Young Republics Play Waiting Game Over New Currencies
TASHKENT, UZBEKISTAN — A TENSE guessing game is developing among the republics of the former Soviet Union. Each republic plans to introduce a national currency, but none wants to be seen as the first to ditch the ruble.
Uzbekistan has already printed its own currency, the soum. "Our government has printed enough new money for a complete distribution," says Sadik Safaev, Uzbekistan's first deputy minister for foreign economic relations. "It was printed with help from abroad, but eventually we will be able to print our own money here."
Confidence in the old Soviet currency would be seriously damaged should any republic leave the ruble zone. Each republic knows its economy would suffer greatly if it were still using rubles after another country switched to a national currency. Rubles would flood into the republic from all over the Commonwealth of Independent States, draining it of consumer goods and creating massive inflation.
"Any country left behind in the ruble zone will certainly die in the end," says Uzbekistan's foreign minister, Ubaydulla Adburazzakov. "But Uzbekistan will not be the first to leave. We have a gentlemen's agreement with the other countries of the [Commonwealth]."
Mr. Abdurazzakov's government, however, is coming under increasing pressure to distribute its soum unilaterally. A dollar buys 120 to 130 rubles on the open market, and Uzbek economists fear dependence on the ruble will bring down the economy.
Uzbekistan's president, Islam Karimov, has even formed a kind of financial SWAT team of young economists briefed to take control of any urgent financial crisis. Top of the agenda is the immediate introduction of the Uzbek soum in the event of a "first strike" by another Commonwealth country.
"If any other [Commonwealth] country begins its own money, it would be [a] catastrophe for us," says Mr. Safaev, a member of the team. "We would be awash with useless rubles and our products would flood out of the country. The only way to create an economic defense system is to form our own currency."
The creation of new currencies is expensive, but it would enable the republics to assess their production figures accurately. Under the Soviet system, products were channeled through Russia and sold en masse, making it difficult to know a product's origin.
Commonwealth capitals are now eyeing each other, anxious not to miss the first sign that another country might be about to introduce its own currency unilaterally.
"It would be better if all the countries of the [Commonweath] introduced their own currencies simultaneously," Safaev says. "But it is very difficult to anticipate the actions of some politicians..... I think the strong republics [like Ukraine and Russia] will be first."