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Wednesday, November 5, 2014
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Headlines in Italic are ones modified by Cover Mongolia from original
CRCC Signs Pact With Aspire Mining for Mongolia Rail Project
By Michael Kohn
Nov. 5 (Bloomberg) -- China Railway 20 Bureau Group Corp. has signed an engineering procurement and construction agreement with Northern Railways LLC to construct phase-1 of the Northern Mongolia Railway Corridor, according to a statement released today by Aspire Mining Ltd., the parent of Northern Railways.
* CR20G is a wholly-owned subsidiary of China Railways Construction Corp.
* Phase-1 of the project extends from the city of Erdenet to Aspire's wholly-owned Ovoot coking coal project
* Agreement to cover completion of engineering work on Erdenet-Ovoot section of Northern Railway Line and provides basis for negotiations to award fixed-price, lumpsum, turnkey EPC contract upon satisfaction of "certain conditions" precedent for both parties: statement
* CR20G to assist Northern Railways in sourcing project financing: statement
(BFW)
XANADU LAUNCHES SUPPLEMENTARY DRILLING PROGRAM AT KHARMAGTAI
November 5 -- Xanadu Mines Ltd (ASX: XAM – "Xanadu") is pleased to announce that it has launched a supplementary 2014 exploration program at its Kharmagtai copper gold porphyry project, located in the South Gobi region of Mongolia, following the success of the first campaign.
The supplementary exploration program will comprise some 2,500 metres of diamond core drilling and will target areas of particular potential identified in campaign 1. Drilling commenced on 4 November and is expected to be completed before early/mid-December. Drilling will mainly target the enlargement of higher-grade zones, specifically:
– potential extensions to porphyry copper-gold mineralisation at Altan Tolgoi;
– connections between the stockwork and tourmaline breccia-hosted copper-gold mineralisation at Altan Tolgoi; and
– a new 4th area of mineralisation not included in the current Exploration Target.
The results will add useful insights to the geological model in areas of higher-grade mineralisation and should contribute to Xanadu's resource estimate for the Kharmagtai project.
Xanadu's Managing Director, George Lloyd, said: "We have taken the project a long way since its acquisition earlier in the year and this supplementary program, armed with the insights from the first campaign, allows us to progress this understanding still further ahead of a more substantive program planned for in 2015."
MSE News for November 4: Top 20 -0.48% to 15,399.51, Turnover ₮5.2 Million, ₮4.34 Billion 12-Week T-Bills
Ulaanbaatar, November 4 (MONTSAME) At the Stock Exchange trades on Tuesday, a total of 54,562 shares of 14 JSCs were traded costing MNT four billion 349 million 265 thousand and 967.00.
"Remicon" /5,962 units/, "Binse" /2,000 units/, "APU" /787 units/, "Nako Fuel" /300 units/ and "Merex" /197 units/ were the most actively traded in terms of trading volume, in terms of trading value were "APU" (MNT two million 912 thousand and 940), "Binse" (MNT one million and 172 thousand), "Remicon" (MNT 601 thousand and 10), "Mongol Nekhmel" (MNT 201 thousand and 600) and "Nako Fuel" (MNT 85 thousand 500).
The total market capitalization was set at MNT one trillion 547 billion 569 million 491 thousand and 421. The Index of Top-20 JSCs was 15,399.51, decreasing 74.38 units or 0.48% against the previous day.
Early morning non-cash USD rates: Khan (Buy ₮1,864 Sell ₮1,874), TDB (Buy ₮1,863 Sell ₮1,874), Golomt (Buy ₮1,867 Sell ₮1,873), XacBank (Buy ₮1,865 Sell ₮1,875), State Bank (Buy ₮1,865 Sell ₮1,874)
BoM MNT Rates: Tuesday, November 4 Close
| | 11/4 | 11/3 | 10/31 | 10/30 | 10/29 | 10/28 | 10/27 | 10/24 |
| USD | 1,869.21 | 1,866.02 | 1,862.36 | 1,861.20 | 1,857.30 | 1,856.44 | 1,854.56 | 1,853.21 |
| EUR | 2,337.73 | 2,330.57 | 2,340.71 | 2,343.06 | 2,365.74 | 2,360.28 | 2,353.71 | 2,342.74 |
| CNY | 305.61 | 305.03 | 304.81 | 304.35 | 303.91 | 303.67 | 303.28 | 302.92 |
| GBP | 2,988.77 | 2,981.25 | 2,978.29 | 2,974.38 | 2,996.94 | 2,992.58 | 2,985.66 | 2,970.97 |
| RUB | 42.84 | 42.89 | 44.42 | 42.81 | 43.49 | 43.72 | 44.21 | 44.17 |
October MNT vs USD, CNY Chart:
BoM FX auction: US$12m sold at ₮1,871.11, CNY74m at ₮305.85, accepts $70m USD, $10m MNT swap offers
November 4 (Bank of Mongolia) On the Foreign Exchange Auction held on November 04th, 2014 the BOM has received bid offer of USD and CNY from local commercial banks. The BOM has sold 12.0 million USD as closing rate of MNT 1871.11 and 74.0 million CNY as closing rate of MNT 305.85.
On November 04th, 2014, The BOM has received USD SWAP agreement ask offer of 70.0 million USD and MNT Swap agreement bid offer in equivalent to 10.0 million USD from local commercial banks and accepted all offer.
See also:
Mogi: all MPP, Justice Coalition's G. Uyanga, L. Tsog, DP's R. Burmaa and caucus leader D. Erdenebat (apparently by mistake) voted YES on voting for PM's resignation in full session. SGK is discussing the issue as we speak, BREAKING NEWS shortly.
MIBG: STANDING COMMITTEE APPROVES PETITION CALLING FOR PRIME MINISTER'S RESIGNATION
MIBG Analysis and Outlook
November 5 (MIBG) We have just learned that the Standing Committee on Governance Structure has approved the petition calling for the resignation of the Prime Minister Mr. Altankhuyag. Which means the issue will be discussed at Parliament and voted on. Readers please be aware that the decision is only a standing committee decision which consists of 19 members, 8 DP members, 7 MPP members, 3 Justice coalition members, and 1 Civil Will Green Party member. We know that all MPP members, possibly 2 Justice coalition members, and 2 DP members (who had been very vocal about opposing the current Prime Minister through various domestic media outlets) may have voted for the petition to be discussed at the Parliamentary level.
The stability of the current government will come down to the vote in Parliament and the unity among the Democratic Party of Mongolia. We know that the DP caucus has expressed their support for Altankhuyag's Government and we know that there will be reprisals for any DP member who votes against the caucus decisions. However, we know of at least 3 DP members who will likely vote against Prime Minister Altankhuyag, who are Battulga, Burmaa, and Batzandan. On the other hand Mr. Altankhuyag may have already secured the support of the Justice Coalition except for one member (Mr. Tsog), also the two CWGP members will likely side with the Prime Minister, and 2 of 3 independents are thought to also prefer the current Government over an alternative.
In conclusion, we expect the final vote at Parliament to be very close. However we believe that Prime Minister Altankhuyag will likely stay in the office by winning the vote through a narrow margin. If our initial assessment is correct, we expect that the vote may look like 45 in favor of the current Government and 31 against, which represents approximately 59%. However, we caution readers that this is MIBG's interpretation of the current situation and the final numbers may differ, depending on which DP members vote against Altankhuyag. Needless to say, the outcome of the vote will be determined by how unified the DP can be in the face of this latest challenge.
Political Turmoil – November 2014
By Julian Dierkes
November 3 (Mongolia Focus) This is approximately the third time that the Altankhuyag government seems to have faced serious opposition in parliament as well as in the DP itself. PM Altankhuyag has been surprisingly and impressively skilled at staying in the PM's position despite giving no clear signs of a policy agenda that he is pursuing. Instead, his government collectively appears to be primarily in the business of being in government as an end in and of itself, rather than for specific policy aims.
From my perspective, perhaps limited to a naive outsider, I would have to note that Mongolia is facing significant policy challenges at the moment, especially in economic policy, and none of the current political shenanigans offer any significant hope that they will facilitate the making of tough decisions. Instead, everything I see (in virtually all players, individually and political parties) suggest a self-interested short-term perspective that cumulatively looks likely to be to the detriment of Mongolians.
A Brief Chronology
Two weeks ago PM Altankhuyag signed an agreement with the MPRP that seems to lock the DP into a cooperation with former president Enkhbayar's party through the 2016 election. It is very unclear to me why Altankhuyag would want to commit to this cooperation. The MPRP seems to offer no policy perspectives to the government and seems to be beholden almost entirely to its leader, Enkhbayar. The alliance with the MPRP seems to further seal the DP's likely electoral defeat in 2016, so why? Most of the explanations would likely focus on the personal motivations of President Elbegdorj (more on that below) or on backroom deals between various leaders.
The announcement of this agreement (pointedly made while Elbegdorj was traveling in Europe) immediately drew out DP leaders in opposition to this deal. Jenco Battulga and UB Mayor Bat-Uul were most vocal in their opposition and went into open rebellion against Altankhuyag within the DP.
Last week Altankhuyag then resigned the chairmanship of the DP [see note below] (Mogi: Julian corrects at the bottom), a decision that will have to be reviewed by a DP party congress. Since the law on political parties specifies that the PM should be the leader of the strongest party in the Ikh Khural (Mogi: my understanding is that this is a DP rule, not the law), his resignation would imply that he would have to be replaced by anyone who is elected as leader of the DP in his succession. Any other constellation (i.e. anyone else as party leader, but Altankhuyag stays on as PM) would seem to be in contravention of the law on political parties.
Over the past weekend, however, there have been calls for DP party unity that might prolong Altankhuyag's tenure.
The Opposition
Most of the MPP is probably right in feeling quite confident about its electoral chances in 2016. Though many things might change in 20 months until the election, it's difficult to imagine a sequence of events until then that would give the DP a strong position in the election.
This confidence is reflected in an apparent attitude by some of the party to let the DP flounder further in its current convulsions and to simply clean up come the 2016 election.
I find that to be an equally short-sighted and irresponsible position in that I cannot imagine under what scenario a responsible politician with a concern for his/her nation's future would prefer another 20 months of inaction/failure for the promise of a sure electoral win, especially in a situation where the MPP has not distinguished itself by proposing viable alternative policies to those "pursued" by the DP.
In fact, the strongest pitch for a MPP government appears to be that it would be staffed by different people, though it is entirely unclear what policy directions this would entail. M Enkhbold as leader of the MPP has certainly not distinguished itself by specifying any policies that would be genuine alternatives to the current mess.
While the focus is on the DP-internal turmoil this week, there surely still is some possibility for a grand coalition at some point which would likely be the scenario that holds the greatest potential for constructive decisions by the government.
The DP and the Opposition
Inherent in some of these considerations may also be an element of revenge that will be difficult to repress come an electoral win in 2016. The DP has made the very unfortunate (in policy terms) decision to replace almost all personnel in the state bureaucracy with new individuals. This has led to a great amount of turmoil and lack of continuity though it may have also placed some individuals of significant competence in responsible positions. Regardless of their competence, the DP has clearly been engaged in a game of distributing patronage appointment and using state powers to hamper the opposition. This strategy is reminiscent of the DU's electoral triumph in 1996. What may be different this time around, however, is that the then-MPRP was restrained in its reaction when it won the 2000 election. Given the DP's reversion to 1996 form since 2012 it is unlikely that such restraint will run strong through a 2016 MPP government.
Individual Players
Factional politics in the DP are very difficult to follow and I've never been so focused on these to really understand what's going on. Surely some of what I say below would appear in a different light if factional politics were taken into account. But I also want to emphasize that from an outsider's perspective, it's difficult to fight the impression that the factional divisions within the DP have turned some of the business of governing into more of a political game than a mechanism to arrive at constructive solution to policy challenges.
Elbegdorj
In conversations with Mongolians, I am regularly reminded that most people suspect Elbegdorj's involvement in the current turmoil, even though he has appeared restrained in public. My own sense had been that he was primarily interested in using the platform afforded to him as president to secure an international position for himself for after the end of his presidency in 2017. His courting of different kinds of countries (landlocked, democratic, non-aligned, etc.) seemed to be aimed specifically at some kind of UN job. From my perspective he might actually be an effective spokesperson for a UN agency, though his managerial credentials or his policy convictions do not suggest as much.
Currently, however, speculation about his involvement seems to be focused more on attempts to secure a post-2017 political future for himself in Mongolia. This could involved "doing a Putin", for example, i.e. running the DP again after completing his second presidential term, and perhaps paving the way for a future prime-ministership or another run at the presidency in 2021. What I fail to see in this speculation is a logic for the current action. I could imagine that Elbegdorj is cementing his personal power, but he would seem to be doing so, by letting the DP flounder, much as the opposition is prone to do.
Bat-Uul
Bat-Uul has arguably had a good run as mayor of Ulaanbaatar. Changes to the downtown are visible and the public mortgage subsidy seems to have encouraged the construction of small-scale condo projects that have begun to offer an alternative to Mongolians living in ger districts. Bat-Uul is rumoured to harbour presidential ambitions for the 2017 presidential elections and being the mayor of Ulaanbaatar is surely a viable platform for those ambitions.
Enkhbold Z
As speaker of the Ikh Khural, he is already close to the centre of power, but he is almost certain to be eager to have a shot at the PM's job. He has recently appealed for party unity, however, denying a push to replace Altankhuyag in the short term.
The Constitution
In the context of the current turmoil constitutional discussions have surfaced once again. What remains unresolved is the division of power between the presidency and parliament/cabinet/PM. This has led to almost constant simmering tension between presidents and prime ministers, whether these occur in a cohabitation setting or with officials from the same party. Yet, the current turmoil has little to do with this constitutional tension and surely it isn't the time to resolve such an issue at the moment.
Conclusions
Predictions about what is likely to happen are fruitless in the current chaos. It does seem clear to me that a coalition government (DP and MPP in some constellation) would be most likely to have a chance at addressing some of the challenges Mongolia is facing whereas a continuation of the Altankhuyag government seems to offer the lowest probability of constructive action.
Some kind of decision should be brought about by Altankhuyag's resignation as party chair as that resignation will have to be accepted/acted upon in some ways this week. But I'm offering no odds on the likelihood of any particular reaction to this resignation.
PS: Comments and Corrections
A number of Twitter followers have pointed out that Altankhuyag has apparently not resigned, but was simply testing the waters with talk of resignation.
I would welcome further corrections to what I've written above if there are errors. Please use the comment function!
Sharing Lessons on Mining Governance: Q&A With Hon. S. Odontuya of Mongolia's State Great Hural
October 23 (Natural Resource Governance Institute) A study tour in September brought six Mongolian members of parliament (MPs) and three parliamentary staff members to western Canada, where they met with tax and public finance officials from British Columbia and Alberta, provincial and federal legislators, leaders of Canada's First Nations (indigenous communities), and representatives from industry who work with mining-affected communities. The exchange yielded important lessons on resource governance for Mongolia's policy-makers, who are currently tasked with regulating a valuable and volatile mining sector.
In the interview that follows, Dorjdari Namkhaijantsan—NRGI's Mongolia country coordinator—spoke with the Hon. S. Odontuya of the State Great Hural, or parliament, about her takeaways.
NRGI: Mining is intensifying in Mongolia. How can the country benefit from this development, and what challenges will it face?
S. Odontuya: Over the past eight to nine years, I think Mongolia has gone through similar experiences as others. There have been mistakes, but also successes. Now we are entering the second stage of mineral development, a real mining "boom." At this stage, we should not make mistakes. It is really important for us to gather information on how other countries went through similar processes to improve their legal frameworks so that we can improve our reforms.
So mistakes would be costly. As members of parliament, what concrete issues do you think the State Great Hural should concentrate on to address these potential challenges?
As members of parliament, we need to understand clearly the choices that other countries have made in order to minimize mistakes. This is the challenge of promoting sustainable development of the sector. In our own experience, at times our policies were too lax, including licensing and oversight, and, at other times, all things were prohibited. This obviously creates instability. Other countries have succeeded by creating stable processes where government, investor and citizen interests are equitably reflected in the policies.
NRGI works to improve the governance of the oil, gas and mineral sectors in different countries by proposing effective rules and mechanisms for accountability and transparency, and supporting the implementation of those rules and mechanisms. How can organizations like NRGI help parliaments implement and oversee their policy work?
I mentioned that we made some mistakes. The main mistake was that we created an unstable environment in this sector. The instability in this sector was created because parliamentarians would initiate various laws related to elections, and often these initiated laws are not based on recommendations of research and policy institutions. The key significance for us to work with NRGI is to learn from others' experiences—drawing on research and independent assessment of others' policies—so that we avoid creating further instability. In Mongolia, we recently approved a new petroleum law and revised the minerals law, as well as the state policy for minerals sector for the next 10 years. In doing so, it is essential to learn from other countries' experiences, and receive evidence based on recommendations from research and policy institutions.
This study tour was very timely. When a challenge is far ahead, people do not pay much attention. But the challenge for us is right in front of us, as the whole world is observing our next steps in terms of issuing regulations to the approved laws and implementing these laws. At this crucial stage, it was very important that key decision-making parliament members from different political parties joined this study tour, including a chairman of one of the standing committees.
In Canada, you have studied how provincial governments collect their minerals and petroleum revenue, and how governments and companies communicate with local communities. You have also studied tax and fiscal environments. What did you learn from the experiences and policies implemented by Alberta and British Columbia? What policies could you emulate and implement in Mongolia?
This study tour helped us validate our own development concept and determine whether we are on the right track. For instance, the issue of state participation in the sector is highly debated in Mongolia. We have been asking in detail about the role of state participation [equity shares] in the successful development of these two provinces in Canada. The state should perform its main functions effectively. The policies here are directed at supporting sustainable tax payers. This is proof that the policy should be directed at collecting taxes from profitable businesses and not for the state to go after the profits and do business on its own. This was very significant.
The second issue is that protecting interest of companies and investors is not sufficient, and that the protection of rights of citizens should be equitably reflected in the policies. In this direction Canada is implementing some best practices, especially with regard to the First Nations issues, transparency of the extractives, and saving and adding value to the minerals revenues, and using these revenues for the society's benefit.
As we have observed, the role of political leadership is very important.
While we cannot learn everything during a short time period, we have established contacts with important people, received information of important websites and other sources of information, and learned about the laws that exist in Canada. This will certainly aid our near future work in Mongolia to improve our legal environment. I would like to thank you on behalf of all MPs.
Thank you.
This is the second of two interviews conducted during the September study tour. In the first, current sitting MP for the opposition Mongolian People's Party (MPP), Mr. Yondon Otgonbayar, speaks with NRGI's Andrew Bauer, and additional background is given on the extractive sector challenges that Mongolia currently faces.
Since returning from their study tour to Western Canada, Mongolia's parliamentarians have begun drafting new and improved policies in support of good governance of mining sector revenues, but not without debate. Read more »
Mongolia's ambitious eGovernment strategy
Mongolia is currently ranked as 65th out of 193 countries for eGovernment. Now, it aims to break into the top 30 by 2016
First published on September 18, 2014
Last edited on October 28, 2014
(Gemalto Review) Mongolia's digital goals are perhaps no less ambitious than those of its most famous son, Genghis Khan. He may have a reputation as a terrifying conqueror, but he also modernized Mongolian culture and played a role in forging early east-west trade.
Today, the country is at a key stage in its development. With its economy having grown at an annual rate of 12% since 2010 thanks to a mining boom, Mongolia is now seeking to establish a knowledge-based economy to help ensure that this newfound wealth benefits the entire nation.
This vision is spelled out in Mongolia's national information communication technologies (ICT) policy, an objective of which is to achieve equity in access to social services. To this end, as a member of the international organization Open Government Partnership, Mongolia has launched an eGovernment program aimed at increasing the transparency and efficiency of public services.
Currently ranked 65th out of 193 states for eGovernment, Mongolia is aiming to break into the top 30 by 2016 and has borrowed US$20 million from the World Bank for its Smart Government program.
Tenzin Dolma Norbhu, World Bank lead ICT policy specialist and team leader for the Smart Government Project in Mongolia, says: "The SMART Government project aims to use information and communication technologies to improve the accessibility, transparency and efficiency of public services in Mongolia.
"The project will support the government in achieving its vision and leveraging the ICT sector as a key driver of growth, competitiveness and improved governance. The World Bank supports Mongolia's commitment towards an accountable, transparent and responsive government."
Here are a few ways Mongolia is putting its plan into action.
eID
Mongolia is rolling out a national eID system that is being financed independently of the World Bank. The centerpiece of this project is a smart card with an embedded microprocessor that contains the user's personal data. Biometric facial and fingerprint ID systems are linked to a secure database accessible to government agencies such as the electoral authority, tax, customs, passport and military agencies. All adults in the country (which has a population of about three million) will carry the smart cards, which the government says will allow for more efficient updating of the national registry.
Online tax payment
Mongolia's tax ePayment system was launched in May 2014. Taxpayers can now submit tax reports, access their history and make payments online. The new system is expected to increase efficiency and transparency within the taxation department by reducing face-to-face interactions and bureaucratic red tape. Seven hundred tax officials are being trained in order to encourage citizens to use the system.
Telecommunications
Since the mid-1990s, the Mongolian government has been reforming the telecommunications sector, opening up the market to partial privatization, and has established an independent watchdog, the Communications Regulation. As a result, the ICT sector has expanded rapidly, with an average compounded annual growth rate in mobile teledensity of 30.6% over the past six years. The World Bank believes the use of ICT sector has helped drive economies of scale and increased efficiencies across the country. With 16,100 miles of fiberoptic backbone and access networks being extended nationwide, more than 200,000 internet-connected points are on the map of Mongolia, bringing ICT closer to its people. There were 3.5 million mobile subscribers as of June 2013, with a mobile penetration of 117% translating into significant reduction of mobile tariffs. Internet users have increased from fewer than 200,000 in 2010 to more than 657,000 in 2012, reaching 21.8% of Mongolia's total population. Today, more than 30% of Mongolian citizens use smartphones and tablet devices.
Challenges do remain; Mongolia now needs to build institutional capacity to consolidate the reforms and measures it has introduced. However, the country is well on the way to greater government efficiency, transparency and accountability.
Peabody Energy in Mongolia: Responsible Mining, Sustainable Development, Trusted Partner
October 23 (Coal Can Do That) Peabody Energy completed the first land restoration project in Mongolia's history at the former Ereen Mine site. Through responsible mining, sustainable development and a long-term partnership with Mongolia, Peabody successfully restored 60 hectares of mined land back to or better than its original condition. The land was formally returned to Mongolia at a handover ceremony in August 2014.
Deputy Foreign Minister Addresses 2nd UN Conference on Landlocked Developing Countries
November 4 (infomongolia.com) Deputy Minister for Foreign Affairs and Economic Cooperation of Mongolia, Mr. D.Gankhuyag addressed at the plenary session of the Second UN Conference on Landlocked Developing Countries opened in Vienna, Austria on November 03, 2014.
Deputy Minister D.Gankhuyag representing the country briefed about the policy and actions of the Government of Mongolia towards tackling challenges of Mongolia, which is confronted with due to its landlocked location while highlighting an importance of reflecting interests of landlocked developing countries in Post-2015 Development Agenda based on Millennium Development Goals. He also called other landlocked developing countries to join a Mongolia-initiated multilateral agreement on the establishment of Think Tank for LLDCs.
During the meeting, Deputy Minister D.Gankhuyag had bilateral meetings with Minister of Transport and Communications of the Kyrgyz Republic Sultanov Kalykbek, UN ESCAP Executive Secretary Dr. Shamshad Akhtar and Senior Director for the Transport and Information & Communications Technology (ICT) Global Practice at the World Bank Pierre Guislain to share views on bilateral cooperation issues.
Related:
Vice FM Addresses Conference for LLDCs – Montsame, November 4
Mongolia-Australia Development Forum Runs in Brisbane
Ulaanbaatar, November 4 (MONTSAME) A "Mongolia-Australia Partners for Development" NGO organized on October 31 a "Mining, sustainable development and partnership"-themed forum in Brisbane of Australia, jointly with the Griffith University of Queensland.
The key lectors at the forum were Chief Operating Officer of Oyu Tolgoi LLC Ivan Vella, a director of Centre Social Responsibility in Mining of Queensland University Prof. Saleem Ali, and the CEO of BA Economics Dr. Brian Fisher. Other lectors were representatives of several economic entities and academic organizations. The forum gathered some hundred representatives of 40 Australian organizations.
They discussed an effectiveness of the mining sector in sustainable development, ways of intensifying a development through partnerships, an exchange of knowledge, and an improvement of governance in minerals sector.
The Ambassador Extraordinary and Plenipotentiary of Mongolia to Australia Mr R.Bold addressed the meeting. Present were also Vice-speaker of Australian parliament Dr. Robinson and representatives of the Queensland government.
This NGO was founded this June by Queensland's professors and scholars and their 80 students--a part of 700 Mongolians in this country.
Transforming Mongolia-Russia-China Relations: The Dushanbe Trilateral Summit
By Alicia Campi
The Asia-Pacific Journal, Vol. 12, Issue 44, No. 1, November 10, 2014 -- The trilateral summit among the presidents of Mongolia, China, and Russia, on the sidelines of the Shanghai Cooperation Organization (SCO) at Dushanbe, Tajikistan on September 11, 2014, was the culmination of a deliberate summer whirlwind policy blitz of Mongolian President Tsakhia Elbegdorj to position his country to take advantage of deepening Sino-Russian economic relations. Concerned that a "great game" to create a new version of the Eurasian Silk Road was being played out without any Mongolian input, Mongolia's activist president used the celebrations around the commemoration of different anniversaries in Sino-Mongol and Mongol-Russian relations to make certain that his two powerful neighbors did not proceed with transportation and energy cooperation without taking into account the role of a mineral-rich Mongolia. The landlocked Northeast Asian nation is seeking to become an international transportation hub and at the same time diversify its mineral exports. This spotlight trilateral summit moment in Mongolian-Chinese-Russian relations, together with the trips of Chinese President Xi Jinping and Russian President Vladimir Putin to Mongolia a few weeks previous, attracted attention, bordering on concern, of other Eurasian countries, the European Union, and the United States who do not fully comprehend Mongolia's strategy.
A Spring and Summer of Bilateral Summits in Shanghai and Ulaanbaatar
The Dushanbe summit came at a time when both China and Russia have serious foreign policy challenges in their home regions—China in the South China and East China seas involving clashes with Japan, the Philippines and Vietnam among others, and Russia in Ukraine resulting in increasingly crippling economic sanctions. Mongolia, for its part, has had a precipitous decline of over 62% in foreign direct investment (FDI) and reduction of its growth rate to 5.3% (one-half of 2013's 11.8%) in the first half of 2014.1 This was connected to concern over Mongolia's vacillating investment legal regime and a slowdown in sales of coal to China. All of these factors propelled increased cooperation among the three nations in the first half of 2014—initially seen via a series of bilateral meetings. The first example was the planning among the leaders when they were in Shanghai on May 20, 2014 at the Fourth Summit of the Conference on Interaction and Confidence Building Measures in Asia over the timing of the Xi and Putin visits to Mongolia. President Xi had agreed to go to Ulaanbaatar to celebrate 65 years of Sino-Mongolian diplomatic relations and announce a new push towards energizing China's strategic partnership with Mongolia. Putin's Mongolian visit, ostensibly to celebrate the 75th anniversary of the Soviet-Mongol victory over an invading Japanese army in 1939 at Khalkhin Gol (Nomonhan), was aimed at jumpstarting Russian's morbid economic relations with its former Cold War satellite whose trade and investment picture has been monopolized for over a decade by China. Originally it seems that Xi and Putin mulled over the possibility of holding a trilateral gathering in Ulaanbaatar in August, but this timetable ultimately was rejected because Putin decided to squeeze in a 5 hour visit to Mongolia instead on September 3rd as part of a swing through the Russian Far East. Mongolian officials told this writer they believe that while Putin was in Shanghai, he also agreed to not oppose Chinese proposals for deeper investment and economic ties with Mongolia in exchange for China's support for Russian plans on modernizing and developing rail links with Mongolia.2
Mongolia hosted Chinese President Xi's state visit on August 21-22. Mongolian leaders deemed the visit very successful in signaling Chinese recognition of the value of stronger political and economic ties to Mongolia, as well as for Chinese acquiescence to Mongolia's desire to develop trilateral cooperation among China, Russia and Mongolia on a shared vision for a new Silk Road economic corridor. The Chinese signed 26 documents with the Mongols, and Xi's personal offer, in his address to the Mongolian parliament which was broadcast live on both Mongolian and Chinese television, for the Mongols to participate in his "China Dream" initiative was seen in Mongolia as a positive gesture by the government and domestic press. However, Mongolian blogs resonated with nervous chatter about Chinese hegemonic ambitions fueled by Xi's strange recital of a famous Mongolian nationalist poem in which he called Mongolia his "native land."3
Mongolia and China signed a Joint Declaration on relations that set a bilateral trade target of $10 billion by 2020 (up from $6.2 billion in 2013) under a "three-in-one" cooperation model, integrating mineral exports, infrastructure construction and financial cooperation. The Chinese side promised to provide Mongolia 1.3 billion RMB [US$260 million] of aid within 3 years for major economic projects and to possibly grant a soft loan in the amount of RMB 1 billion [$162.7 million]. The presidents of Mongol Bank and Chinese National Bank agreed to an increase of the currency swap exchange from 10 billion to 15 billion RMB to provide foreign currency to Mongolia's domestic market.
The five new transportation agreements may prove the most significant of all in that they relate to the future of Eurasian economic integration and Sino-Russo-Mongolian cooperation on regional rail projects. These were 1) Inter-Governmental Agreement on "access to the seaport and transit transport" 2) Inter-Governmental General Agreement on development of cooperation of the railway transit transport 3) Inter-Governmental MOU on Development of Railway Cooperation 4) MOU between Ministry of Road and Transportation of Mongolia and Railway Authority of People's Republic of China on renewal of the "Mongolia and China Border Railway Agreement" and 5) Agreement on "Mongolia-China Border Port Management Cooperation Commission" between National Council of Border Port of Mongolia and General Customs Office of People's Republic of China. The latter document designated six Chinese seaports, including Tianjin, Dalian, and Jinzhou, for the transit of Mongolian exports to overseas markets. A key breakthrough for the landlocked Mongolia was the agreement that two-thirds of Mongolian goods transported on Chinese rails would be destined for the Chinese market while one-third would be for export via Chinese seaports to third countries. Border crossing co-operation and access to rail capacity within China were promised, and four new Mongolian ports (Shiveekhuren, Bichigt, Gashuunsukhait and Nomrog) were opened for rail transport. New tariffs and additional volume for Mongolian cargo on Chinese railroads were established, and China also gave Mongolia a 40% discount on current transportation tariffs. The big catch to all of these agreements is the necessity to secure ratification by the Mongolian parliament, which remains divided on new rail links to China and which size rail gauge to use.
Not two weeks later the Mongols welcomed Russian President Putin's visit as visual proof of a new era in Russian economic investment in Mongolia to balance nearly total Chinese monopolization (89% in 2013) of Mongolia's foreign trade. The 14 bilateral agreements signed were vaguer than those with China, but of greater importance was Putin's political message that Russia had not forgotten Mongolia. What is most interesting about the rail projects covered in the Russo-Mongolian agreements is the potential impact on Sino-Russian rail cooperation. An example is the electrification and construction of a second track for the 1100 km (684 mile) rail from Mongolia's northern border with Russia through the planned Sainshand minerals processing industrial zone in the Gobi to Zamyn Uud on the Chinese border. Russo-Mongolian cooperation also covered exploring development of a western Mongolian railway line joining Russia and China for Russian exports to China, India and Pakistan, as well as researching utilizing the 230 km (143 miles) Choibalsan–Erentsav eastern railway for transit goods into northeast China. During the press conference that Putin held at the end of the Mongolian visit, he singled out bilateral transport cooperation: "This is a very important sector for Mongolia, and it is in our interests too to increase Mongolia's transit potential. Mongolia is located between Russia and China after all. We are big trade and economic partners and have bilateral trade with China that will come to $64 or already $65-67 billion this year. It therefore makes sense to put Mongolia's transport possibilities to greater use than is the case today."4
Dushanbe Trilateral Summit
The Mongols in the spring had begun to talk publicly about a trilateral summit meeting taking place in Ulaanbaatar. When it finally occurred in Dushanbe, President Elbegdorj particularly hailed the meeting as a historically significant first in the history of the three countries5 and suggested it take place every three years in Mongolia. Both Xi and Putin expressed their general interest but did not confirm the venue and timing. President Xi proclaimed that the trilateral summit was of "great significance to deepening mutual trust among the three parties, and pushing forward regional cooperation in Northeast Asia."6 He said that his Silk Road Economic Belt initiative meshed well with Russia's transcontinental rail plans and Mongolia's desire to build up a China-Mongolia-Russia economic corridor in its Talyn Zam [Steppe Road] program. However, he cautioned that if this concept were to succeed, the three nations needed to strengthen traffic interconnectivity, facilitate cargo clearance and transportation, and build a transnational power grid.7 As for Putin, he noted that: "Things discussed at this meeting create the appropriate mechanism to discuss and resolve the largest projects to be implemented by us in the future, and we agreed to promote our cooperation in this regard." Moreover, the Russian leader asserted that the geographic proximity of Mongolia, Russia and China facilitated long-term projects in infrastructure, energy and mining: "We have things to discuss and we find it important, feasible and useful to establish a regular dialogue."8
Many foreign observers saw the Dushanbe meeting as proof of China and Russia's deepening coordination, especially regarding Mongolia and the greater Eurasian continent. However, equally discussed was the concern of Mongolia's "third neighbors" about the real intentions of President Elbegdorj. Despite the strong democratic record of Elbegdorj from his days in the streets as one of the key protest leaders who brought down Mongolia's communist government in 1990 and the fact that the plethora of agreements with both China and Russia to improve Eurasian transportation connections through Mongolia also should help Turkey, Europe, Japan and South Korea to become stronger regional trade partners, Mongolia's new strategy has caught many, including in the restless foreign investor community, off guard. When a Mongolian delegation visited New York and Washington in connection with President Elbegdorj's speech to the United Nations General Assembly in late September, its members were met with a barrage of questions from American officials about the future of Mongolian allegiance to its policy of reaching beyond its two border neighbors to integrate into the world economy (the so-called 'third neighbor policy'), as if Mongolia were returning to a pre-democratic mentality.
This concern, while understandable, arises from a lack of understanding of Mongolia's overall trade predicament and its limited options to find a way forward. After 20 years of unsuccessful efforts to find new trade partners other than its two border neighbors for its minerals and animal by-products, Mongols of all political persuasions came to recognize that they cannot ameliorate the Chinese monopoly over their economy without careful development of real transport and pipeline alternatives to their present poor infrastructure. Following World Bank and IMF advice to just build new roads and rail spurs south to service the Chinese market would merely perpetuate the dependence on China, yet it may be necessary in the short- and mid-term to keep the economy afloat. A longer term strategy of reviving Russian economic investment in Mongolia and building transport infrastructure north to link with the Trans-Siberian rail system as well as promoting Mongolia as a reliable and cheaper alternative for Sino-Russian transit traffic within a greater Eurasian transit zone are absolute necessities. Moreover, Elbegdorj and many other Mongolian policymakers are clever enough to recognize that the Chinese-Russian political rapprochement, which is based on economic self-interest, can only profit Mongolia if Mongolia is seated at the negotiating table and participating in drafting new transport and energy growth models. Thus the U.S. and other democracies should be supportive of Mongolia's strategy of trust building as possibly leading to greater Northeast Asian political stability and being economically beneficial to American allies such as Japan, South Korea, and Australia.
Progress after Dushanbe
Since the tripartite summit, the Mongols have moved to maintain the momentum of Sino-Russo-Mongolian cooperation. Elbegdorj announced after the SCO that Ulaanbaatar would host a meeting on implementing the Railway Transit Transportation agreements just signed among the three governments and set up a working group to study linking Central Asia's natural gas fields to China and South Korea through Mongolia via Russia's "Western Corridor of Natural Gas."9 The Mongolian government on October 15th at the 18th regular meeting of the Mongolian-Russian Intergovernmental commission on trade, economic, science and technical cooperation initiated a Steppe Road highway project together with the Russian company Dalistroimachanizasiya to develop a 997 km highway, 1100 km high voltage electrical line, gas and oil pipeline from Altanbulag at the northern border through Ulaanbaatar to Zamin Uud on the southern border.10 On October 20th an MOU for a high speed rail line project linking Beijing and Moscow through Mongolia was signed by Russia and China during a visit to Moscow by the Premier of the PRC State Council Li Keqiang. This new passenger train project would reduce the 7000 km journey from 6 days to 2. Cost projections for the new rail line are set at US$ 230 billion on a 5-year construction time schedule.11 The line would parallel the route of the present Ulaanbaatar Railway, which likely would be turned over solely to freight traffic. A few days later in Mongolia's parliament a draft bill was approved that permits for the first time narrow-gauge (1,435 mm) railroad spurs from coal processing plants to the Chinese border for transporting raw minerals (Tavantolgoi-Gashuunsukhait, Sainshand-Zamiin Uud, and Khuut-Bichigt), contingent on agreement on border crossing cooperation between Mongolia and China. The Russian wide gauge (1,520 mm) spurs were approved for Arts Suuri-Erdenet, Tavantolgoi-Sainshand-Baruun-Urt-Khuut-Choibalsan, and Khuut-Numrug, while the Sainshand and Zamiin Uud lines were eliminated from the government's proposed plan because of the new Sino-Russo rail agreement.12
The above-mentioned transport and energy projects clearly indicate that Mongolia is now well positioned in the middle of Chinese and Russian plans to expand their transportation cooperation throughout the Eurasian region. This trend is likely to continue, particularly with the continuing delay on the development of the second phase of the giant Rio Tinto-controlled copper and gold deposit at Oyu Tolgoi. That project has been touted as inextricably linked to Mongolia's economic development. While that assessment is still true, Mongolia has many domestic factors to consider before coming to a final solution on how to proceed. With the indecision and delay, western investors have grown weary and leery of entering into big new mining projects in Mongolia at the central government level which might be derailed by local and environmental groups locked out of the original negotiating processes. Also, many Mongols are uncomfortable with the present reality of major western companies acting as middlemen to move Mongolian raw minerals to Chinese customers—a pattern that further strengthens Chinese monopoly over its economy.
Mongolia now has an alternative to this type of foreign investment—increase its role as a transit corridor in the region as it simultaneously develops its dual rail gauge infrastructure in a more balanced manner so that its products are better able to reach new trade partners, and it profits in transit fees from exploding Sino-Russian trade.
Ultimately this plan could break China's stranglehold on Mongolian trade by helping Japan, South Korea, Southeast Asia and Vietnam sell their goods as alternatives to Chinese ones to Mongolia, especially if North Korean ports are developed to avoid Vladivostok congestion. Also, a modernized rail system across Eurasia would permit Turkey, the Middle East, Iran, and Europe to grow their trade with Mongolia in a substantive fashion. However, the ever present danger of this new game plan lies in Mongolia's ability to manage the influence of the Sino-Russian partnership in its domestic political scene. Mongolian history tells us that rising Chinese and Russian economic ties brought strong political pressures and even bloody competition. As the 21st century progresses, the challenge of balancing economic benefit and national security remains key for Mongolian leaders.
Alicia Campi has a Ph.D. in Mongolian Studies from Indiana University, was involved in the preliminary negotiations to establish U.S.-Mongolia bilateral relations in the 1980s, and served as a diplomat in Ulaanbaatar. She has a Mongolian consultancy company (U.S.-Mongolia Advisory Group), and writes and speaks extensively on Mongolian issues. She has published over 80 articles and book chapters on contemporary Mongolian, Chinese, and Northeast Asian issues, and advises Chinese and western financial institutions on Mongolian investment, particularly in the mining sector. She is the author of The Impact of China and Russia on U.S.-Mongolian Political Relations in the 20th Century.
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South-South ASEAN study visit to Mongolia
October 30 (ILO: Social Protection) In October 2014, a delegation of ASEAN officials, composed of representatives of Cambodia, Indonesia and Thailand, travelled to Mongolia to learn more about the country's experience in delivering social services and benefits through single-window service points.
The study trip, sponsored by the ILO/Japan Project Income Security and Employment Services in ASEAN, Mongolia (ILO/Japan MAPS Project) and the joint ILO-UN Office of South-South Cooperation (UNOSSC) project on South-South and Triangular Cooperation, was designed to build capacities of ASEAN officials through South-South exchange of experiences and expertise.
The study visit contributed to current government efforts in Cambodia, Indonesia and Thailand. In Cambodia, the government is setting up single-window centres for the delivery of social protection and employment services, called the Social Service Delivery Mechanism (SSDM), which also includes the establishment of a monitoring and evaluation protocol. In Indonesia, the government is also currently piloting similar integrated services in two provinces of the country. In Thailand, such an approach is also being discussed to deliver social services more effectively.
The ILO/Japan MAPS Project (2014-2015) aims to extend social protection floors in ASEAN and Mongolia.
The ILO-UNOSSC project aims to support countries from the South in the design, implementation, monitoring or harmonization of Social Protection Floor policies and components through knowledge exchange and international learning.
[Global HR Forum 2014] Mongolian Ed Policy Makers Need to Learn from Success Case of KAIST
November 5 (The Korea Economic Daily) "Korea has successfully made economic growth envied by the world without any resources. I believe this is largely because highly educated people worked hard in industrial workplaces. I am sure this is made possible by high-quality institutions of higher learning. The success case of Korea is a good role model for all Mongolians."
Erkembulgan (Mogi: must be Erkhembulgan), director in charge of university education for the Mongolian Ministry of Education, Culture, and Science, said this on November 3 at the East Asia-Pacific Workshop 2014 held at the Sheraton Grande Walkerhill, adding, "In order for Mongolia with a population of 3 million to achieve economic development comparable to that of Korea, it is essential to have talents nurtured through a good educational system." He visited Korea to take part in the workshop, the event held before the Global HR Forum 2014.
"Since the early 2000s when the country underwent democratization, Mongolia has seen so many new private universities spring up. It, however, led to across-the-board degradation of educational quality and caused a glut in college-educated job seekers," he added. In addition to reforming the system so that universities can produce capable workforce for industry, he further said, he'd like to find ways to help Mongolian university graduates land good jobs in countries like Korea and Russia.
"If we learn how research universities like KAIST in Korea could develop their system, I think Mongolian policy makers will find ways forward for their universities. From this forum, I want to look for ideas to help our higher learning system upgrade," he said.
Human Rights and Mongolia's Small-Scale Mining Sector
By Bolormaa Purevjav
October 29 (The Asia Foundation) Since the collapse of the socialist regime in 1990, Mongolia's economic development has been dependent on an expanding formal and informal mining sector that for many years had little regard for the environment. As the negative environmental implications of such rampant mining expansion became clearer, Mongolia's government and national and international communities have put pressure on mining companies to comply with international environmental standards. Such pressure has driven progress in the large-scale mining sector to invest greater resources to reduce their impact with significant attempts to comply with international environmental standards, including performance standards specified by key lending banks.
However, for the estimated 100,000 small-scale artisanal miners who work independently and make up nearly 20 percent of Mongolia's rural workforce, complying with these standards is complicated at best.
Historically, artisanal miners have been marginalized from society due to the negative impact of their mining activities on the environment. This has prevented them from achieving their full economic potential and from developing more sustainable environmental practices. However, thanks to government efforts and an increase in awareness, that negative perception is shifting, and Mongolia's artisanal miners are gradually becoming more formalized and are being recognized as important contributors to the economy.
In 2010, the government legalized artisanal mining as an official occupation, recognizing the rights of artisanal miners to work, mine land, and organize themselves into official partnerships. Today, these workers contribute $110 million annually to export revenues. Their rights, however, have often conflicted with the rights of communities living close to artisanal mining sites, especially the communities' right to be protected against environmental pollution and ecological imbalance (as defined in Article 16.2 of the Constitution of Mongolia). As many rural communities depend on natural resources for jobs and food, environmental degradation can destroy traditional livelihoods.
Given that artisanal miners often lack access to knowledge, financial resources, and technological capacity, it has been very difficult to implement environmentally friendly practices in relation to rehabilitation of degraded land. Such mining impacts the interests of other stakeholders in the community, where large unfilled shafts, compacted soils, loss of vegetation and topsoil, and polluted water degrade the value of pasturelands and impact wildlife. As such, artisanal mining communities have often been excluded from local decision-making processes.
Since 2006, The Asia Foundation has been working with Mongolia's artisanal mining sector on sustainable local development through its Engaging Stakeholders in Environment Conservation project. The project introduces responsible and sustainable environmental rehabilitation approaches for abandoned artisanal and small-scale mining sites. The work engages a range of stakeholders – from local communities and artisanal miners, to local officials, businesses, and civil society – and incorporates a human rights based approach (HRBA), which focuses on strengthening participation of all stakeholders in local development and environmental decision-making processes.
In 2010, we partnered with 19 local environmental NGOs to establish over 20 multi-stakeholder councils (LMCs). This year, local environmental NGOs conducted HRBA training in over 15 soums (local districts) involving artisanal miners, local communities, mining companies, and local governments to enhance their knowledge and understanding about respective rights and responsibilities. Trainings focused on local decision-making processes on socio-economic development and effective environmental rehabilitation of artisanal mining sites.
The interactive training sessions clarified roles and responsibilities of "duty bearers" and "rights holders." These include the duty of local governments to create opportunities for meaningful participation and to empower vulnerable groups such as artisanal miners to be part of local decision-making processes. They also highlighted the right of citizens to participate in decisions affecting them and to hold local governments accountable for securing such rights.
As part of the HRBA training, participants identified the key human rights challenges in their communities as well as their root causes. In many areas, persistent unemployment was identified as a key human rights violation of the right to work resulting in people being forced to engage with the informal artisanal mining sector. It became clear that most soums do not have clear policies to address this issue nor are investments made to promote the creation of sustainable jobs. Local governments were therefore encouraged to develop such a policy with HRBA as an integral part of the process.
To complement the HRBA trainings, the project initiated frugal rehabilitation of degraded land, which is an economically affordable, socially acceptable, and ecologically viable rehabilitation approach, at eight sites involving 355 artisanal miners, with rehabilitation completed by artisan mining communities themselves. If local governments recognize such skills as legitimate forms of employment, then frugal rehabilitation can not only help shift the perspectives of artisanal miners on their responsibilities to the community, but can also create opportunities for green jobs for local communities, addressing both poverty and unemployment as well as rehabilitation of degraded lands. From a human rights perspective, addressing the economic rights of artisanal miners, while also fulfilling citizens' rights to live in a safe and healthy environment, is essential.
Bolormaa Purevjav is senior advisor to The Asia Foundation's Engaging Stakeholders in Environmental Conservation Project (ESEC II) funded by the Swiss Agency for Development and Cooperation. The ESEC II project complements SDC's Sustainable Artisanal Mining project. P. Bolormaa can be contacted at bolormaa.purevjav@asiafoundation.org. The views and opinions expressed here are those of the individual authors and not those of The Asia Foundation.
Mongolia Activate Talk: Child Helpline
Mongolia | November 12, 2014 (UNICEF)
On November 12, Mongolia will hold an Activate Talk on the first-ever nationwide child helpline.
The nationwide toll free, 24/7 child helpline is a big step towards creating a comprehensive child protection system in Mongolia. The three-digit number established by the government in cooperation with World Vision, Mobicom (a telecom company) and UNICEF aims to reduce child abuse cases and strengthen the child protection system. Since the launch in June, 2014, 20 000 calls have been received and over 200 cases opened. The talks will explore challenges and opportunities facing the helpline and discuss how adequate referral mechanisms and casework linked to this helpline are still needed.
Arga Bileg - Full Performance (Live on KEXP)
November 1 (KEXP) http://KEXP.ORG presents Arga Bileg performing live in the KEXP studio. Recorded September 17, 2014.
Songs:
Imagination
Badarchin
Bayad
Uulen Bor
Host: Darek Mazzone
Audio Engineer: Kevin Suggs
Cameras: Jim Beckmann, Scott Holpainen & Justin Wilmore
Editor: Justin Wilmore
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6th Floor, NTN Tower
Baga Toiruu, Chingeltei District 1
Ulaanbaatar 15170, Mongolia
Email: info@covermongolia.com
P Please consider the environment before printing this e-mail.
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