ASTANA (Reuters) - Russian President Vladimir Putin proposed on Friday creating a regional currency union with Belarus and Kazakhstan, Russia’s main partners in a union of ex-Soviet states facing growing economic challenges.
Putin made his proposal at a meeting with the Belarussian and Kazakh presidents, who did not respond in public but have been lukewarm about such proposals.
“The time has come to start thinking about forming a currency union,” Putin told reporters after the talks in the Kazakh capital Astana with Belarussian President Alexander Lukashenko and Kazakh President Nursultan Nazarbayev.
He gave no details but suggested it would be beneficial for the three countries to work closely together as they try to overcome their economic difficulties.
Kazakhstan, the second-largest post-Soviet oil producer and economy after Russia, has said the three nations should synchronize their monetary policies before considering adopting a single currency.
Grigory Marchenko, a former head of Kazakhstan’s central bank, has estimated that it would take 10 to 12 years before such a currency was introduced.
“Two days ago we met with our prime minister,” another former Kazakh central bank chief, Oraz Jandosov, told Reuters. “We asked him about this and he said: ‘We know nothing about this. This is their (Russia’s) initiative. We haven’t spoken about this (with the Russians)’,” he said.
Independent analysts doubt the idea will get off the ground.
“A currency union would be a bad mistake in many ways. Luckily, we can be confident that Belarus and Kazakhstan will never agree to it,” said Christopher Granville, managing director of consultancy Trusted Sources in London.
“Lukashenko did in fact sign up to a monetary union with Russia in the 1990s and spent the best part of a decade wriggling out of that commitment since he realized that it meant the end of Belarusian sovereignty.”
The three leaders made clear it would be a tough year for countries in the Eurasian Economic Union, the Russia-led political and economic bloc they have formed with Armenia, with Kyrgyzstan set to join later this year.
Putin dream of the Eurasian Economic Union matching the economic muscle of the European Union, the United States and China is a long way from fruition, though it has an integrated single market of more than 170 million people.
The fall in oil prices and Western economic sanctions over Ukraine have worsened an economic slowdown in Russia, and the rouble has declined by about 40 percent against the dollar since midway through last year.
Belarus devalued its own rouble in January and there has been speculation on markets that Kazakhstan may soon devalue its currency, the ten, little more than a year after a more than 19 percent devaluation.
Additional reporting by Dmitry Solovyov and Mariya Gordeyeva in Almaty and by Sujata Rao in Lodnon, Writing by Timothy Heritage, Editing by Larry King