International economic cooperation in mitigating effects of global economic crisis - Jan Kubis
ASTANA. March 12. KAZINFORM. Our Agency offers its readers the short version of the statement by Mr. Jan Kubis, Executive Secretary of the United Nations Economic Commission for Europe at the Second Astana Economic Forum on “Economic Security in Eurasia in the System of Global Risks” held in Astana on March 11-12, 2009 referring to the Kazakh Ministry of Foreign Affairs. Why international economic cooperation is even more important during the global crisis? I would like to take this opportunity and join this debate by drawing your attention to some specific features of the current crisis and the important role that international cooperation can play in mitigating its negative effects. First, its scope. One of the peculiarities of the current situation is that what started as financial turmoil in the United States quickly paralyzed major parts of the world financial system with devastating effects on the global economy. The most efficient way to counteract a widespread slowdown that affects at the same time the entire global economy is a coordinated international response. This demands not only addressing the obvious and immediate implications of the crisis but also anticipating what could be the likely ramifications in other areas, so as to design corrective actions enabling us to take preventive measures. Second, there is a clear need for public intervention to address the crisis. The role of the public sector as a safeguard of economic stability is undisputed. Governments have thus a key role in shoring up confidence and, when necessary, in providing a direct boost to economic activity to offset private sector weakness.Moreover, in many cases it has already been identified that efficient policy responses require coordinated and agreed-upon actions by many stakeholders (including the public and private sectors, international organizations and the civil society), both nationally and internationally. Efforts to promote a wider and more comprehensive international multi-stakeholder dialogue on the policy responses to the global crisis can thus contribute both to a better diagnosis of the key policy problems and to a more efficient therapy in identifying best practices in addressing the problems. Third, the importance of incorporating long-term considerations in the design of anti-crisis programmes. In a crisis, particularly in one that is as severe as the one we are experiencing, there is the danger that policies focus only on short-term issues, without paying sufficient attention to other threats that are less immediate but certainly quite as real. It is much more productive for all partners in the global economic community to look at the current situation in a more positive way. The role of the UNECE in promoting international economic cooperation The UNECE is one of five UN regional commissions whose mission is to facilitate economic development and integration of Europe. Membership covers 56 states: all European, Caucasian and Central Asian countries, the United States, Canada and the State of Israel. Its main areas of work cover: environmental policy; sustainable energy; transport; statistics; trade facilitation; promoting knowledge-based and innovative development The UNECE, through its intergovernmental subsidiary bodies and expert networks is promoting an ongoing multi-stakeholder policy dialogue and exchange of good practices and policies. It also undertakes policy-oriented normative and other “soft” regulatory work in the above noted policy areas. One important aspect of this policy dialogue is that the UNECE (and the UN system in general) offers a platform for a variety of experts and think-tanks to present their views on issues. This helps governments and national policymakers to make more informed choices in selecting policy options and reduces the risk of bias in these choices. A typical UNECE activity with practical significance for Central Asia that calls for dedicated efforts in cross-border economic cooperation in the region is the work on the promotion of efficient sub-regional transport and transit links and simplified border-crossing procedures. We believe that such activities and their practical outcomes will contribute to the enhancing of the economic potential of the countries in Central Asia and will help them better deal with the challenges of the current economic crisis. I would like to stress in this regard the importance that we assign to sub-regional economic cooperation in the framework of the United Nations Special Programme for the Economies of Central Asia (SPECA) which is jointly supported and implemented by the UNECE and the UN Economic and Social Commission for Asia and the Pacific (ESCAP). This programme has established itself as one of the important vehicles for mobilizing and coordinating the joint efforts of the countries in the region in addressing economic issues of common interest. In this regard, I would like also to express our deep appreciation of the efforts of the authorities in Kazakhstan in support of the work under SPECA. How does the crisis affect the economies in Central Asia and what could be the specific policy responses? Let me now turn my attention to the situation in Central Asia and, in particular, Kazakhstan, to illustrate some of the points made above. In recent years, many of the Central Asian economies, including Kazakhstan under the leadership of H.E. President Nazarbaev, have made significant progress in their re-integration in the global economy. This has brought about considerable benefits, in particular, growing exports and imports, increased inflows of FDI, better access to international financial markets and, as a consequence, higher economic growth and rising welfare of the population. These countries also actively participate in various forms of international economic cooperation. The Kazakh economy has grown rapidly in recent years, before the crisis struck. Prudent fiscal policies, which involved the accumulation of resources from the exploitation of hydrocarbons, have been instrumental in reducing the vulnerabilities of the economy and increased the degree of policy freedom in the current downturn. These policies, which were driven by a long-term strategy – the diversification of the economy away from its dependence on the exploitation of natural resources – have put the country in a better position to address the consequences of the current downturn. At the same time, it is encouraging to see that the current anti-crisis plans in Kazakhstan retain a focus on long-term issues while crafting an immediate response to the present financial difficulties. In this regard, the Kazakh authorities deserve praise for continuing to adhere to a strategic view of economic development that seeks further progress in economic diversification and the advancement of a knowledge-based economy while navigating the treacherous waters of the financial crisis. Moreover, it is also encouraging to see important indications of growing international economic cooperation in addressing the negative effects of the current global economic crisis. I refer here to the joint Anti-crisis Fund recently established in the framework of the Eurasian Economic Community (EurAsEC) with the joint participation of Kazakhstan, the Russian Federation and other EurAsEC countries. The main mission of this Fund is to propose coordinated EurAsEC measures in response to the global crisis, a mission that the Fund is due to implement in cooperation with the Eurasian Development Bank. A crisis is a time of economic dislocation, with mounting unemployment as an unavoidable consequence. The provision of a social safety net softens the impact of this temporary hardship on the vulnerable sectors of the population. Kazakhstan has recognised that improved human capital is a fundamental component of innovation-based competitiveness in knowledge-based economies. I would add that internationalization and economic openness – principles to which Kazakhstan’s policies have also adhered – are also essential for the firm foundations of this strategy. Public investment in infrastructure has been recognised in many countries as a useful measure to boost economic activity in the current depressed conditions. At the same time, the development of infrastructure improves the productive potential of the economy, thus supporting long-term growth. The anti-crisis programme put in place by the authorities of Kazakhstan envisages an important role for infrastructure upgrading, which is embedded in well-established strategic plans for economic diversification. Building new forms of cooperation between the public and private sector is a challenge faced by all countries as they seek to address the consequences of the crisis and put in place new financing and regulatory mechanisms. From this point of view, public-private partnerships are seen as an efficient way to develop these infrastructures, through collaborative approaches that pool together resources and skills in pursuing mutually agreed development goals. The anti-crisis programme envisages continued support to the implementation of the “30 corporate leaders of Kazakhstan” initiative, which defines an effective mechanism of cooperation between state and business, in particular, in connection with export-oriented growth. I do hope that the discussions at this Forum will contribute to a better understanding of the existing investment options and to finding more efficient practical solutions to these investment opportunities.