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In Mongolia: Elections, Mining & National Security

June 25, 2008

Late in 2007, at a meeting of senior government officials and development partners, Member of Parliament S. Oyun commented, that “how Mongolia develops its mining sector is a matter of national security.” In other words, the choice of which foreign partner will help develop Mongolia’s vast minerals resources is a material concern for Mongolia’s government, its people, and for the international community.

Mongolia shares borders with only two neighbours: Russia and China. For foreign policy and economic reasons, how and to whom mine licenses are granted has regional, and potentially international, implications. Mongolia has an avowed third neighbour policy, which means that it wants to balance relations with its immediate neighbours, China and Russia, and with those of “third” countries in North America, Europe and East Asia.

Many doubt, however, that the government is able or willing to balance interests fairly and transparently. When Prime Minister S. Bayar took office in early 2008, for instance, many questioned his objectivity in managing relations with Russia. Bayar had previously served as Mongolian Ambassador to Moscow, and many feared that prior familiarity would breed biased outcomes. Since then, Bayar and the government have pursued discussions with Russia for numerous projects in the minerals and petrochemicals sectors, but also with Canada, Australia and others, all of which appear to be merit-based, examining and weighing the corporate qualifications of each potential licensee.

Of course, believing absolute transparency and fairness characterizes all of these discussions would be naïve. According to The Asia Foundation’s semi-annual corruption survey, mining is consistently perceived to be among the most corrupt sectors in the economy. The government, however, has taken deliberate steps to reduce corruption-related risks and vulnerabilities across all Mongolia’s government systems. For example, in late March, the Prime Minister sequestered all State Secretaries — Mongolia’s highest ranking career civil servants — from each Ministry and line agency, for a two-day seminar to develop corruption-fighting action plans. His policy was clear: “Zero tolerance for corruption”. Since then, all Ministries and agencies, including the Minerals Resources and Petroleum Agency of Mongolia, have filed action plans, which will be monitored by the Independent Authority Against Corruption. Despite these efforts, corruption still exists in Mongolia and its impacts on the mining sector have national security and economic security implications.

In late May, at a Business Council of Mongolia meeting, now-Minister of Foreign Affairs S. Oyun explicated, once again, that Mongolia’s foreign policy is anchored in balanced relations between Russia, China and third neighbors. She said that the original national security strategy advanced in 1994 is based on economic security concerns; therefore, its goal is to diversify markets and attract investment from both the west and the east. According to Oyun, the government had no favorites in the international community and was objectively balancing different nations’ expressions of interest in the mining sector. In turn, Minister of Justice and Home Affairs, Munkh-Orgil, indicated that the Mongolian Peoples’ Revolutionary Party, like Minister Oyun’s Civil Will Party, embraced Mongolia’s foreign policy, national security, and economic security concepts.

The June Parliamentary election will introduce political actors who will have to surmount the obstacles that have prevented Mongolia from developing its minerals sectors. Upon taking office after the June 29th election they will have to grapple with licensing major mines, a process thus far stymied by legislative wrangling. The decisions the new government makes will bear great weight on national security. But, given the statements of Ministers Oyun and Munkh-Orgil, senior government and party leaders, it could well-be that bi-partisan, if not multi-partisan commitment to preserving balance in international relations, and thereby protecting national and economic security interests will prevail after the election.

William Foerderer Infante is The Asia Foundation’s Country Representative in Mongolia. He can be reached at binfante@asiafound.org.

View all posts by William Foerderer Infante

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