19.09.2019 Author: Vladimir Odintsov

What Does Mongolia Want and What Do Others Want from Mongolia?


Mongolia is truly a bridge between Europe and Asia, and its location is fairly important strategically. However, because of economic inequality and numerous social problems plaguing this nation at the end of the previous century, there was limited interest in Mongolia from leading Western and Asian countries. Still, it was at the end of the last century when a steady increase in foreign investments into its economy began (by the PRC, the United States, South Korea, Japan and a number of transnational companies). Mongolia, a country that borders Russia and China, was subsequently included in the sphere of interests of the Shanghai Cooperation Organisation, and now has the status of an observer in it.

Today Mongolia’s economy primarily centers on the spheres of natural resource extraction and agriculture. Deposits of copper, coal, Molybdenum, tin, wolframite, precious and rare-earth minerals make a significant contribution to this nation’s manufacturing sector. On account of these different natural resources, at present, there is interest in Mongolia from many nations. In particular, the focus is on mining licenses and the import of gold, platinum and silver from Mongolia. Recently, many countries have expressed an increased interest in extraction and refining of Mongolia’s rare-earth minerals.

In fact, nowadays, in addition to the clearly political, strategic and military interest in Mongolia from the United States, there is also a focus on deposits of rare-earth minerals, bauxite and gold. Japan has announced that it is planning to increase food imports from Mongolia. South Korea, which is also interested in the exploration of Mongolia’s useful natural resources, has its own aims to build stable partner relations with Mongolia, especially in its market of bauxite and iron ore, as well as rare-earth metals, which are used to produce complex computer equipment.

From 2015 to 2016, the governments of India and Mongolia held a round of multilateral negotiations with the aim of attracting investment from India to Mongolia’s extraction and heavy industry sectors, agriculture, and publishing companies, and of purchasing equipment and technology from India. In January 2017, it was reported that India would loan Mongolia $1 billion, which was to be spent not only on the previously discussed initiatives but also on other sectors that offer opportunities for Indian companies.

Since China is Mongolia’s southern neighbor, it clearly also has interests in this nation. At present, the PRC is one of Mongolia’s key trading partners and the second biggest investor in its economy. The fact that the relations between these two nations are developing at a fast pace is evidenced by the constantly increasing bilateral trade between Mongolia and China, which today is worth more than $5 billion. At the same time, Ulaanbaatar is, to a certain extent, limiting the flow of Chinese capital into the nation and its wide-spread use for several reasons, such as the fact that proposals involving multilateral investments are more lucrative, and that there is a history of ties between the two countries.

In recent years, there have been efforts to restore cooperation between Russia and Mongolia that extended into various spheres in the past.  Russia has already expressed its willingness to lend Mongolia 100 billion rubles in state funds for the nation’s power and energy projects and railway initiatives. For instance, the money will go towards Ulaanbaatar’s thermal power station-3 and its integration with other energy initiatives in the nation that has to increase its power generating capacity four-fold by 2030.

During Russian President Vladimir Putin’s official visit to Mongolia on 3 September, an agreement on establishing the Russian-Mongolian Investment Cooperation Fund was signed. It is aimed at strengthening investment cooperation and at helping Russian companies collaborate more effectively with Mongolian businesses, since each year there are more and more joint projects in the spheres of new technologies and transport infrastructure.

Russia’s and Mongolia’s Ministers of Energy talked about cooperation plans for the near future on the sidelines of the 24th World Energy Congress, which took place from 9 to 12 September in the capital of the UAE, Abu Dhabi. The discussion focused on the installation of a gas pipeline from the Russian Federation to China via Mongolia, and research conducted in connection with the construction of a high-voltage power transmission line as part of the Asian Super Grid project, initiated by the President of Mongolia.

Bilateral ties between the USA and Mongolia are being built in a somewhat different manner, as the United States actively attempts to ensure that Mongolia disengages from China and Russia, with whom it has traditionally had relations spanning many centuries.  Experts have reported that the American leadership is clearly striving towards establishing bilateral ties with Ulaanbaatar and including Mongolia among its closest allies (along with Singapore, Taiwan and New Zealand) in the Indo-Pacific region. Analysts think that the idea of cooperating with Ulaanbaatar has become especially relevant for the United States in light of its tense relations with both Russia and China in recent years. In fact, at the end of US secretary of defense Mark Esper’s visit to Mongolia in August of this year, he said that the American leadership was proud the United States was Mongolia’s “third neighbor”. Still location-wise, Mongolia borders only two other countries, the Russian Federation and China. Mongolia’s “third neighbors” are those countries with which this nation has maintained close ties, and usually include the USA, Japan, South Korea, Australia and the EU states. Washington is convinced that Mongolia’s cooperation with these countries is meant to serve as a counterbalance to Russia’s and China’s influence in the region.

Recently, The Diplomat has fairly clearly outlined Washington’s true intentions as far as Mongolia is concerned. The magazine pointed out that Mongolia, currently a backward nation, could once again become a great country and take its rightful place on the global arena, but this would only happen if Ulaanbaatar carefully heeded Washington’s advice and not in and of itself. And this is exactly what Roncevert Ganan Almond, the Vice-President at The Wicks Group Consulting and an Adjunct Professor of Law at the Georgetown University Law Center, and the former international law consultant to governmental agencies in Asia, Europe, the Middle East, Africa and America, thinks.

Vladimir Odintsov, expert politologist, exclusively for the online magazine ‘New Eastern Outlook’.

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