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    July 9, 2016

    "An Old Friend is Worth Two New": It's time for Russia to turn towards...Mongolia

    July 9, 2016 - 
    Dmitry Narkevsky, PolitRussia - 
    Translated by J. Arnoldski



    On June 29th, parliamentary elections were held in Mongolia. According to the results of the vote counting, the Mongolian People’s Party claimed victory by a large margin, receiving 65 out of 79 seats in the Great Khural. The previous ruling party, the Democratic Party of Mongolia, retained only 9 seats. The remaining two places were occupied by a representative of the Mongolian People’s Revolutionary Party and by an independent candidate. The victory of the opposition in the face of the Mongolian People’s Party was entirely expected, but such a significant break from the ruling Democratic Party nonetheless came as a surprise. 

    From Russia’s point of view, it is difficult to stay that any kind of clear pro-Russian position was professed among any of the political forces in the elections. In this sense, Mongolia is no longer the country that the majority of Russians imagine it is. Although the traditional stereotype of vast steppes and nomads driving huge herds of cattle and horses still has its place in real life, with 60 million cattle compared to a population of 3 million people, it is not cattle that have been determining the face of the country in recent years.

    The Asian Wolf

    Mongolia boasts enormous natural resources. Deposits of coal, gold, silver, cooper, molybdenum, and uranium have been opened and developed in the country. Large mining companies from China, Japan, the US, Canada, Australia, and South Korea have rushed to Mongolia, which has had an immediate effect on the economy. If the collapse of the socialist system and the rupture of relations with the Soviet Union defined the 1990’s, then since the 2000’s the country has shocked the world with the tempo of its economic growth. The peak was in 2011 when GDP growth amounted to a record 17.5%! In just six years between 2006 and 2011, Mongolia’s GDP increased almost four times. All of this caused  a certain excitement around the future economic prospects of Mongolia. In contrast to the Chinese Dragon and South Asian Tigers, media outlets prone to epithets began to call the country none other than the “Asian Wolf.” 

    Certain difficulties began when the financial crisis of 2008-2009 spread to commodity markets and China’s economic began to slow down. Focused on the expert of raw materials, Mongolia began to lose its positions. Falling prices for raw materials slowed the pace of the economy ’s growth and, despite the fact that the first quarter of 2016 showed positive growth, this did not save the Democratic Party from electoral defeat.

    Political system

    Over the last two decades, a two-party system has virtually taken shape in the country even though there are many smaller players on the political scene. The main confrontation, as before, is still between the Mongolian People’s Party and the Democratic Party. In 2008, the country even experienced the so-called “Yurt Revolution” after the Democratic Party lost elections and refused to recognize the results, bringing out its supporters onto the streets of Ulaanbaatar.  The script was a classic one. After pogroms, arson, and clashes with police during which 4 people were killed, political parties managed to reach an agreement and the Mongolian People’s Party was forced to form a coalition government with the Democrats.

    However, the Yurt Revolution did not match the scale of the events in Kyrgyzstan, Georgia, and Ukraine. The Mongolian People’s Party, despite being the successor of the Mongolian People’s Revolutionary Party which ruled under socialism, has long since abandoned the principles of Marxism-Leninism and tried to  position itself as a social democratic party of the European type. Many observers saw the results of the 2008 elections as a triumph of “democracy” over the old system, as the classic slogan of “democratic” coups in the former Soviet space, and as an attempt at regime change in the struggle for access to the country’s wealth.

    During the 2012 elections, in the context of a slowdown in economic growth, the Mongolian People’s Party was forces to cede power to the Democratic Party. The Democrats’ ascent to power earned the expected rave reviews from Western powers and foreign politicians, primarily American ones, who called Mongolia none other than an “oasis of democracy.”

    Similar praise for the Mongolian political system was heard earlier. President George Bush, during his visit to Mongolia in 2005, called the country “an example for the region and the world” in building a “free society in the heart of Central Asia.” In 2001, US Vice President Joe Biden visited the country and also drew attention to Mongolia as a “shining example of democratic development.”

    It must be admitted that press reports simultaneously appeared that the political development of the country was not so perfect as Western leaders presented it. The traditional flaws of young democracies in the form of an opaque legal system, the use of administrative resources, the active involvement of law enforcement operations in discrediting political opponents, and corruption had not been overcome by Mongolia. However, the strategic importance of the country for international players allowed them to keep their eyes closed to such “costs of democracy.” 

    A Geopolitical Node

    Before the collapse of the USSR, Mongolia was firmly tied to the Soviet sphere of influence. Like Bulgaria in Europe, in the Mongolia was often called the 16th republic of the USSR in the East. In fact, from the end of the 1980’s, Mongolia’s fate was not longer of interest to the Soviet leadership as all foreign policy activity was focused on flirting with the West.

    However, a holy place is never empty. And now, rising China, whose relations with Mongolia cannot be called smooth and trusting, could attach a significance part of Mongols’ economic life to itself. Today, 89% of Mongolia’s exports go to China, while 26% of China’s imports of goods and services are from Mongolia which beats the previously undisputed leader, Russia, with its 22%. But Mongolia’s foreign policy preferences cannot be limited to the People’s Republic of China.

    Mongolia adheres to the “third neighbor” principle in its foreign policy. Large in territorial size, the sparsely populated country is sandwiched between two major geopolitical players of Eurasia: Russia and China. Having experienced the whole brunt of the breakup of Mongolian-Russian relations in the 1990’s on the one hand, and on the other the fear of possible claims by China to Mongolia’s sovereignty, the country is trying to find a third force which could allow it to balance the complex situation. 

    This “third neighbor” role is being fulfilled by several players at once: the USA, the EU, India, and Japan. Such a position, first and foremost, is beneficial to the US which is glad not only to have access to Mongolia’s resources, but also rely on the formation of a pro-American lobby within the local political elite. At the moment, the Mongolian Constitution does not allow the stationing of foreign troops on its territory, but who knows what will happen tomorrow.

    For now, American troops are holding annual joint exercises on the territory of Mongolia. In May, the Khaan Quest 2016 regular exercises were held near Ulaanbaator. 

    American-Mongolian cooperation, in addition to the purely military sphere, extends to other areas. The Americans understand, however, that they are not yet able to compete with China in the economic sphere, so they are promoting political and humanitarian cooperation. In early June, John Kerry visited Mongolia ahead of parliamentary elections  and, as has become conventional, praised the level of development of democracy, promised investments, and participated in a local festival were he unsuccessfully shot a bow and arrow, personally demonstrating his interest in the cultural rapprochement of the two countries. 

    Observers tried to discern support for the ruling party in the  behavior of the Secretary of State and became more critical of Kerry upon learning that this American visit did not help the Democratic Party.

    Another player claiming the title of “third neighbor” is Japan. Tokyo and Ulaanbaator both believe that the current level of cooperation is not enough for both countries, hence why Japan has begun the process of transition from providing funds in the form of assistance to developing economic relations. In particular, in June they signed a Memorandum on cooperation in the workforce sphere, thus providing internships for Mongolian youth at high-tech plants in Japan. A Memorandum on cooperation for developing clean coal technologies was also signed. Despite possessing enormous reserves of coal, Mongolia experiences shortages in generating capacity in its energy sector and is thus forced to import petroleum products. Ulaanbaatar is striving to attract Japan, as well as a number of other countries, for their modern technologies in the sphere of converting coal into other types of hydrocarbons as well as constructing the most environmentally friendly power plants and using alternative energy sources. In addition to attempts to increase direct economic relations, Tokyo has provided assistance to Mongolia through international organizations. In particular, a number of projects in Mongolia received funding from the Asian Development Bank at which Tokyo “plays the first violin.”

    In recent years, India has tried to keep pace with Japan, the US, and China. New Delhi is seeking to show that Ulaanbaator has become a strategic partner for India given the broad range of areas of cooperation ranging from joint military exercises to cooperation in the security field to granting large loans. In April, the 11th joint Indian-Mongolian “Nomadic Elephant” exercises were held and the Indian EximBank expanded the line of credit for Mongolia’s projects in the sphere of railway transport and infrastructure to $1 billion. 

    This group of countries is trying to keep back others wishing to profitably trade their technological achievements fror Mongolia's raw materials. Although the EU, Australia, Canada, and South Korea do not claim any military-political influence on Ulaanbaator, they are trying to strengthen their positions in the economic and humanitarian spheres.

    Russian-Mongolian relations

    In recent years, Russia has tried to remember who it is. But talking about a return to its former positions is not fully possible. In addition, a number of subjects of bilateral cooperation raised by the leaders of Russia and Mongolia have yet to be realized.

    In the humanitarian sphere, the declining role of the Russian language in the Mongolian education system should be noted. Russian is still taught in high school, but the reduction in cooperation between the two countries has rendered the relevance of acquired knowledge of the language not so obvious for Mongolia’s future. The ideological promotion of the West as the absolute leader in political, scientific, and humanitarian issues ensures a mixed interest among ordinary Mongolians in learning English.

    In the economy as well, not everything is going so smoothly. Despite the fact that some projects have been given the green light at the highest level - for example, the joint construction of a transport route from China through Mongolia to Russia agreed upon by the three countries' leaders during the SCO summit in Tashkent - it is way too early to speak of any large-scale successes of Russia 

    At the end of June, Rostekh stated that it was selling 49% of its shares in the mining enterprises Erdenet and Mongolrostsvetmet to a Mongolian copper corporation in order to cover its financial needs. After all, these companies producing cooper, molybdenum, and other valuable ores survived the difficult 1990’s.

    Until Russians get out of the mining business, competitors will continue to struggle for resources. The other day, the Australian-British mining giant Rio Tinto announced its readiness to participate in the privatization of the Mongolian state’s share of one the largest copper deposits, Oyu Tolgoi. 

    In the political sphere, Russia’s tools of influence are also quite limited. Russia and China are still unable to persuade Mongolia to join the SCO.

    There exist a number of problematic issues in relations between Russia and Mongolia. One of the main issues is the Mongolian leadership’s plan for restoring the three hydropower stations on the Selenga River, the largest tributary of Lake Baikal. The matter reached such a level that it demanded comment from Russian President Vladimir Putin.

    Even while under the influence of Western sanctions and refusing to import food products from the West, Russia has still been unable to increase meat imports from Mongolia over the past two years.


    Examining the development of Russian-Mongolian relations, it can be said that their level does not meet the objective of closer and mutually beneficial cooperation with neighboring states. Russian business’ withdrawals from Mongolian projects tied with the outflow of Russian experts staying in Mongolia and gaps in the humanitarian sphere are all weakening Russia’s competitive advantage. Crises in relations with the West should teach Russia the simple truth that we should not ignore neighbors in favor of an ephemeral friendship with distant overseas partners whose interests diverge radically from Russia’s. No matter what neighbor, developed or not so much, no matter whether big or small, it is worth recalling the proverb: “an old friend is better than two new.” 





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