BE ECONOMICALLY JUSTIFIED
- One of the main purposes of your visit to Kazakhstan is strengthening of regional cooperation between Kazakhstan and ESCAP. Eurasian Economic Union is one of the examples of such integration. Do you think this kind of integration is predominantly political or economic in its nature?
- It is obvious that once we are talking about sub-regional integration or cooperation, there is always some kind of economic rationale for such processes. I think that economic reasons should take centre stage, when it comes to this kind of integration processes. It is critically important for them to be a top priority.
Talking about Eurasian continent, Kazakhstan has a very strategically important place as it is located between Europe and Asia and serves as a corridor between them. When we are talking about corridors, we are not only implying transit corridors and transport infrastructure development. It really helps to facilitate trade between Europe and Asia, but we are also talking about energy and about enabling trade in energy resources as well. This is where Kazakhstan has an important regional role to play.
- Do you think that regional integration and its institutions facilitate trade? If one thinks about it, those institutions ease the process of trade between the member-countries and complicate the process of trade with anybody else.
- I look at this issue a little bit differently. The most important thing is that there is trade and countries are sharing economic opportunities; member-countries and their region as a whole benefit from this process. There is always an issue of choice. Who benefits more? The region as a whole or a certain member-country? That is why it is important to assess all the economic pros and cons before integrating regionally.
It makes no difference anymore which transport corridor to use. Whether it is a short or a long one, one needs to invest in it to benefit from it economically. For example, we have China that is developing rapidly and needs plenty of resources on one hand. On the other hand, we have Kazakhstan that has a lot to offer – oil, gas and other resources. The entire Central Asia benefits from it. There is a non-zero-sum game situation and everybody wins.
Of course, there are some cases, when neighbouring countries find it easy to cooperate and trade with each other; however, it is not possible to fully utilise that potential for political reasons or because those countries have different outlook.
- Is it more effective to have a common currency when the countries are integrating economically or not?
- Introduction of common currency is a complex procedure. It does not happen over night. Before that happens, some other processes take place. Common infrastructure is developing, simplified trade regimes are introduced, trade and economic ties are becoming stronger and the common market is created. In other words, integration happens and then, possibly, the common currency is introduced.
As the EU experience has shown, common currency introduction has its pros and cons. It is especially illustrated by the last economic crisis. Once the crisis is coming, the member-country that uses some common currency is not at liberty to regulate its exchange rates in a bid to get out of the crisis. Greece is a good example of that. It couldn’t devalue its currency to offset the crisis.
One requires significant political willpower and significant amount of time to introduce common currency. Global Financial Crisis has revived an old discussion of whether or not the common currency is needed at all what role it needs to play if it is needed.
Moreover, once the common currency is introduced, a member-country gives away a part of its sovereignty that allows it to regulate its own currency. It’s an uneasy process. It is easy to say that once some union is created, the free flow of goods and services will start along with free trade, that common infrastructure will start developing. It is much more difficult to implement the intended changes. It is a complex process to introduce a new currency. One needs time to discuss these issues and to make decisions.
- Can sanctions against Russia affect Eurasian Economic Union that is being created, Customs Union or Kazakhstan?
- Unfortunately, we don’t know what the scale of those sanctions is set to be at the moment. Hence, we cannot say who and how will be affected by them. However, Russia is an important trade and economic partner for Central Asian Republics. If something is happening to Russian economy, it inevitably affects Central Asian Economies. What comes to sanctions, this issue is still unclear.
- You have already met some of Kazakhstan’s senior officials. Have you already discussed these issues with them?
- … We have discussed many issues of economic cooperation between Central Asia and ESCAP and implementation of various programs. We also discussed possible support of Kazakhstan in its bid for sustainable development.
Moreover, we discussed prospects for regional economic cooperation. The number of programs is currently being implemented by the ESCAP headquarters in Bangkok as well as by our regional office in Almaty. We have also discussed future joint projects and programs.
I would like to notice that there is a good understanding between us and Kazakhstan government and we share a number of common priorities.