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Mongolia’s rocky road to prosperity www.ft.com
For foreign visitors, the warm hospitality of Mongolia’s centuries-long nomadic tradition is alive and well in 2023. Beneath the surface, however, there is tension; the country is at a crossroads.
As a guest entering a ger, the traditional circular tent, in the countryside a few hours’ drive from Ulaanbaatar, I am directed to sit next to the head of the family, justice minister Nyambaatar Khishgee, who wears a dark navy-blue robe, a black fedora and knee-high riding boots.
We share bumps of tobacco powder, poured from his glass bottle on to a tiny silver spoon. From porcelain bowls we drink airag — fermented horse milk — and whisky chasers from glass tumblers. Food is carried in — a small mountain of roast lamb and a stack of khuushuur, crispy meat-filled dumplings — with cigarettes and more airag.
Appetite satisfied, Nyambaatar, the top lieutenant of Prime Minister Luvsannamsrain Oyun-Erdene, talks. He takes me on a journey though the country’s transition from central planning to the market economy in the 1990s, to today’s crackdown on corruption and plans to entice more western mining companies to exploit Mongolia’s vast deposits of copper, uranium and rare earths.
The government says the reforms could, by the end of the decade, more than triple gross domestic product while halving poverty — in 2020 nearly a third of the population lacked the basic necessities of life. But for large swaths of Mongolia’s 3.4mn people, such promises ring hollow. Some, especially women, have found the transition out of the Soviet shadow to a market-orientated democracy not entirely a positive experience.
For Mongolians, including those who live among the smog and clogged roads of the capital, local culture is deeply embedded in nature. Unbridled industrial development risks clashing with the nomadic tradition. Trust in the government remains weak after years of endemic corruption at the highest levels.
Sukhgerel Dugersuren, director of an environmental group monitoring Rio Tinto’s copper mine in the Gobi region, believes there is an alternative. With so much land and so few people, she says, Mongolia can thrive sustainably with an economy underpinned by industries such as eco-tourism and the ethical production of cashmere, wool and meat. “The World Bank and IMF are brainwashing [Mongolians], to make you think that you need economies of scale, that you have to compete in global markets, you have to be part of the global production and consumption chains. No, we don’t, we are located right next to world’s largest markets,” she says.
Yet there is also a strong argument that, since the pandemic has left deep social and economic scars, the need for reforms is even more pressing. Economic activity ground to a halt for long periods during the height of Covid-19 because of tight border controls with the country’s key economic lifeline, China. More prosperity and tax revenues could improve the social plight of many Mongolians.
The landlocked country needs to cut dependence on its neighbours, China and Russia. Oyun-Erdene, the Harvard-educated prime minister, has been busy recently working towards his vision of a resource boom enabling a step-change in public services. In June, he met Xi Jinping in Beijing to make the case for improved trade routes. This month in Washington, he met secretary of state Antony Blinken and vice-president Kamala Harris. French president Emmanuel Macron visited him in May. On Thursday, Pope Francis will visit Mongolia’s 1,500 Catholics.
This has all raised Mongolia’s profile after years in the wilderness; whether it will bring more resource deals with the west and new trade routes through China is not clear. A pending decision from French group Orano on developing a major new uranium mine will be a bellwether on the prime minister’s efforts.
The business community is cautiously optimistic. Bayanjargal Byambasaikhan, a dealmaker developing clean energy projects in the Gobi, says as a frontier market, Mongolia must build more trust in its “fundamentals”, including the rule of law and the certainty of its tax regime.
“I’m hoping that these reforms will translate into sending the right signals to the market,” he says, while also offering a word of caution to foreign investors: “Don’t bring a Ferrari to an off-road adventure.”
edward.white@ft.com
Published Date:2023-08-31
