Putin calls for EEU single currency, despite fierce Kazakh, Belarusian opposition

By bne IntelliNews March 20, 2015

Naubet Bisenov in Almaty -


Russian President Vladimir Putin has suggested that the embattled Eurasian Economic Union (EEU) should work to create a currency union in the future, despite fierce opposition from partners Kazakhstan and Belarus. Putin repeated his calls for a single currency, for the second time in the past two weeks, at a summit in Astana on March 20.

In a statement for the press following a meeting with Kazakh President Nursultan Nazarbayev and President Alexander Lukashenko of Belarus, Putin said that the leaders had agreed to coordinate the member states' monetary policy. "I believe it is high time we also started talking about the formation of a currency union in the future," Putin said in remarks carried by the Kremlin.ru website. "Working shoulder to shoulder, it is easier to react to external financial and economic threats and defend our joint market."

Putin's remarks came as a reaction to signals sent by the EU that the sanctions imposed against Russia for its annexation of Crimea a year ago will be extended for another six months. Putin's orders on March 10 to the Russian Central Bank and government to draft plans by September 1 to launch a single currency for the EEU were linked to the cancellation of the summit on March 13.

Russia has been trying hard to set up a currency union with Kazakhstan and Belarus as it sees the EEU as a political project, whereas Kazakhstan insists it is "purely economic", though critics charge that the EEU will eventually lead to the country's loss of political sovereignty.

When Nazarbayev suggested at the signing of the EEU treaty in Astana in May 2014 that a financial regulator for the union would be set up in Almaty by 2025, Russia’s First Deputy Prime Minister Igor Shuvalov took his words to suggest that the EEU would in future envisage a financial and currency union between the member states. Shuvalov's comments infuriated Kazakh Deputy Prime Minister Bakytzhan Sagintayev who immediately dismissed Shuvalov's statement. "[Shuvalov] has talked about a financial and currency union. Not a single time have we discussed this issue, neither at our level nor at the level of heads of state," he said.

Lukashenko went further in airing his opposition to the idea. "I don't think this will happen tomorrow and I don't think this will happen during my presidential life," he said in January 2015.

Nazarbayev explained that the March 20 summit had been prompted by "pressing problems" the EEU is facing, which he blamed on the global economic crisis, the Ukrainian crisis and Western sanctions against Russia and the low price of oil. Kazakhstan’s foreign trade with Russia and Belarus decreased by 20.1% year on year to $19.67bn, according to the State Statistics Committee.

Perhaps in response to Putin's insistence on a currency union within the EEU, Nazarbayev called for the resolution of the Ukrainian crisis on "fundamental principles of international law" and called for Ukraine's territorial integrity at a time when Russia is celebrating the first anniversary of Crimea's annexation. "We are interested in that Ukraine remains a stable and independent state and territorially intact," Nazarbayev said.

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