Chinese Analyst Downplays Mongolia’s Leverage Over Russia-China Gas Pipeline www.chinaglobalsouth.com

Russian Energy Minister Sergei Tsivilev said early this month that President Vladimir Putin had renamed the long-planned Power of Siberia 2 pipeline the “Power of Baikal.” The proposed 2,600-kilometer route would carry up to 50 billion cubic meters (bcm) of gas a year from the Yamal and West Siberian fields through Mongolia to China, exceeding the existing Power of Siberia line’s 38 bcm capacity.

The announcement revived debate in China over whether Mongolia could one day exploit its position as a transit country to restrict Russian gas flows.

Writing in the Chinese news and commentary outlet Guancha, Zhang Chenyi, an international relations scholar affiliated with Moscow State University’s Faculty of Global Studies, argued that Mongolia’s dependence on its two giant neighbors limits that risk.

“Mongolia may hold the valve in a geographical sense, but it would struggle to turn that valve into a strategic weapon against China at low cost,” Zhang said.

A Route Closer to China’s Main Gas Markets

Mongolian route offers China advantages over an earlier proposal to send West Siberian gas directly into Xinjiang through the Altai Mountains.

Xinjiang already produces substantial volumes of gas and serves as the entry point for pipeline supplies from Turkmenistan, Kazakhstan and Uzbekistan. Adding another 50 billion cubic meters there would concentrate more imports in western China and require the gas to travel thousands of kilometers to major northern and eastern markets.

A pipeline entering through Inner Mongolia would arrive closer to major Chinese cities such as Beijing, Tianjin, Hebei and Shandong. It could also connect with the Shaanxi-Beijing pipeline system and China’s national gas grid. The route avoids the difficult terrain and protected areas along the Altai border, reducing construction challenges.

Mongolia’s Valve Comes With Constraints
Mongolia recorded approximately $27.1 billion in foreign trade in 2025. China accounted for $18.7 billion, or 69.2 percent, of that trade and purchased 89.4 percent of Mongolian exports. Coal and copper concentrate together generated more than four-fifths of the country’s export earnings.

Mongolia also depends on Russia for around 97 percent of its petroleum-product imports. Fuel shortages would directly affect its mines and the trucks carrying coal to China.

“Mongolia has thus formed a pronounced two-way dependence: its energy supply to the north is closely tied to Russia, and its export market to the south is closely tied to China,” Zhang wrote. “This structure makes it very difficult for Mongolia to choose one side and bear the cost of a prolonged confrontation with the other.”

Zhang also dismissed the prospect of Russia using its fuel leverage over Mongolia to engineer a cutoff. Moscow needs a new long-term buyer for its gas after losing much of its European market. China is the only nearby customer capable of absorbing 50 bcm a year. A deliberate interruption would cut Russian export revenue and risk leaving production stranded.

Supplier Concentration Is the Longer-Term Risk
For Zhang, China’s more consequential concern is supply concentration. The existing Power of Siberia pipeline, a planned 10 bcm Far Eastern route and the new 50 bcm project would bring Russian pipeline capacity to China close to 100 bcm a year. Further expansion could push it above that level.

Large volumes of inexpensive Russian gas could gradually displace Central Asian supplies, seaborne LNG and higher-cost domestic production, which helps explain Beijing’s caution over the project. 

by Rudy Lu
September 15, 2026

Mongolia, Rio Tinto agree to amend Oyu Tolgoi contract, increasing Mongolia’s returns by MNT 13 trillion www.gogo.mn

The Government of Mongolia and Rio Tinto Group have reached an agreement to amend the Oyu Tolgoi project’s Shareholders’ Agreement, originally established 17 years ago, which is expected to increase Mongolia’s future returns from the project by approximately MNT 13 trillion.

The two sides also agreed that dividend distributions from the Oyu Tolgoi project will begin in 2027.

Prime Minister N.Uchral announced on social media that the amendments include measures to reduce project costs. The total cost reduction is estimated at approximately MNT 30 trillion, including about MNT 8 trillion through lower management fees and the elimination of overlapping costs, and approximately MNT 22 trillion through lower interest rates on shareholder loans.

Representatives of the Mongolian side also said the parties had reached a mutual agreement to begin dividend distributions in 2027 and increase Mongolia’s returns from the project.

Following the negotiations, Rio Tinto Chief Executive Simon Trott highlighted the progress made in cooperation between the two sides.

“Today, we have made significant changes to the shareholders’ agreement. We have reduced the interest rate on shareholder loans and lowered management service fees. This is a historic moment and represents very important progress. 

Rio Tinto’s commitment to working with Mongolia on dividend distributions to Oyu Tolgoi shareholders and increasing Mongolia’s returns, adding that teams from both sides would continue working to reach and finalize a unified solution”, he said. 

Trade Surplus Grows 3.6-Fold to USD 6.0 Billion www.montsame.mn

MONTSAME National News Agency, in cooperation with MICC Mongolia International Capital Corporation, is delivering a weekly overview of domestic and international capital markets and economic developments to its readers.

Weekly Capital Market and Economic Review (September 7–13, 2026)

MONGOLIAN STOCK EXCHANGE

A total of 13.7 million securities worth MNT 6.81 billion were traded on the Mongolian Stock Exchange last week. By trading value, Khan Bank JSC, MGL Aqua JSC, Tavantolgoi JSC, APU JSC, and the Future Tech Innovation mutual fund were the most actively traded securities. One block trade was carried out during the period: 4.5 million shares of MGL Aqua JSC (MGLA) changed hands at MNT 276.18 apiece, worth a total of MNT 1.2 billion.

Overall market sentiment was weak last week, with the TOP-20 and FTI indices both declining. The MSE A index, however, edged higher, pointing to pockets of positive sentiment. The FTI index's 1.23% drop reflected relatively weak performance among small- and mid-cap stocks. Although the market's broader trend was slightly negative, some sectors and stocks retained room for growth, and investors continued to show steady interest in large, financially sound companies.

INDEX

UNIT

CHANGE

TOP 20 Index

63,054.98

-0.56%

MSE A Index

24,470.87

+0.17%

MSE B Index

15,254.90

-0.06%

FTI

1,053.71

-1.24%

COMMERCIAL BANKS' FOREIGN DEBT GROWS 2.6-FOLD IN 3 YEARS

The foreign debt of Mongolia's commercial banks reached USD 4.4 billion at the end of the second quarter of 2026, up USD 1.3 billion, or 41.2%, from a year earlier. Compared with the second quarter of 2023, commercial banks' foreign debt has grown 2.6-fold, now accounting for 11.4% of the country's total external debt.

By structure, foreign direct investment and intercompany lending account for the largest share of total external debt, at USD 17.6 billion, or 45.0%, followed by the government at USD 8.4 billion, or 21.5%, other sectors at USD 7.6 billion, or 19.3%, and commercial banks at USD 4.4 billion, or 11.4%. While banks' foreign debt rose 41.2%, the government's foreign debt fell 3.2%, foreign direct investment and intercompany lending fell 1.9%, and the Bank of Mongolia's foreign debt fell 29.5%.

Rising foreign funding gives banks more diversified sources of lending capital, but it also increases their exposure to exchange-rate movements, the cost of foreign financing, and refinancing risk. Going forward, attention should therefore be paid not only to the overall level of debt but also to what types of loans and investments this funding is being channeled into and to how soundly banks are managing their foreign-currency risk.

At the same time, the government's domestic debt rose 60.2% to reach MNT 2.0 trillion, reflecting the government's growing reliance on domestic sources to finance its spending.

TAVANTOLGOI OVERTAKES KHAN BANK IN MARKET VALUE

Valuations of major companies on the Mongolian Stock Exchange rose last week, lifting the number of companies with a market capitalization above MNT 3 trillion to two. Shares of Tavantolgoi JSC (TTL) climbed 37.7% over the week, pushing its market value to MNT 3.2 trillion and briefly overtaking Khan Bank JSC (KHAN) as the exchange's most valuable listed company. TTL's share price then fell 5.4% last Friday, while KHAN's rose 2.6%, returning Khan Bank to the top of the market-value rankings.

Three of the five companies valued above MNT 1 trillion are banks, underscoring that the banking and mining sectors remain the main drivers of Mongolia's equity market. At the same time, while two companies have now crossed the MNT 3 trillion threshold, none is valued near MNT 2 trillion, pointing to a clear valuation gap among the exchange's largest listed companies.

According to Mongolian Stock Exchange data, a total of MNT 872.2 billion in trading was carried out between September 7 and 11. Of this, coal accounted for MNT 699.4 billion, iron ore MNT 9.2 billion, and molybdenum concentrate MNT 56.8 billion, while securities trading made up the remaining MNT 106.8 billion—showing that trading in mining commodities, not only equities, contributes substantially to the exchange's overall activity.

EXPORTS RISE 57.2%, TRADE SURPLUS WIDENS

Mongolia's exports reached USD 14.4 billion in the first eight months of 2026, up USD 5.2 billion, or 57.2%, from the same period last year. As a result, the country's foreign trade balance posted a USD 6.0 billion surplus, 3.6 times larger than a year earlier.

Mining output drove the rise in exports: exports of copper ore and concentrate grew by USD 2.8 billion, and coal exports by USD 1.9 billion. Exports of unprocessed and semi-processed gold rose by USD 255.6 million and combed cashmere by USD 97.1 million, also contributing significantly to export revenue growth.

In terms of export structure, copper ore and concentrate accounted for 43.7% and coal for 37.0% of total exports, together making up more than 80% of the total, while gold accounted for 5.6%.

China remained Mongolia's main export market, receiving USD 13.3 billion worth of goods, or 92.7% of total exports. Of goods exported to China, copper ore and concentrate made up 47.1% and coal 40.7%.

These figures show that growth in the volume and price of copper ore, concentrate, and coal exports was the main driver of Mongolia's export growth in the first eight months of 2026, with mining remaining the principal source of export revenue.

PM Uchral: Government Mobilizing All Resources for Citizens www.montsame.mn

Uchral Nyam-Osor, Prime Minister, took part in the opening of the Confederation of Mongolian Trade Unions' fair, themed "Social Partnership – Cooperation," where he presented the 2026 revised budget, the 2027 draft budget, and nine related decisions and policies.

The Prime Minister said the basic pension would be paid starting November 1, 2026, with the MNT 769,000 pension rising to MNT 1 million. Pensions would rise by an average of MNT 380,000. Energy tariffs would not be increased. Under the revised budget, MNT 200 billion had been allocated to the energy sector, with half (MNT 100 billion) earmarked for repairs and renovation and the remaining MNT 100 billion provided as subsidies.

The government aimed to channel MNT 3.5 trillion in dividends from state-owned enterprises into the budget to raise citizens' pensions and wages and improve people's lives. He noted that, had this not been included in the budget, the funds would otherwise have been supplied to the market through the boards of the state-owned enterprises. Under the 2026 revised budget, the salaries of civil servants would be increased by 50%.

16,000 households would be covered by the mortgage loan program. A preferential loan program to support the middle class would also be implemented. He said the government was fully mobilizing its resources for citizen-focused decisions such as raising wages and pensions and providing mortgage housing. The government's core policy was to support everyone who wants to work and build something. He noted that Mongolians had not received a single dividend payment from Oyu Tolgoi in 17 years and that the government had now officially secured a commitment to receive dividends from Oyu Tolgoi, with the dividend expected to total around MNT 3 trillion.

Tamir Enkhbaatar, President of the Confederation of Mongolian Trade Unions, said he considered the government's policy of increasing citizens' real income to be the right approach and noted that there remained a need to further raise wages going forward. He also expressed support for establishing specialized high schools in each region, implementing the Cambridge curriculum, and the government's housing policy.

Gashuunsukhait-Gantsmod cross-border railway reaches 54% completion www.gogo.mn

Installation of the railway superstructure for the Gashuunsukhait-Gantsmod cross-border railway project has officially begun, with overall construction progress reaching 54.15% as of September 14, 2026.

The project includes the installation of 32.6 km of railway superstructure. To date, 2.5 km of narrow-gauge superstructure has been installed, along with five turnouts and 2,304 reinforced concrete sleepers at three locations.

Under the project's second package, which covers the long bridge, 2,382 pile foundations, 291 intermediate piers, and 666 girders have been manufactured. Installation of 426 girders has been completed to date.

Russian customs data not updated despite EAEU trade agreement taking effect www.gogo.mn

The inaugural meeting of the Joint Committee overseeing the implementation of the Interim Trade Agreement between Mongolia and the Eurasian Economic Union (EAEU) and its member states was held to review the agreement’s implementation and identify practical challenges.

The meeting was co-chaired by J.Enkhbayar, First Deputy Prime Minister and Minister of Economy and Development, and Andrey Slepnev, Minister in charge of Trade at the Eurasian Economic Commission.

B.Lkhagvajav, President of the Mongolian National Chamber of Commerce and Industry (MNCCI), noted that while the agreement has created new opportunities for Mongolian exporters, its implementation has revealed challenges related to tariff concessions, customs clearance, payment settlements, and data synchronization.

In particular, exporters have encountered outdated data in the Russian customs system, discrepancies in signatures on certificates of origin, and requests for additional “Form B” certificates.

Participants also noted restrictions related to veterinary and quarantine requirements affecting the export of milk and dairy products to Kazakhstan.

Meanwhile, the 2nd Mongolia-Russia Regional Forum began on September 14, featuring B2B meetings that enabled business representatives from the two countries to establish direct contacts and discuss opportunities for trade, investment, and cooperation.

More than 100 companies from Mongolia and Russia participated in the meetings, highlighting new business opportunities emerging from Mongolia’s interim trade agreement with the EAEU.

The participating sides also signed memoranda of cooperation and agreed to expand bilateral business collaboration.

Molybdenum Concentrate from Erdenet Mining Corporation Sold on the Exchange for the First Time www.open.kg

On September 10, 2026, trading took place at the Mongolian Stock Exchange, where molybdenum concentrate produced at the Erdenet Enterprise was auctioned. The product, containing at least 44% molybdenum, was offered in a volume of 520 wet metric tons (WMT) and 468 dry metric tons (DMT) with a starting price of $28,317.9 per ton.

As a result of active trading, the price of the molybdenum concentrate increased by $5,450 per ton. Thus, the final transaction price amounted to $33,767.9 per ton, and the total amount of the successfully concluded deal reached $15,803,377.2.

The Mongolian Stock Exchange is actively working on expanding the range of traded goods. In this direction, new "Rules for Establishing and Complying with Trading Contract Standards for Molybdenum Concentrate" were developed and approved in 2026, as well as amendments to the general "Rules for Trading in Mineral Products." The successful results of the first trades confirmed the effectiveness of the implemented changes.

Mongolian president vows to deepen energy, infrastructure cooperation with China www.xinhuanet.com

 Mongolian President Ukhnaa Khurelsukh on Sunday said the Erdeneburen Hydropower Plant in the western Khovd Province is an important outcome of practical cooperation between Mongolia and China.

During an inspection of the construction site, where he received a briefing on the progress of the project, Khurelsukh said Mongolia will take the project as an opportunity to further deepen practical cooperation with China in the energy and infrastructure sectors.

The Mongolian president commended the Chinese side's contract performance and construction management, and thanked the Chinese government for its strong support for the project.

Cao Li, acting chargé d'affaires of the Chinese Embassy in Mongolia, said that China stands ready to work hand in hand with Mongolia to implement the important consensus reached by the two heads of state, consolidate strategic mutual trust, deepen mutually beneficial cooperation, and build the hydropower plant into a benchmark high-quality project that precisely aligns the Global Development Initiative with Mongolia's "Vision 2050" development plan.

Constructed by Power Construction Corporation of China, the plant is currently Mongolia's largest national key livelihood hydropower project.

With a total installed capacity of 90 megawatts, the project, once fully operational, is expected to ensure a stable electricity supply to Mongolia's five western provinces and significantly enhance the region's energy self-sufficiency.

It is also expected to improve local agricultural irrigation, promote the development of cultural tourism and fisheries, and contribute to ecological protection and comprehensive environmental management.

(Web editor: Zhang Kaiwei, Liang Jun)

Amendment to Boost Mongolia's Oyu Tolgoi Benefits Confirmed www.montsame.mn

Uchral Nyam-Osor, Prime Minister of Mongolia, announced on September 11, at a joint briefing with Simon Trott, Chief Executive of Rio Tinto, who was visiting Mongolia, that the Oyu Tolgoi Shareholders' Agreement had been changed for the first time in 17 years to increase Mongolia's benefits.

After prolonged negotiations between the Government of Mongolia's working group and the Rio Tinto Group, the two sides reached and finalized an agreement with the investor to increase Mongolia's benefits from the Oyu Tolgoi project and substantially reduce costs. This created the conditions for the first major amendment to the Shareholders' Agreement in 17 years. The parties also agreed to move up the timeline for distributing dividends to the Mongolian side from the Oyu Tolgoi project to 2027.

According to "Chinggis Khaan Sovereign Wealth Fund" LLC, preliminary estimates indicate the negotiations will reduce Oyu Tolgoi LLC's management costs by USD 8.4 billion, or around MNT 30 trillion, while increasing Mongolia's benefits over the mine's total operating life by around USD 4 billion, or MNT 13 trillion.

Oyu Tolgoi LLC said in a statement: "Within the framework of negotiations on Oyu Tolgoi shareholder matters, the Government of Mongolia and Rio Tinto reached an agreement on reducing management service costs and lowering the interest rate on the shareholder loan. Today, the parties formalized these agreements and signed the relevant contracts and documents, confirming their joint commitment to distributing Oyu Tolgoi's dividends to shareholders in 2027. Munkhsukh Sukhbaatar, Chief Executive Officer of Oyu Tolgoi, said, "This progress is not the result of one side's effort alone, but a joint achievement. Today's step became a reality through mutual trust, open dialogue, and solution-focused cooperation."

Deep in debt for flagship airport www.ubpost.mn

Mongolia has yet to pay off even a third of the loan that built Chinggis Khaan International Airport, but that has not stopped officials from already sizing up a second concessional loan from Japan, worth a further 65 billion JPY, to expand and modernise the facility.

The original airport was financed with a 65.6 billion JPY concessional loan from the Japan International Cooperation Agency (JICA), worth an estimated 570 million to 600 million USD at the time it was disbursed. Built by a consortium of Mitsubishi and Chiyoda in Khushig Valley, some 52 kilometers south of Ulaanbaatar, the airport opened its doors in July 2021 and replaced the ageing Buyant-Ukhaa International Airport, whose mountain-ringed runway had long been a headache for pilots and a bottleneck for the country’s growing air traffic. Five years on, the new airport has more than lived up to its billing as a gateway to the world, but it is also, quite literally, living on borrowed time and borrowed money.

Designed to handle 2.3 million passengers a year, the airport is now bursting at the seams. Passenger numbers rose to 2.17 million in 2024, a 25 percent jump from 1.73 million the year before, and traffic on routes to Seoul, Beijing and Istanbul in particular has climbed steadily as Mongolians travel abroad in greater numbers and the country pushes to draw in more visitors from the Middle East and Central Asia. With the terminal already pushing up against its ceiling, expansion has stopped being a nice-to-have and become, in the government’s own words, an urgent priority. However, for all the urgency, the state has been dragging its feet on paper trail. Officials at the Ministry of Road and Transportation have so far given little more than the standard runaround, saying only that the expansion loan is being “studied, calculated and discussed”, without putting a single detailed plan, cost estimate or repayment schedule on the table. Reading between the lines, however, it looks very much as though the ink is all but dry.

That impression was reinforced during an official visit to Mongolia by Japanese Foreign Minister Motegi Toshimitsu, held from August 29 to September 4 as part of a wider four-nation tour through Central Asia and Europe. Motegi held talks with President U.Khurelsukh before sitting down with his Mongolian counterpart, B.Battsetseg, on September 3 in Ulaanbaatar. Reporting on the meeting, Japan’s Ministry of Foreign Affairs said the two sides welcomed progress on Japan’s assistance with the expansion of the airport, describing the project as important for improving the landlocked country’s connectivity. According to one Japanese news outlet, the two ministers “ratified major advancements” on the expansion during that meeting, a sign that Tokyo, at least, considers the matter all but settled. 

The groundwork for that moment had been laid over several months. As far back as June, at the sidelines of the Nikkei Forum in Tokyo, Motegi had already signalled Japan’s intention to cooperate on the airport’s expansion, and Minister B.Battsetseg had welcomed the commitment on the spot. The two countries, who officially style themselves “Special Strategic Partners for Peace and Prosperity,” have also been coordinating at the technical level: the Ministry of Road and Transportation confirmed in late June that both sides were discussing an exchange of notes and a loan agreement with JICA, and then Prime Minister L.Oyun-Erdene had earlier met with Japanese Ambassador Igawahara Masaru to discuss how the new loan would be used. Finance Minister Z.Mendsaikhan later held his own meeting with Igawahara on the same subject, underlining just how many hands have already touched this file before a single MNT, or JPY, has changed hands. 

Media in both countries have reported that Tokyo has agreed in principle to extend a concessional loan worth roughly 1.5 trillion MNT for the expansion, on terms that would make most borrowers green with envy: an interest rate of just 0.1 to 0.2 percent, spread over a 40-year repayment period. It is a similar playbook to the one Japan used in 2020, when it extended a 25 billion JPY, or roughly 230 million USD, emergency loan to Mongolia for COVID-19 response at an even lower rate of 0.01 percent, underscoring how Tokyo’s soft-loan diplomacy in Mongolia tends to come with strings so loose they are barely felt at signing, even if they still have to be paid back to the last tugrik decades down the line.

Asked directly about the state of negotiations, officials at the Ministry of Road and Transportation Development did not mince their words on where things stand, even if they have been tight-lipped on the specifics. “The two sides have reached an agreement, and the government has approved the draft loan agreement,” the ministry said. “Once Parliament ratifies it, the preparatory work will be finalized. We plan to begin the expansion work by 2027.” In other words, the deal has already cleared the executive branch and is now simply waiting for Parliament to rubber-stamp it, a formality that in Mongolia’s political climate rarely proves much of an obstacle once the government has thrown its full weight behind a project.

What remains conspicuously absent from the public record is any serious accounting of what the first loan actually cost, and costs still, the country’s finances. With barely a third of the original 65.6 billion JPY repaid, the nation is poised to double down on its debt to Japan for the very same asset, banking on rising passenger numbers and tourism revenue to eventually make the arithmetic work. Whether that bet pays off will depend less on the generous terms Tokyo is offering than on Ulaanbaatar’s discipline in spending, and repaying, what it borrows. For now, though, with the government’s mind seemingly made up and Parliament’s approval looking like a foregone conclusion, the debate over the airport’s expansion appears to be less about whether it will happen than about who, eventually, will be left holding the bill.

The idea of enlarging Chinggis Khaan Airport is not, in truth, a new one. The ministry first floated the idea of commissioning a study into expanding and upgrading the airport’s capacity two years ago, and later confirmed that the research and planning work was being carried out jointly with JICA and New Ulaanbaatar International Airport LLC, the company that operates, manages and organizes the facility. After roughly three years of studies and back-and-forth negotiation, a solution now appears to have been reached, one that will require funding on a par with the cost of building the airport in the first place. The need behind the expansion is real enough, but the decision also lays bare the government’s want of strategic foresight and its habit of skimping on preliminary analysis. It is, in short, a textbook case of the old saying that haste makes waste, or that the person who cuts corners ends up doing the job twice.

The whole rationale for building a new airport in Khushig Valley, after all, was to escape the cramped, substandard conditions of Buyant-Ukhaa Airport and bring Mongolia’s main gateway up to international standards. It is more than a little galling, then, that the country appears to have built a smaller, more constrained version of the very problem it set out to solve, and is now footing the bill twice over, first for construction, and now for studies and expansion works to fix what should have been got right the first time. Complaints about the new airport have piled up steadily since it opened: poor ventilation, slow baggage handling, an inability to cope when several flights land in quick succession, brusque and poorly trained staff, and unreliable transport links to and from the city. Most of these grievances trace back to one root cause, namely the airport’s limited capacity and its struggle to absorb passenger volumes, with reports suggesting the facility buckles under the strain of as few as three or four overlapping flights. The post-pandemic rebound in both international and domestic flight frequency, spurred on by the liberalization of the air transport sector, has only piled further pressure onto a facility that was already too small for its own good.

When Chinggis Khaan Airport opened for business, the country’s social and economic footing was still shaky from the pandemic, and officials from the head of state on down were quick to tout it as a lifeline for a tourism sector and an economy that had ground to a near-total halt. At the time, though, experts and industry observers were not shy about pouring cold water on the fanfare, pointing out that a change of name and location did not, by itself, amount to a change in standards, and that despite its polished exterior, the airport’s internal layout and spatial planning fell well short of what a genuine international hub ought to offer. Those criticisms were largely brushed aside by officials at the time. It is telling, then, that the same ministry now openly admits the airport was built to handle just 1.5 million passengers a year, a figure that looks almost quaint given how quickly tourist and passenger numbers have climbed since. To hear officials now argue that expansion has become unavoidable because the airport is creaking under peak summer loads is, frankly, more than a little embarrassing, given that the writing had been on the wall for years. After roughly a decade of dithering, false starts and second thoughts before ground was even broken in Khushig Valley, the failure to plan for exactly this kind of growth points to a project that was, from the outset, handled with a distinctly lackadaisical air.

Whose fault is it, really?

It would be too easy, and not entirely fair, to lay the blame solely at the contractor’s door. The new airport was indeed built by Japanese firms and specialists under a concessional loan from the Japanese government, but Mongolia was never a passive bystander in the process. As the client, the Mongolian side oversaw and took part in every stage of the project, from approving the design to signing off on the plans, and today the airport’s management still rests with that same Japan-Mongolia joint venture. If the whole undertaking was launched without proper costing or forward-looking study, then that failure belongs as much to the client as it does to the builder. In a country with a stronger culture of accountability, tighter oversight and laws that are actually enforced, a shortfall of this scale might well have prompted some very pointed questions about who was responsible. Instead, our own officials have carried on as though they had pulled off some great feat, pretending as if they were building the airport out of their own pockets, which is a distortion of the facts if ever there was one.

A concessional loan, however easy its terms, is not a gift. It is a life debt, one that the country, and by extension every taxpayer, will eventually have to repay with interest. It should be treated accordingly, not as free money that fell out of the sky, but as capital that ought to be steered towards whichever sector of the economy will yield the greatest return. Pouring this much money into expanding and upgrading an airport that is not even 10 years old is, in practical terms, a poor use of resources, an “investment” that looks rather too wasteful under any honest scrutiny. Channelled instead into diversifying the economy over the long run, whether through domestic manufacturing, broader infrastructure, or export channels capable of generating a direct return, the same sum could have made a far more tangible contribution to the country’s development.

That said, with the loan agreement now on the cusp of ratification and both sides having reached terms, the only road left open is to carry the project through with real accountability and rigorous oversight, following the old carpenter’s rule of measuring seven times and cutting once. If the government wants to avoid finding itself, a few years down the line, once again crying that “capacity has run out,” it needs to expand the airport with genuine foresight this time, building in enough headroom to absorb 20 to 30 years of growth rather than just enough to get through the next peak season. Simply making the terminal bigger will not be enough. Service quality, accessibility and cargo logistics all need to be brought up to genuine international standards, and just as importantly, the airport itself needs to be put in a position to generate enough revenue of its own to service the debt it is about to take on, rather than leaving that burden to fall, yet again, on the state.