At the end of May in the capital of Kazakhstan there was the VI Astana Economic Forum, attended by over 12 000 delegates from 132 countries.Among them there are 35 current and former Ministers, 10 Nobel Laureates and more than 40 heads of major international organizations and corporations. This forum proved to be perhaps the most large-scale within the whole history of its existence. Within its framework 73 events were held, including the first World anti-crisis conference and already traditional briefing "Dialogue of leaders", which this time was devoted to the problem of a sustainable economic development in G-Global format.
Opening a plenary meeting of the forum, the President of Kazakhstan declared that intensifying the process of development of the global anti-crisis plan, a number of critically important lessons, given recently, should be taken into account.
"Yet at the end of last year almost all in the world were convinced that the first general crisis of the globalized economy of the XXIst century is already “the turned page” of the history. Many financial institutions convinced us in this. But euphoria did not occur – the collapse of the financial system in Cyprus made doubt in closeness of the era of a universal economic stability. “According to Nursultan Nazarbayev, even an inexperienced person in economics will find similarity in causes of the current collapse of Cyprus banks and five year old American mortgage agencies. Among them, blowing up of financial bubbles and thirst for “easy money”, absence of proper responsibility of national financial institutions and weakness of global financial management.
These and other fundamental causes of the global economic crisis have still not been remedied, and this means that it cannot be deemed completed. Moreover, it seems that it goes into a new phase, which will be accompanied by painful "explosions" of a number of local financial systems. As the head of the state considers, this is the first lesson that should be comprehended and taken into account when drawing up a global anti-crisis plan.
The second lesson, in his opinion is that, paradoxically as it is, anti-crisis measures taken at national levels bring to a global recession. "Undoubtedly, during any crisis action is better than inaction, and Kazakhstan, as it is known, also carried out a successful anti-crisis program. It allowed preserving work places and a positive dynamics of the economic growth. However, not all anti-crisis recommendations worked out within the Group G-20, have been implemented. Many states carried out protectionist measures, which led to a slowdown in world trade growth rates, decrease of prices on global and regional markets". As a result, today, volumes of cross-border lending and investments amount to only 60% of the pre-crisis level.
Another aspect was a dramatic deterioration of the social well-being of people and growth of global unemployment. According to the forecast of the International Labour Organization, already this year there will be more than 200 million of unemployed in the world. In Europe alone, the number of people facing employment problem exceeded 26 million people, which is one and a half times more than 5 years ago. "Many states are cutting expenses on education, medicine, development of a human potential – all this are obvious signs of a global social crisis, which threatens with decrease of the quality living standards level even in developed societies".
As the President of Kazakhstan assumes, social injustice, which is observed today in many regions, is a direct consequence of a financial and economic inefficiency. National anti-crisis plans mitigated effects of the crisis, but they were not followed by efficient radical actions at the global level.
The problem of a defective world monetary system was not solved, which Nursultan Nazarbayev called the main reason of the current world economic storm even four years ago. "Let me remind you that I strongly appealed to change the procedure of issuance and circulation of a world currency, which does not meet the criteria of legality, democracy, efficient controllability and responsibility. But so far there is neither an effective global anti-crisis mechanism, reliable world reserve currency nor groups of regional currencies. For making drastic decisions not enough commitment and responsibility was revealed", – he stated.
The third lesson, which is important to take into account when working on a global anti-crisis plan, is connected with overcoming of trust deficit, which is observed today at all levels. "I am convinced that without a universal trust any anti-crisis plan will boil down to just a practice of "closing gaps”. In the XXI century the world needs a new economic model. It must be based, above all, on an honest and fair world financial system, where there will be no fraud, irresponsibility and wastefulness, where benefits produced by the mankind, will be turned to creation and progress for the sake of happiness and development of each society".
The fourth lesson is to understand that the financial sector cannot and should not evolve in isolation from a real production, both at the global and national level. "A pre-crisis situation, when derivatives exceeded eight times the total GDP of the entire planet, is suicidal for the global economy. Therefore a special emphasis in reforming of a global financial management should be made on creation of an effective model of regulation of derivative securities market".
Besides, in the opinion of Nursultan Nazarbayev, global control over offshore zones should be ensured, as volumes of funds taken away from national economies today are reaching up to $30 trillion. "In fact, they become delayed-action mines that can detonate at any minute. And the situation in Cyprus is a strong warning about this problem”.
The fifth lesson is that the current global crisis is multidimensional. "I called it the first universal crisis of the globalized world no randomly – not only economic, but also political, humanitarian and moral-value causes determine its course and dynamics. Today, for example, one cannot fail to see a problem of a growing number of countries that have become "chronic recipients" of international aid. Internal conflicts in the Middle East and North Africa are a heavy burden on the world economy. But the “world economic fire” cannot be stopped by the “Deluge” of a political destabilization. A new global economy is impossible without a new fair world order”.
Summarizing his observations, the President of Kazakhstan underlined that taking into account of these five lessons, being comprehended in the course of the global crisis, is fundamentally essential for determining a right anti-crisis development trend of the world in the current century.
In his opinion, a real tool for harmonizing key aspects of international economic policy can be a global regulation Pact, to begin the work on which, he called for from the UN tribune in September 2011.
Among the priority measures, the President of Kazakhstan called development of a functioning mechanism of a new global financial system and creation of a global regulator, which defines common rules of the game. Furthermore, it is vitally important to expand the dialogue on a global anti-crisis management within the framework of G-8 and G-20.
At the same time he is confident that any crisis is first of all an opportunity of radical changes. "A year ago, from the tribune of this forum, I proposed the idea of G-Global. I am grateful to all those who positively assessed it! The main sense of G-Global is to propose a positive alternative to a chaotic dynamics of the change of global paradigms of the world development. On its basis in the XXI century a successful dialogue on any global problem and finding a solution acceptable for all participants is possible. Today the world needs a new financial-economic system and efficient security structures, including nuclear ones. In terms of a global transformation, like never before, political will, determination, consistency, transparency and trust are necessary. I sincerely hope that the number of G-Global followers will grow”. And in order this idea to be further developed, Nursultan Nazarbayev suggested, following the example of Rome or Madrid clubs, to create a Board of Trustees of G-Global, within which research of its fundamental aspects will be financed.
Judging by speeches of delegates of the forum the ideas, expressed by the head of Kazakhstan, and is finding large support at the highest level. For example, the UN General secretary Pan Gi Mun in his message to the participants of AEF and World anti-crisis conference (which was read by his Deputy for economic and social issues Mr. Humbo) stressed the need that G8 and G20 countries, while making global decisions, took into account opinions and interests of developing countries.
"You got together at a time of global economic uncertainty. Widespread unemployment, growing inequality, banking fragility and problems of sovereign growth threaten economic recovery... The need in cooperation is left in order to reduce vulnerability of international financial markets and risks of a future crisis. We need to turn efforts to maintaining economic recovery and creating worthy work places, especially for women and youth. The global structure of economic management should better reproduce voices of developing countries in the global economy. Less than one thousand days are left before the end of the period, designed for achieving the largest and most successful project for fighting poverty. Now it is exactly that time in order to speed up efforts on fulfilling Millennium development goals. At the same time, the UN supports states in their work on defining the agenda after 2015. This will demand your experience and participation. I appeal you to use this forum as an opportunity to help us build the world we want".
Speaking on his own behalf, U. Hunbo marked a slight increase of a global economic activity, which can be expected only closer to the end of the current year. The growth will be below the potential in virtually all regions of the world. "Among developed countries, particularly in Eurozone, the situation will remain dangerous. A lot of members of the Eurozone find themselves in a double depression". With regard to the United States, although the US economy feels better than the European, its future is also uncertain.
The position of developing countries and transition economies look much stronger, but some of them will face structural difficulties. In the opinion of Mr. U. Hunbo during recovery, the focus should be on creating work places, and therefore countries with high financial costs and unemployment, should orient on encouraging, rather than on tough measures of curbing the economic growth.
At the same time, he drew attention to the need of improving the coordination of international policy and creation of a clear plan for sustainability of physical and economic indicators. "We need to reduce the domino effects in the monetary policy, which come from developed to less developed countries. We must ensure that developing and especially least developed countries will have enough resources to accelerate their progress in the framework of the Millennium development goals.”
The President of the UN Economic and Social Council Nestor Osorio supported Nursultan Nazarbayev's statements regarding the need to reform the global financial system. "The main conclusion of the world economic crisis is completely clear: in terms of absence of a common economic management we will not be able to prevent international economic crisis. This means that we have to increase transparency, improve supervision over the international financial system that needs substantial reforms, in order to reflect today's realities at the global level".
The process of world economic management requires active involvement of all interested parties. "It is completely clear that the time has come, when public authorities, civil society and private business should join their efforts in order to work not in isolation, but in a uniform manner for the sake of the future and partnership", – Mr. Osorio concluded.
Nobel laureate Robert Mandell once again suggested creating a new world monetary and credit system, noting that this issue must be raised at the forthcoming meeting of Nursultan Nazarbayev with leaders of G-20 in St. Petersburg. "We must establish a relevant committee, because we still operate within the framework of the Bretton Woods order, but the system itself has long ago disappeared. It is necessary to invent repeatedly a system, which will operate within the framework of “Group of Twenty”, including both large countries and small states”.
According to Mr. Mandell, another condition for solving the financial crisis is introduction of a global international currency. "The US dollar was the main currency within the Bretton Woods system. Creation of the Eurozone and introduction of Euro determined the basis for a non-dollar system. New blocks that make up 40% of the global economy, were created. It is possible to fix one exchange rate in the world (for example, prices for gold and silver), but it is complicated to do it, as it is difficult to gain cooperation in this issue between the United States Federal Reserve and the European Central Bank”.
One of the main subjects of discussion was integration processes, which, in the opinion of experts, should be a foundation of a large-scale modernization of the world economy. As the Chairman of the board of the Eurasian Economic Commission Viktor Khristenko considers, the crisis in many respects was the catalyst of emerging of new regional economic unions. The Eurasian project was not an exception, the idea of which appeared 20 years ago. However, the last three years were the period of its transition into a new capacity. "It meant starting functioning of the Customs Union, beginning of the formation of the Common Economic Space, removing barriers and restrictions, creation of a single market – the only driver, which is able to reinvigorate economies of our countries".
Today the key task for CU participants is to deepen integration, without repeating mistakes of other similar unions, when expansion was assigned a primary importance to the detriment of the depth of integration processes. "Eurasian Economic Union is a strategic long-term project. To anticipate instant effects in such kind of project means to cherish illusions, and all three of our countries are not in a vaccum and when our key partners (e.g. the EU) currently experience crisis, recession and drop of demand, we cannot remain untouched by these negative phenomena. We are long ago and tightly had been integrated into the global economy, it is an objective context and it cannot be ignored", – Mr. Khristenko said.
Issues of the regional integration of three Post-Soviet countries were considered in the final day of the forum. So, the vice-minister of economy and budget planning of Kazakhstan Madina Abylkassymova noted that there exist certain potential risks in the sphere of macropolitics. "Despite the fact that the deep economic integration implies substantial benefits, it can also contribute to a more rapid spread of crisis processes among partner-countries. Worsening of the situation in Russia, which has the largest portion in the total exports of our country, can have the strongest influence on the economy of Kazakhstan". According to her estimates the forecasted in 2013 reduction of the economy growth of the Russian Federation from 3.7 % to 2.4% can result in falling GDP growth rates increment minimum for 0.1%. Growth of the forecasted export in real terms can drop from 3.5% to 3.2%.
She also drew attention to the fact that with CU entering, the raw materials orientation of Kazakhstan export intensified. Thus, the portion of mineral products in it rose from 52% to 57.8% and metal products from 23% to 27%. At the same time the portion of exports of the chemical industry, products of animal and vegetable origin decreased. Besides, the sales markets of goods of the manufacturing industry decreased. Everything points to the fact that it is not allowed to ignore the risk of repeating mistakes of failed trade unions, when in their mutual trade goods prevailed, which had a low competitiveness on the world market. "This is an important support for manufacturers, but does not have special benefits to consumers", – Mrs. Abylkassymova stated.
The briefing "Dialogue of leaders", which traditionally is the final chord of AEF, once again demonstrated viability of G-Global idea, since anti-crisis solutions within the existing formats of the global dialogue still do not bring expected results.
In particular, the Adviser to the President of the RF Sergey Glazyev noted that all parties in words are interested that anti-crisis agreements to be brought into effect. “But frankly speaking, the only way, which is realized today, is the way for openness and denial of protectionism. As you know, G-20 and G-8 make decisions upon a consensus, but when parties have different interests, it is very difficult to work it out. Among participants of “Twenty” there is a group of countries, which have an opportunity to issue reserve world currencies – USA, Great Britain, European Union and Japan, and the rest are donors of issuers of world currencies. Speakig in mathematical terms, it means they have opposite interests – those, who issue world currencies are forced to increase the national debt, as they issue in these currencies growth of their obligations. The rest in this game are forced to finance their debts, and therefore the Twenty is divided into those, who print money and those, who buy their debts. Nonequivalence of foreign economic exchange, which emerges due to this, reaches overcritical sizes”.
As an example Mr. Glazyev cited Russia, which “must have surplus of a trade balance, accumulate superprofit from oil export in reserves, invest reserves into purchasing bonds of issuers of world currencies, and afterwards, due to absence of long money inside the financial system, is forced to borrow money again from issuers of world currencies”.
Annual losses, which the Russian financial system bears from such unequivalent exchange, amount to $50–100 bln. While prices for oil remain high, such state of affairs may still exist. However misbalances grow and the main point that needs to be solved is: “how in terms of such difference and even polarity of interests come to a consensus, which will give us tools of fighting the crisis”.
In the opinion of Mr. Glazyev, Kazakhstan is one of the best countries regarding attraction of foreign investments for its projects, and not having a possibility to issue a world currency. “It seems to me that this example may be used in a wider context, because no matter how much we talk about the financial crisis, the way out from it, is development of innovations, and a new technological mode. This is the only way that can save the economy today. Therefore the main point is how to connect excessive money, which today is issued by four world reserve currencies, with new technologies, which grow at the rate 35% per year”. As the expert assumes, long-term target programs of using these money in large international development projects, including infrastructure, are necessary for this purpose.
In his turn, ex-head of the International Monetary Fund Dominique Strauss-Kahn stated that the world community needs for the purpose of an efficient economic interaction to establish a new organization, which could really ensure such cooperation. “Otherwise, we will just not get out of the crisis, neither in Europe, nor out of it. The core point for me is what institute, what group of people will undertake leadership and propose decisions that will be applied in the whole world”.
Nestor Osorio paid attention to the fact that, if heaps of financial problems of the European Union are not solved, the region will suffer the fate of the Middle East and North Africa. “What do we see here, especially in the situation with the growing unemployment? This is a demonstration of a real social crisis, wherefrom democratic systems may suffer. I apologize, if I go too far, but if the situation is not improved, we will come to the “European spring”. As you remember, the “Arabic spring” was a usual strives for freedom, expression of democratic rights and human rights, that is, it occurred because of poverty, because of unemployment, because of the need to change the system somehow”. Now the European Union fights poverty, decreasing meanwhile the welfare of people. “And how to create welfare, how to start-up this engine? Foreign investments. And where do they go now? Latin America, South Asia, and some African states. That is, money from Europe and USA are not invested into strengthening their well-being. Why? Because there is no confidence in their systems, no confidence in their own institutions”, – the expert concluded.
Alejandro Hara, Deputy General Director of the WTO assumes that in order to solve the Eurozone crisis as soon as possible it is required to "intimidate" leaders of “Group of Twenty”. In his opinion, the European Union does not have an opportunity to react timely and properly the challenges, as heads of countries, busy with their internal problems, cannot gather and jointly efficiently work on issues of ecology, climate change, finance, trade and etc. “It seems to me it is necessary to get the state leaders a little bit frightened, so that they could move on faster, were accountable and responsible for their statements. G-20 has enormous powers, but everyone says that it is a formal club. From year to year it is necessary to demand from them: last year you said that you would do “A”, and what have you achieved at the national level or at your level?”, – Mr. Hara proposed.
Summing up the discussion, the ex-president of Bulgaria Georgi Pyrvanov underlined that he supports G-Global initiative, as it allows everyone to search for solutions of problems of the modern crisis. “I would like to hail G-Global initiative, because this format, compared with others, which close the opportunities of searching solutions for everyone, is expected to inclusion, communication and participation. Such kinds of forums gather representatives of science, politics, diplomacy, management and banking sector. So, it turns out to be an interdisciplinary discussion, which, at least, for us, politicians, is very useful and important”.