Mongolia: Between a Rock and a Hard Place – by Marcel Plichta (International Policy Digest – March 12, 2015)

http://www.internationalpolicydigest.org/

Since the establishment of a democracy in Mongolia following the collapse of the Soviet Union, foreign interests have attempted to reassert control over the landlocked piece of steppe between China and Russia.

Mongolia’s position, located between two ambitious powers, means that it is the target of Chinese and Russian influence, often to the detriment of the fledgling democracy and its people. Historically Mongolia’s geographical position and nomadic inhabitants (of which there are still many) has made it vulnerable to the influence of its neighbors. Mongolia was subjugated to both Beijing and Moscow at different times and still struggles with the political influence of both powers.

Economics further complicates Mongolia’s diplomatic issues; vast amounts of mineral wealth have been discovered in Mongolia since the early 90’s including large reserves of copper, gold, and coal. Previously Mongolia’s weak economy, based on pastoral products such as beef and cashmere production, meant that it provided very little potential wealth for powers seeking to control it.

These discoveries have led to serious interest from a resource-hungry China, which accounts for 89% of Mongolia’s exports, as well as Russia, which faces more competition for resources in an ever more hostile Europe.

Despite the renewed interest from its neighbors, most foreign companies involved in the Mongolian mining sector have been Canadian or Australian, of the 11 foreign companies invested in copper production, 9 of them were Australian or Canadian. In most sectors the primary owners of the mining companies have been Canadian or Australian, with a few from Hong Kong or the UK.

These firms often own and operate mines in conjunction with the Mongolian Government, which creates friction when the negotiations go sour, such as with the massive Oyu Tolgoi mine that has seen constant delays from shareholder disputes and concerns over the operating cost.

The access to fossil fuels and raw minerals have given some measure of control over Mongolian politics and makes government corruption all the more dangerous to the Mongolian people. On February 26th the president of Mongolia pardoned 3 foreign nationals involved in the mining industry who had been convicted of tax evasion. The foreign nationals were accused of evading 6.8 Billion USD, a sum so ridiculous that the arrests shook foreign confidence and caused complaints in the UN over human rights violations.

The simultaneous state of unprecedented economic growth and unrelenting economic exploitation have left the Mongolian authorities and people with as much resentment for foreigners as gratitude. A former member of Mongolian parliament and minister of foreign affairs stated “It is no secret that small Chinese, Korean, and Vietnamese investors are commonly robbed, threatened, and slandered in cases brought on false charges.” An ineffectual and divided Mongolian Government coupled with widespread corruption enables foreign interests to undermine the welfare of the state over the acquisition of its resources.

For the rest of this article, click here: http://www.internationalpolicydigest.org/2015/03/12/mongolia-between-rock-and-a-hard-place/

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