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UNCLAS SECTION 01 OF 03 ASTANA 000441 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EFIN KZ
SUBJECT:  KAZAKHSTAN:  PRESIDENT NAZARBAYEV CALLS FOR NEW WORLD 
CURRENCY 
 
ASTANA 00000441  001.2 OF 003 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  At the second annual Astana Economic Forum on 
March 11, President Nazarbayev called for a new world currency and a 
"more accountable" monetary policy and urged world leaders to take 
this up at next month's G-20 summit in London.  Nazarbayev 
essentially blamed U.S. monetary policy for contributing to the 
global financial crisis, saying, "The country that issues the de 
facto world currency shows no responsibility to consumers and 
infringes on the rights of the majority of the world's countries." 
He added that the current global financial system lacks clear, 
consistent rules and called for new laws and institutions to provide 
a framework for a more stable currency regime.  Nazarbayev also 
suggested that the countries of the Eurasian Economic Community 
could begin by introducing a new regional currency as they move 
towards establishing a regional customs union.  Nobel Prize-winning 
economist Robert Mundell, speaking shortly after the president, 
supported Nazarbayev's proposal for a new global currency, although 
he cautioned that it would be difficult to implement.  Nazarbayev 
originally proposed these ideas in an article published in Russia's 
"Rossiskaya Gazeta" on February 2.  END SUMMARY. 
 
"KEYS TO THE CRISIS" 
 
¶3.  (U) On February 2, President Nazarbayev authored a nine-page 
article in Russia's "Rossiskaya Gazeta," describing his plans for 
overcoming the current economic crisis.  Entitled "Keys to the 
Crisis," the article argued that the current crisis is unprecedented 
in human history and therefore demands unconventional ideas and 
innovative solutions, free from "old dogmas and stereotypes." 
Although Nazarbayev wrote that it would be "unproductive" to assign 
blame for the global crisis on any one nation, actor, or event, he 
nevertheless suggested that the "existing, de facto world currency" 
(i.e., the U.S. dollar) is illegitimate because it is not supported 
by an international law or treaty signed by the leaders of the 
majority of countries and ratified by a majority of the world's 
parliaments. 
 
A MORE "CIVILIZED, ACCOUNTABLE" MONETARY POLICY 
 
¶4.  (U) Nazarbayev also wrote that the "activities of the issuer of 
the de facto world currency are not democratic," because there is no 
popular participation in the monetary policies of the U.S. 
government.  Furthermore, he argued that the global currency market 
is not competitive or "civilized," since there are no global 
institutions that establish and enforce rules for fair play by all 
of the actors in the market.  He also contended that those in charge 
of U.S. monetary policy were "unaccountable" to the countries, 
companies, and citizens of the world community, "and that is what 
generated the global crisis."  Nazarbayev proposed the creation of a 
World Currency Court of Arbitration to hold "the issuers of the de 
facto world currency" accountable to the world community for their 
decisions. 
 
FROM "DEFECTAL" TO "ACMETAL" 
 
¶5.  (U) Calling the current world currency "obsolete" and 
"defective," Nazarbayev suggested, perhaps with tongue in cheek, 
that the name of the U.S. dollar be changed to the "defectal," a 
combination of the words "defective" and "capital."  He then 
proposed the creation of a new world currency and suggested it be 
called the "acmetal," based on the Greek word "acme," meaning peak 
or best, and "capital." 
 
A PASSIONATE PLEA FOR RADICAL RENEWAL 
 
¶6.  (SBU) Opening the second annual Astana Economic Forum on March 
11, President Nazarbayev reiterated many of the arguments in his 
April 2 article.  (NOTE:  Despite the economic crisis, the Forum was 
a lavish affair held at the new Palace of Independence and attended 
by more than 1,000 participants from government, industry, and the 
diplomatic corps.  Including airfare and per diem costs for several 
 
ASTANA 00000441  002.2 OF 003 
 
 
prominent foreign speakers, we estimate the cost of the event to be 
in excess of $1 million.  END NOTE).  Nazarbayev said that the 
economic models currently in vogue were created in the 18th century 
and are as obsolete as the steam engine.  He also dismissed most 
attempts to reform the financial system as "cosmetic repairs" that 
would not address the root causes of the crisis.  Urging the 
audience to embrace his proposal for a new global currency and new 
international regulatory institutions, Nazarbayev said, "Unless we 
achieve a radical renewal of the basic economic paradigm, the world 
will have little chance to survive." 
 
OBLIQUE CRITICISM OF U.S. INFLUENCE 
 
¶7.  (U) Nazarbayev told forum participants that global market 
participants are unwillingly "forced to abide by rules imposed on 
them by others," a clear reference to the United States.  He further 
complained that a "narrow circle" of monetary policy makers sets 
rules and makes decisions that "often violate the majority's 
interests" and he urged the leaders of the G-20 countries to 
consider his proposal to establish a new world currency system under 
the aegis of the United Nations that, in his opinion, would ensure a 
more stable, competitive, civilized, and accountable financial 
system.  He also said that the "de facto world currency" is not 
legal because it was never approved by international treaty and 
contended that "the system for supplying the de facto world 
currency" is not "democratic, competitive, or free." 
 
A NEW EURASIAN CURRENCY 
 
¶8.  (U) Nazarbayev proposed that the countries of the Eurasian 
Economic Community (Eurasec) take the initiative by introducing 
their own regional currency.  "A single, supranational, cashless 
currency could be introduced" in Eurasec that, he opined, would not 
be dependent on the volatile fluctuations of other world currencies. 
 Nazarbayev suggested that the currency be called the Euras or 
Eurasia and noted that Kazakhstan first proposed the idea of a new 
supranational currency in 2003, at that time to be called the 
"altyn." 
 
CUSTOMS UNION EXPECTED TO DRIVE GROWTH 
 
¶9.  (U) In his speech, Nazarbayev stressed the importance of 
maintaining solidarity and common cause among the countries of 
Eurasia.  At one point, he said rather pointedly, "One cannot expect 
outside assistance in the present situation:  the donors of 
yesterday and those who used to teach us how to live and how to 
govern, now have to resolve their own large problems.  If we don't 
take care of ourselves, nobody will," he said.  He then suggested 
that the proposed Customs Union among Kazakhstan, Belarus and Russia 
would help lead countries in the region out of the crisis, and 
lamented that Ukraine was unlikely to join the Union.  "Simply put," 
he said, "these four states, which account for 85 percent of the 
economy of the former Soviet Union, could become a locomotive of 
assistance to other members of the CIS." 
 
SURPRISING SUPPORT 
 
¶10.  (U) President Nazarbayev anticipated that his proposal might 
not be widely accepted, at least initially:  "I understand that for 
an unprepared audience, the idea of creating a global currency may 
sound too daring," he said, "but my conversations with the prominent 
participants of this forum have convinced me that this basic idea is 
not out of the ordinary," Nazarbayev said.  Indeed, he received 
strong and surprising support for his plan from an intellectual 
architect of the euro, Nobel-prize winning economist Robert Mundell. 
 "I must say that I agree with President Nazarbayev's statement and 
many of the things in his plan for a new world currency," Mundell 
said, adding that the idea held "great promise."  Mundell 
acknowledged that it would be very difficult to achieve the 
"political integration" necessary to implement a new world currency 
and admitted that abandoning current national currencies and 
switching to one single currency would not be feasible.  He also 
 
ASTANA 00000441  003.2 OF 003 
 
 
argued that not all countries should be forced to follow the same 
monetary policy rules, due to their significant differences in size 
and complexity.  (NOTE:  The other Nobel laureate flown in for the 
Forum, Edmund Phelps, was less enthusiastic, saying the proposal 
deserves "further study."  END NOTE). 
 
NOT-SO SURPRISING SUPPORT 
 
¶11.  (U) On February 10, several days after the appearance of 
Nazabayev's article in "Rossiskaya Gazeta," Russia's ambassador to 
Kazakhstan, Mikhail Bocharnikov, said in a press interview that, 
"The creation of a common world currency under the aegis of the 
United Nations is quite possible."  Bocharnikov suggested starting 
with the creation of a regional currency first, based, not 
surprisingly, on the ruble.  "As for Russia, we support the 
president's proposal," he said.  "The first practical attempt in 
this direction would be the movement to the (Russian) ruble as a 
common unit of accounting between Belarus and Russia," he said. 
 
¶12.  (SBU) COMMENT:  Regardless of the merits of President 
Nazarbayev's proposal for a new world currency, three points are 
worth noting:  (1) the proposal effectively criticizes the U.S. 
government and U.S. financial institutions for acting without care 
or concern for the welfare of others around the globe; (2) 
Nazarbayev first announced his proposal in the Russian media, 
signaling a desire to garner Russian popular, intellectual, and 
political support; and (3) the proposal to establish a Eurasian 
regional currency is presented in the context of broader regional 
Eurasian integration, including the creation of a Customs Union with 
Russia and Belarus, that may not be in the long-term interests of 
Kazakhstan.  END COMMENT. 
 
HOAGLAND