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Russia, others move toward currency union

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By Richard Giedroyc

It’s not all about Crimea. Despite the rhetoric and saber rattling by both Russian and US politicians regarding the recent Russian occupation of the Crimean region of Ukraine, Russia’s true intentions become obvious not through its military actions or political statements, but through what it is trying to achieve with its currency.

The bottom line is that Russia is attempting to reunite as many of the nations as possible that emerged when the Soviet Union collapsed during the late 20th century. This appears to be a monetary reunification, if not a political reunification. The United States and its allies are trying to prevent this reunification as this chess game for regional political superiority continues.

The Bank of Russia tried to keep the former Soviet nations under a single fiduciary umbrella through the Commonwealth of Independent States currency issued by that bank immediately following the collapse of the Soviet Union. Where the CIS failed the Eurasian Economic Union now hopes to succeed. In May Belarus, Kazakhstan, and Russia will sign an agreement through which a joint monetary union will emerge. There are indications Armenia and Kyrgyzstan are among several other former Soviet republics that might join the EEU soon after.

Russia’s dream could be a nightmare for the United States and its allies. In December 2012 former U.S. Secretary of State Hillary Clinton said of the EEU, “It’s going to be called [a] customs union, it will be called the Eurasian Union and all of that, but let’s make no mistake about it. We know what the goal is, and we are trying to figure out effective ways to slow down or prevent it.”

Its goal is obviously pro-Russian trade. Slowing down or preventing it is going to be difficult. The presidents of Belarus, Kazakhstan, and Russia will sign the joint monetary policy and financial markets agreement in May. This is all about trade, either Russia or the United States being the dominant trading partner with the countries involved.

According to an article appearing in an early March issue of Moskovsky Komsomolets newspaper, the founding Eurasian Central Bank will issue currency in “altyn” denominations somewhere between 2017 and 2025. Altyn is a Russian word that may have been borrowed from the Golden Horde Turkic numeral “alti” for six. The Russian altyn refers to the 3-kopek coin introduced in 1839 during the reign of Czar Nicholas I. During the 17th century 20 altyn was the purchase price of a calf, five altyn would buy a piglet, while two to three altyn would purchase a goose.

The Moskovsky Komsomolets article describes the ECB as being the “supranational megaregulator of the joint currency.”

The currency union was first suggested in 2012 by Kazakhstan President Nursultan Nazarbayev. Nazarbayev is quoted in the April 10 issue of the Russian newspaper Pravda as saying the world is moving towards a new monetary system that Nazarbayev describes as going from “defective capitalism” to “the new capitalism that would be based on a non-defective currency—self-growing global wealth.”

Nazarbayev argues that the “world currency was not de jure legitimate because it was never adopted by any communities or organizations,” but only explains “There is not such international law,” while failing to define this world currency of which he speaks.

Despite the attempts of the United States to discourage the EEU Kyrgyzstan and Tajikistan have each expressed interest in joining the organization. Armenia is considering joining as well (Russia is Armenia’s biggest trading partner). Ukraine submitted an application to participate as an observer in August 2013, several months before a pro-Western revolution toppled Ukraine’s pro-Russian president.

Georgia took an interest in the union, then announced it will continue to seek integration into the European Union instead. Despite Georgia’s change in attitude Russian Prime Minister Dimitri Medyedev included Georgia as a possible future member to the EEU in a speech Medyedev made in August 2013.