Eurasian Vision of Global Problems
In late May, Astana became again a meeting place for representatives of the political, business and scientific elite, the center of discussion of problems and prospects of global economic transformation.Some 8,000 delegates from more than 90 countries, including eleven Nobel laureates, four participants of the global rating "A Hundred Thinkers of Our Time," also current and former heads of the states and governments, and heads of international organizations and regional associations arrived in Astana for the Fifth Astana Economic Forum (AEF). Taking into account the scope and scale of the considered topics, we can state today that the dialogue platform of the AEF has no analogue throughout the Eurasian region.
G-GLOBAL in action
Opening the event, President of Kazakhstan Nursultan Nazarbayev noted that in terms of content the AEF, is in fact, becoming a transponder of Europe’s vision of problems of global development and economic transformation of the world. Although the latter topic has been discussed in the world for a few years, however, many of the ideas and theories proposed have not helped to overcome the shortage of practical solutions. As a result, the global economic crisis has turned into social one, which has spread to many countries, including developed ones.
According to the President of Kazakhstan, today enormous funds are allocated to rescue certain national economies, to maintain the balance of the World Bank and IMF. "Unfortunately, the above are all the positive steps taken by the G-8 and G-20. But every billion dollars is likely to raise a billion of new social problems. As they say, it's like putting out a fire with gasoline."Such a half-way approach to global recession response is the striking evidence of one more systemic crisis – "corrosion of international relations." On the one hand, the creation of the G-20 considerably expanded the "range of dialogue" on reforming the global economy. However, today, four years following the first summit of the anti-recession G-20, this format no more seems sufficient. Moreover, at the last World Economic Forum in Davos, many world leaders finally agreed that it's time now to do something with capitalism, or more exactly, with its neo-liberal modification.
In view of this, at the end of 2011 President Nazarbayev proposed in the framework of the AEF to test a new format of dialogue, which he calls G-GLOBAL. This idea received widespread support among politicians, experts and business circles. As a result, during a few months more than 30 thousand users from 140 countries had become regular users of the communicative website G-GLOBAL. In fact, an intensive search for ways of forming a new stable and equitable world order of the 21st century began.
Nursultan Nazarbayev presented the AEF participants a series of findings made on the basis of proposals submitted under this initiative. First, the international community is going through one of the most controversial and difficult stages of its history. "Never before has mankind had such great potential for successful development and self-destruction. Realization of this makes it topical the solution of global problems solely on the basis of a comprehensive approach."
Second, this level of global communications, enabling today to shorten distances, to "compress" the time, and to overcome the historical, political and other barriers has never been before. Along with that, this potential should not become a tool of information provocation, deliberate collapse of the moral foundations and public order in the "undesirable" societies.
Third, today the world is learning to live in the new conditions. Society has to follow the path of progress and growth of technologies and levels of public relations. For this, it is important to actively learn the successful experience of development. "Kazakhstan is ready for such cooperation. It shows readiness to learn and share its experience with its friends."
Fourthly, the structure of the global world in the 21st century should take into account the people's desire for justice. "Justice in the 21st century is not only a moral. It is one of the crucial conditions for successful national and global development. In the 21st century immoral are those socio-economic models that are built on pumping the natural resources of the third world countries. The resources in those countries will deplete one day, and we will come again to a dead end."
Fifthly, it is important to pull out the entire system of international relations from the state of stagnation. It is necessary to form transparent world politics with a high level of trust between the states as the foundation and with their mutual responsibility for the present day and the future of every region and the entire world.
According to President of Kazakhstan, G-GLOBAL as a civilized initiative of the information epoch showed its incredible popularity for the six month period. "It demonstrated the possibility of finding an answer to the systemic crisis that had hit the global economy, moral foundations and international relations... I believe that all together we will be able to achieve the main goal of G-GLOBAL – to propose to the international community an attractive and effective model of international relations in the 21st century".
The principles of the new world order
Further, Nursultan Nazarbayev presented to the AEF delegates five principles of G-GLOBAL, which, in his opinion, could become a fundamental basis for the new world order.
The first principle is evolution, but not revolution. Mankind has exhausted the limit for revolutions and world wars back in the last century; so today, the successful updating of the global architecture can only be evolutionary. The path of reforms is the only way to progress in the 21st century.
The second principle is fairness, equality, and consensus. Today’s classification of countries for major and minor, leading and lead ones is out of date from the viewpoint of civilization. An alternative to the old geopolitical practices is the fair approach to development of the global economy, a monetary system and policies that are based on the equality of all the countries. In prospect, it is vital that global solutions at all levels (including the UN, international organizations, regional associations, forums, and summits) are taken only by consensus.
The third principle is global tolerance and trust. This involves not only inter-ethnic, interreligious and intercultural mutual respect. Relations between the states should be tolerant, regardless of their geopolitical weight and influence, historical experience, and level of development of the economies and society.
The fourth principle is global transparency. Peace in the G-GLOBAL format is a transparent community of nations. There should be no "double standards", degrading the merit of the nations, both of the large, medium-sized and small ones. Maximum openness and transparency in international affairs is needed.
The President of Kazakhstan called constructive multi-polarity as the fifth principle, in the framework of which it is necessary to create a balanced system of geopolitical curbs and counterweights. Within this system there should be no place for geopolitical snobbery or psychology of "blocking", which is a negative legacy of the bipolar world. "Powerful integration associations have to co-exist peacefully and work closely within this system. The Eurasian Economic Union, which we are now creating, will become one of them in the near future. I believe that only in the condition of constructive multi-polarity, will the world solve pressing issues of the global economy and will acquire sustainable development."
To discuss these five principles, Nursultan Nazarbayev proposed to create a special web portal which will be segmented by the main ideas of G-GLOBAL. Among them, there are the reform of the global economy and monetary system, creating a nuclear-free world, the strengthening of global security, the expansion of dialogue between cultures and nations, the implementation of the concepts of global energy and environmental development, including Kazakhstan's initiative "Green Bridge". In his opinion, all these areas could form the basis for developing the Global Strategy of the Future. The International Institute of Predictions which could be set up on the basis of the Eurasian Economic Club could help with scientific studies of the global strategy of the future and expert’s opinions on that.
In conclusion, the President of Kazakhstan urged the AEF participants to adopt the Address to the UN to conduct in Astana in May 2013 a Global Anti-Recession Conference to develop the anti-crisis plan of action.
Large-scale conceptual ideas expressed by Nursultan Nazarbayev gave support and development in further speeches of the participants from abroad at the main plenary session of the AEF.
Thus, a special guest of the forum, Turkey’s Prime Minister, Recep Tayyip Erdogan, said that the recession is a common problem, which to solve the combined efforts of the international community are required. Today, when the European and global economy are slowing down, credibility and trust play a key role here, as without them there will be "no investment, no money, and no welfare of the people." In this regard, the G20 should play a more serious role. Along with that, he criticized the subjectivity exhibited by the rating agencies which in the evaluation of the emerging markets are often based on political or ideological motives. They should fairly consider the employment and economies, and only then evaluate. Otherwise, this would harm the states to which they assign ratings. Speaking about the achievements of his country, Turkey’s Prime Minister noted that today Turkey has one of the fastest growing economies in the world. Over the past nine years, the economy of Turkey grew fourfold, and Mr. Erdogan could share that successful experience. "Of course, every country has its own conditions, in which it combats the recession and defines its strategy for economic growth. However, in terms of financial policy and the system of incentives, we could be an example for the others and cooperate in overcoming the recession."
High appraisal to the Astana Economic Forum as a platform on which the present day discussion of key issues takes place was given by the UN Secretary-General Ban Ki-moon in his welcoming speech for the forum, which was read by Under-Secretary-General for Economic and Social Affairs Sha Zukang to the AEF participants. As indicated in the address to the participants, in 2030 the world will need at least 50% more food, 40% more energy, and 30% more water, as well as millions or even billions of new jobs, and therefore to resist the existing challenges can only be possible through creative unconventional thinking. In this regard, a new economic model should be based on environmental sustainability and social development, with attraction of new segments of the population, as well as with taking into account the fiscal, budgetary, intergovernmental, social and environmental aspects.
Ex-President of Germany Horst Koehler in his speech deepened into the issue of observance of the principles of social justice. Stating that the economic recession has not ended yet, he noted that one of the underlying causes of this problem is the lack of a common format of regulation, and thus, it is necessary to develop common approaches to solving global problems. In this regard, the observance of ethics should become the main condition. "The society in its unrestrained avarice, in the pursuit of short-term profits and financial well-being became neglecting morality... In Berlin, one can buy a postcard with the slogan: "If everyone starts thinking only about yourself, we will all lose." It really has a deeper meaning. We have to take into account the value of all the nations in the world. We need a global ethic. Truthfulness, tolerance, equality, partnership and equitable economic order – these are the priorities mankind should adhere to in the future. Only then we can succeed."
Deputy Managing Director of the International Monetary Fund, Min Zhu said that the world is entering the stage of slow economic growth. For example, in 2012 global GDP grew by 3.5%, compared to last year's 4%. The growth itself is becoming more heterogeneous, ranging greatly from country to country. As a result, the foundation of the global economic situation is changing – the main driver is shifting towards the developing countries; the latter are likely to account for more than 50% of global GDP in the current year. The former leaders, the developed countries, by contrast, are slowing down as a result of unresolved issues with sovereign debt and the banking sector. The IMF predicts that the situation will further deteriorate, and stabilization in Europe can hardly be expected before 2016.
Speaking of Central Asia, Min Zhu said that the countries of this region well tolerated global financial turmoil, in general. Along with that, in the condition when the investment capital flows are extremely unstable, for us it is quite important to diversify the economy so as to move away from its pronounced dependence on raw materials. The second objective is to rehabilitate the financial sector, which will protect against "external shocks".
A regular participant of the AEF, Nobel laureate Robert Mundell, also drew attention to the changing balance of interests and power between the developed and developing countries. There are always prerequisites that such rebalancing will take place at the IMF’s and World Bank’s level. He thinks the significant event is that the yuan is now a part of short-term loans of the IMF, along with the dollar, pound and euro. This is the event we were waiting a long time for. The same is likely to happen with the Russian ruble, because the Russian economy is growing rapidly and already exceeds many of the economies of the European Union. Also, he also listed three main problems in the world's financial architecture. These are unstable prices for raw materials, the volatility of currency exchange rates, and the lack of monetary coordination between the euro and the dollar." If we want to have a global credit system, we should not let these two currencies be unstable with respect to each other. My idea is that the U.S. should buy the euro, the European Central Bank should buy dollars in order to balance the exchange rates of both the currencies. According to Mr. Mundell, the optimum corridor for the rate of exchange is the range of $1.25 to $1.30 per euro. Such stabilization would be a "good anchor" for further expansion of the global monetary system. Here, China could be involved with the huge monetary reserves it currently possesses... In the condition when the yuan is almost stabilized against the dollar, we would be able to stabilize 50% of the global economy.
As for a new global reserve currency, it must necessarily appear in the next 10–20 years. Moreover, according to Robert Mundell, it must not necessarily be a monetary unit of a particular country. This may be the right of short-term borrowing from the IMF. For example, the solution can be to set six ounces of gold as the scope of such right and to add gradually to this system the ruble, pound, yen, and yuan. However, currently, these rights of short-term borrowing from the IMF cannot work because they are based on two currencies which are absolutely unstable against each other."
Lessons from Europe
After the main plenary session, further work of the AEF continued in the form of individual sessions, briefings, roundtables, conferences and forums. In total, 55 events of various kinds were held during the three days. The variety of topics considered at the forum could be conditionally divided into three main groups: 1) Financial capital and the global economy, 2) Industrial and innovative development, and 3) Sustainable development and global social condition.Yet the most discussed topic, both at the open discussions and in the margins of the AEF, was about Europe. It is quite topical for the former Soviet Union today, where integration processes are in progress: the experience of the EU (both positive and negative ones) should be taken into account by the Customs Union and Single Economic Space member countries.
No wonder that the future of the Eurozone countries was the refrain at the briefing "The Dialogue of Leaders: The New Financial and Economic Policy." The briefing became the ending event at the AEF 2012. During the discussion, the former British Prime Minister Tony Blair said that the current world economy is very vulnerable, and the key to changing the situation is the availability of a coordinated policy for further growth. This is especially pressing for the European countries which have no alternative to carrying out fundamental structural reforms in areas such as social security and pensions, labor market and others. According to Mr. Blair, if Europe is able to balance the macroeconomic growth and macro reforms, it will have a good chance to get out of this recession successfully.
In his turn, Italian ex-Prime Minister Romano Prodi said that European countries should come to a truce to calm down the financial markets to develop a common strategy. He said if we have the refinancing rates rising as in Greece, we will not be able to implement these strategic reforms. Therefore, we need an immediately long-term strategy to develop measures to overcome the economic recession.
Ex-Prime Minister of the Netherlands, and now President of the Club de Madrid Wim Kok also agreed with the necessity of structural reforms and austerity. However, he believes that it is necessary to develop targeted, selective initiatives to achieve, at least, higher rates of economic growth, since the unemployment, especially among young people in some countries of Europe, has already reached 40%.
Kazakhstan’s Prime Minister Karim Massimov expressed his vision of the situation in the Eurozone. He compared it with the recession in Southeast Asia. In his opinion, those advices and recommendations the IMF and World Bank gave to the ASEAN countries 10–12 years ago, could be a help to the countries of Europe today. "Politically, this will be painful measures, but this is the only option... In our view, Europe, at least, some parts of it, is strong enough to survive." The main problem of the EU is that when in the Eurozone the political and monetary unification took place, the question of a unified budget system had not been resolved. "This is what we are currently discussing in the framework of the Customs Union. The politics should not go far ahead of the economy; otherwise, we will fail. In my opinion, first we should see a single Ministry of Finance for the European Union, and only then the euro will be able to become stable."
According to Executive Director of the Reinventing Bretton Woods Committee, Marc Uzan, what is happening today in the Eurozone is not a crisis of the European currency, but crisis of management. We have a credit and monetary union, but we have no economic union and political union. This is the same level of the problem we face globally.
In this regard, Deputy General Secretary of the Eurasian Economic Community Sergei Glaziyev noted that to come out of the recession the structural reforms of the economy and a new system approach are required, when the real and financial sectors are considered as a single unit and institutes ensure this interrelation. “As we work in the open global world today, institutes should be global as well. I.e. those who print world currencies should take responsibility before the other world and comply with certain limitations. Those who have possibility to multiply money should make particular limitations, clear to everyone”.
It is of note that practically all the participants of the debate agreed with such viewpoint. This means that the consensus, at least, in the framework of the AEF, is reached. The matter is when the consensus will become a global one.
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