The Rest of the World
by Warren Coats

I am back in Almaty, Kazakhstan, to provide technical assistance to the central bank on inflation targeting. This continues work I started a year ago here, more than a decade after I led the IMF’s technical assistance missions to the then newly independent National Bank of Kazakhstan in 1992-1993.

Sitting in the breakfast room of a normal Hyatt Hotel, at about the time I was having dinner at home last week, it was interesting to study the faces and ease-drop on the different languages being spoken around the room. Back home I don’t think much about the ancient or recent nationalities or ethnicities of the faces in restaurants. Here anyone who is not Kazakh or Russian is visiting. I am amused to note that here all of the waitresses and bus boys are pale skinned, blond or reddish haired Russians or dark haired, round faced Mongolian descended Kazakhs. Before coming here the first time in 1992, I had never seen a Mongolian/Kazakh/Kyrgyz. Who really knows what Genghis Khan really looked like? They look different than anyone I had seen before. In Cayman, none of the waiters or bus girls are Caymanians. They are from every where else in the world (especially Canada). In the U.S. who notices?

Looking around the breakfast room, some faces seemed familiar. A few actually were familiar. An IMF team is here. Others I wasn’t sure about, but between my first and second cup of coffee I can imagine almost anything and am sure of nothing. The Texan oilmen were obvious from their manner and dress. Tall blond Scandinavians were also obvious but I can’t really tell one from another. Most faces were Asian (Japanese and Chinese). I was sure that I had seen the beautiful black woman here last year, but that is unlikely. Hers is probably the only black face I will see during my stay. I automatically assume that a black person is American, but she spoke English with an African accent.

For all of its problems—it is an increasingly large oil exporter, which has been a curse to most countries so blessed—Kazakhstan continues to make solid economic progress. Real GDP growth has averaged around 10% per year (yes) since 2000. The central bank and commercial banks have steadily deepened their institutional capabilities. Kazakhstan could become a successful and stable financial leader in the central Asian region.

This trip started in Amman, Jordan last week to participate in an IMF workshop for the Central Bank of Iraq and the Ministry of Finance of Iraq. Twenty Iraqi officials participated and I was able to catch up with old Iraqi friends and counterparts in the safety of Amman. I have not been willing to return to Baghdad since I was there last December. My previous meeting with Iraqi officials this year was in Beirut in February because the suicide hotel bombings in Amman made it seem unsafe. Oh well.

Amman is one of two main portals (civilian and military) to Baghdad. It is a good place to run into other people working in Iraq.

With Jordanian friends I discussed whether there has been lasting effects in Jordan of the widespread (and semi official) smuggling of oil from Iraq during the economic sanctions imposed on Iraq between the Gulf war and the most recent one (oil for food). The economic sanctions on Yugoslavia in the mid 1990 had created (or at least greatly enlarged) a criminal underground in Bulgaria that got rich helping Yugoslavia circumvent the sanctions. Bulgaria continues to have trouble getting rid of the bad habits developed then. It is similar to the impact of outlawing drugs demanded in the U.S. in enlarging the mafias in both the supplying countries (Colombia, Afghanistan, etc) and in the U.S.

An American official told me that the political situation within the Iraqi government is worse than it appears. The law on oil revenue sharing is not good and is deepening Sunni opposition to the federalization of Iraq. Nation building political deals within the government that could help isolate and undermine many of the insurgent movements are not being made or are unraveling. The central Iraqi government is falling apart. Each government ministry is controlled by a different political/religious group with “ethnic” cleansing slowly advancing in each ministry. Balkanization progresses and little else is. The American official was working on Plan B (increased Iraqi self reliance and regional cooperation). The Iraqis will have to do more for themselves, he said. He feared that Plans C or D might overtake Plan B before it can be attempted. Iraqis will have to fix the dysfunctional government themselves. There may be a future in Iraq for Mr. Chalabi yet (he did not win a seat in Parliament in the last elections).

A Jordanian doctor working at the Jordan International Police Training Centre told me that the Iraqi police cadets being trained there where were a sorry lot. They are more interested, he said, in phony sick-leaves than training, and are not representative of the tough Iraqi people.

A Director and Department head of the Central Bank of Iraq told me that the recently and forcibly retired Deputy Governor of the Central Bank (a Sunni) was not worried about what he would do with his time after “retirement”; he was worried about how he would replace the security the Central Bank had provided him (24/7 armed guards at his home, and armed transportation). The Director also added a new reason for public resistance to saving in banks and book-entry securities (rather than barer instruments) to the usual desire for anonymity for tax evasion reasons. People are afraid to hold wealth in an identifiable and thus traceable form, he said, for fear that it will make them a kidnap target or facilitate its capture by political or religious enemies.

The week after that I escape to Grand Cayman Island. It is for business but it will be a wonderful break from the rest of the world.

Warren Coats