Kazakhstan rules out common currency within EEU, again

Kazakhstan rules out common currency within EEU, again
By bne IntelliNews November 11, 2015

Spokesman for the Kazakh president Dauren Abayev has ruled out the possibility of adopting a common currency within the Eurasian Economic Union after a Russian MP suggested that the common currency would be called "Yevraz" ("Euras"). According to his statement published on the presidential press service's Facebook page this issue "is not on the agenda of the EEU" and "is not being discussed at any level of the integration union".

Abayev was responding to a statement made by Leonid Slutski, the chairman of the Duma Committee for the CIS and Eurasian Integration that the work on a common currency was going ahead, albeit with difficulties. He also revealed that the new currency might be called "Yevraz".

The statement angered the Kazakh authorities as their official position is that Kazakhstan rules out any possibility of adopting a common currency. On the other hand, top Russian politicians, including President Vladimir Putin, persistently suggest that the introduction of a common currency is inevitable.

The countries got involved in a public spat during the signing of the EEU Treaty in Astana in May 2014 when First Deputy Prime Minister Igor Shuvalov, suggested that the EEU would in future envisage a financial and currency union between the member states. "At some point we will need to seriously study the issue of a financial union or perhaps even currency [union]. But this is in future as this ... issue is not on the agenda yet," Shuvalov told a news conference following the treaty signing. Deputy Prime Minister Bakytzhan Sagintayev was outraged by Shuvalov's suggestion and he immediately respondeded by saying that "not a single time have we discussed this issue, neither at our level nor at the level of heads of state".

Raising the question of the common currency in current circumstances in the Kazakh monetary market (given the sharp depreciation of the tenge since August) is politically beneficial for Russia as it helps to attract more supporters in Russia to further integration within the EEU and present Moscow as a regional leader in the eyes of ordinary Russians. This is against Kazakhstan's policy: although Astana officially declares support for integration within the EEU in fact it tries to loosen the ties with the organisation following Moscow's unilateral decision to draw Armenia and Kyrgyzstan to the free-trade bloc. The two countries' membership of the union has been seen as political in Kazakhstan whereas the government has been trying hard to sell first the Customs Union and then the EEU as a "purely economic" organisation to the Kazakh public.

Kazakhstan's accession to the WTO will somewhat help Astana abstain from deeper integration within the union.