Crucial to develop a common food security system and agrarian development action plan, view


Narymbek Ismagulov

Crucial to develop a common food security system and agrarian development action plan, viewThe events taking places in the countries of the Arab world, dynamics of the oil and food prices in the world markets have clearly illustrated the interrelated chain of developments.

All of this poses a serious challenge even for states with the conditions remote from a financial and social crisis. The situation is that the leading “brain centers” and governments start to reconsider the strategies adopted and prepare adequate responses in the light of the changes to come, executive director of the “Post-Crisis World Institute” Foundation Yekaterina Shipova told in an interview with Kazinform agency.

Food inflation is the world challenge. The food prices reached a historic height to date.  It is an absolutely brand new situation when a traditional anti-inflation policy becomes insufficient. Some of the states would weather the food inflation and some of them as we can see have already failed to stand its blow. The surge in food prices puts the state to the test. 

We in Russia study the best practice of the world’s anti-inflationary policies. Kazakhstan’s practice applied back to 2007 is of great interest. You got through the first wave of the food inflation then. You found the answer to the problem without taking administrative or repressive measures. The discussions revolved then around whether to establish a grain monopoly or not. The state monopoly could have broken the market then and lead to deficit. The country chose the other way. The Government inked memos with business on restriction of prices. We believe a similar model well-worked in Kazakhstan could be adopted in Russia. We will send corresponding proposals to the Russian Finance Ministry.

Another way to avoid food crisis is to speed up development of the own agriculture. Both Kazakhstan and Russia possess huge resources to make an agricultural breakthrough in the years to come. The Kazakh Government recently adopted a plan with ample injections to have the country’s agricultural sector developed. The Russia’s plan is under consideration.

I think we could join efforts. Our institute suggests elaborating a common system of food security Russia-Kazakhstan-Belarus and a general plan of agrarian development. We support Ukraine’s proposal to set up a grain OPEC, a club of our countries.

Food price is a serious issue. It is also a political challenge. Rising food prices are known to be a catalyst of dramatic events occurred in the Middle East.

-The riots in Libya as well as concerns that such demonstrations may occur in other oil producing countries of the region push the world oil prices higher.  Would this situation affect Russia and Kazakhstan as hydrocarbons exporting countries?

-High oil price is no bargain. The global oil prices advance towards fresh highs and whip up the food inflation further. For our exporting countries high oil prices pose a threat for they may lead to self-moderation: the budget is replenished, economy grows. But there is no such a thing as an everlasting oil festival. The trend will break to pieces, the prices will slide down. The country bases its 2011 budget on an oil price forecast of $65 per barrel, the Russian – on $75 per barrel. Thereat, Russia’s Vice Premier, Minister of Finance Aleksey Kudrin raises the alarm.

Thereat, Russia’s Vice Premier, Minister of Finance Aleksey Kudrin raises the alarm. Russia will run a balanced budget if the oil price make more than 100 per barrel. It means your budget is more stable. And if the oil prices drop Russia would have to cut its budget expenses.

-Following the situation in neighboring countries, you have probably noticed, Kazakhstan’s National Bank decided to scrap the corridor of fluctuations for the tenge and transit to a managed float of the exchange rate from Feb. 28.What would you say about expediency and efficiency of this move in the light of indefinite global market situation?

-The transit to a managed float of the exchange rate is the demonstration of strength of the National Bank and the whole banking system of Kazakhstan. The National Bank shows its control over the situation.  Kazakhstan’s transition to the managed float of the tenge is due to a large-scale program aimed at rehabilitation of banks carried out during the past two years.

-At the XIII Congress of Nur Otan Party this year President Nursultan Nazarbayev charged the Government to develop a people’s IPO program that will give people a chance to own shares of the national companies. What are the foremost conditions the should be created in order to achieve greater efficiency of this move?

-To develop steadily the countries should have a mass proprietary class – investors. Development of such a class of “people’s capitalists” indicates the health of the nations. The people’s IPO is a powerful instrument for the formation of such a class. The people’s IPO distributes the property of the leading companies between the people. We could call it as a “new nationalization”.

The people’s IPO should be preceded and accompanied by a strong financial literacy program. Another highlight is that the people’s IPO should be oriented, first of all, at the young and educated class. However, the key to success is the development of the national stock market.

We wish you successful people’s IPO.

-In his State-of-the-Nation Address President Nursultan Nazarbayev prioritized continuation of the Forced Industrial and Innovation Development Program as the key factor for the country’s economic modernization. How would you assess the development of the country’s real sector of economy?

-7% growth of Kazakhstan’s economy in 2010 is a brilliant result achieved thanks to the industrialization. It is noteworthy; the processing industry outstrips the development of the materials sector. It means a real diversification is underway. Industrialization is also the opportunity to “tap” a part of world investments. The world observes now the strongest redistribution of investment flows. Russian and German investors display their interest in Kazakhstan’s industrial projects. I think these projects will generate considerable interest in the EU. European industrial capital seeks for new niches in the world.

Owing to the forced industrialization, Kazakhstan, known as an ordinary post-soviet country, ranks to date among a new group of states as “newly industrialized counties”. A group of “newly industrialized counties” comprises Turkey, Brazil, China, Malaysia, India and Kazakhstan, etc. Thanks to the forced industrialization you emerge from “a slow-response trend” the rest of the post-soviet world moves along and embarks on a brand new path of astonishing opportunities.