Mongolia makes the most of the middle position

Author: Anthony Rinna, Sino-NK

On 14 April 2016 the foreign ministers of Mongolia and Russia signed what they termed a Medium-term Strategic Partnership Development Program in Ulaanbaatar. Plans to establish a strategic partnership between Mongolia and Russia date at least to September 2014, when the presidents of the two countries met in the Mongolian capital.

During his recent visit to Mongolia, Russian foreign minister Sergei Lavrov highlighted plans for increased cooperation between Moscow and Ulaanbaatar in the Shanghai Cooperation Organization (SCO) and at the UN. Lavrov also noted plans to create a China–Mongolia–Russia economic corridor. Officials from the three countries will discuss these plans on the sidelines of the next SCO summit in Tashkent, Uzbekistan.

Mongolia is an important component of Russia’s orientation toward Asia. Its interests in Mongolia are primarily economic. Russian energy company Rosneft supplies Mongolia with 92 per cent of its oil. In return, Mongolia possesses a vast amount of mineral wealth that Russia desires.

Yet bilateral trade between the two countries has declined since 2010. Russian officials would like to see this trend reversed, particularly as China continues to make economic inroads into Mongolia. Mongolia and Russia the possibility of opening a ruble-based credit line for Mongolia. But Moscow appears to be less interested in using Mongolia as an economic link to broader Eurasian markets than China. Russia’s main priority is more tightly focused on maintaining a privileged position in the Mongolian energy and mining sectors.

Russia will likely increase, in a limited fashion, its influence in East Asia through its enhanced relations with Mongolia. Mongolia, likewise, may diversify its economic position in international markets. Yet the concept of ‘strategic partnership’ is not clearly defined. The term’s ambiguity allows for considerable flexibility. In Mongolia’s case, the loose definition may prove problematic for its attempts to implement a policy of official neutrality.

In late 2015 Mongolian President Tsakhiagiin Elbegdorj opened the debate regarding official Mongolian neutrality to the public and the topic is high on the agenda in Mongolia’s current session of parliament. In Elbegdorj’s view, Mongolia has essentially been a de facto neutral country for several years. Mongolia’s foreign policy is centred on diversifying its economic and security partnerships beyond the geographic confines of its neighbours China and Russia, while not aligning fully with any one country or bloc.

Mongolia’s multi-vector policy of reaching out to the West, as well as other countries such as Japan and Turkey, is billed as the ‘Third Neighbour’ policy, based on a statement by former US secretary of state James Baker in 1990. Mongolia’s geographic vulnerability toward China and Russia underlies the continued use of this term to describe Ulaanbaatar’s external relations.

Mongolia’s multilateral defence policy is based on limited cooperation with China, Russia and the United States, as well as with larger groups such as the North Atlantic Treaty Organization (NATO) and the SCO. Mongolia is an observer at the SCO, and could become a member. Mongolia also participates in NATO’s Individual Partnership and Cooperation Programme. As John Daly of Johns Hopkins University maintains, Mongolia’s policy of military multilateralism is part of the country’s strategy to maintain its sovereignty and independence.

The principle of neutrality mostly relates to Mongolia’s defence relationships, while strategic partnerships largely concern international trade and exchange. Declared neutrality does not conflict with forming strategic partnerships: neutral Switzerland, for instance, recently announced its intention to enact a strategic partnership with China.

But the problem for Mongolia is the country’s dependence on China and Russia in the economic sphere. Viktor Samoylenko asserts that neutrality is feasible only when a country is not overly dependent on external financing and investment. Mongolia’s economic growth rate declined from 7.9 to 2.3 per cent between 2014 and 2015, and foreign direct investment dropped by a third over the same period. Mongolia exports far more to China than to Russia, though Mongolian imports of Chinese and Russian goods (excluding energy) are more balanced between the two countries.

The realisation of a Mongolia–Russia strategic partnership may prompt the development of a more balanced trade relationship for Mongolia and bolster the country’s ailing economy. Yet it could also increase Mongolia’s sense of economic dependence on Russia, particularly as an economic counterweight to China.

As traditionally defence and security-oriented blocs such as the SCO expand their mandate into the economic sphere, the lines between trade and security in defining regional relationships have become less distinct. The onus therefore will be on Mongolia to sustain economic relationships beneficial to its economy while maintaining sufficient strategic distance between its security partners.

Anothony V. Rinna is Russia and Eurasia Analyst at Sino-NK.

Source:http://www.eastasiaforum.org/

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Shell leaves Petro Matad on its own in Mongolia

Petro Matad revealed it had lost its partner in the Block IV and V production sharing contracts in west and central Mongolia on Friday.

The AIM-traded company said that, on 28 April,Shell - through its affiliate company - issued an exit notice to Petro Matad’s 100% owned subsidiary Central Asian Petroleum Corporation, exercising its option to leave the farmout agreement dated 7 April 2015.

“The decision by Shell is based on optimisation of its own portfolio and it is not related to the technical prospects for the blocks,” Petro Matad’s board said in a statement.

“The exit is subject to Mongolian government consent.”

As required in the agreements, Shell’s affiliate company will compensate Central Asian Petroleum Corporation as a result of the exit decision.

Petro Matad said the amount will be “highly material” to the company. Its working interest in the two production sharing contracts will revert to 100% from the current 22%.

“Petro Matad will continue to execute the work program as planned,” the board confirmed.

“Currently, our seismic contractor is mobilising to the field and will soon commence the second phase of the planned seismic acquisition programmes in Blocks IV and V.”

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Mongolian media delegate visits Yonhap to promote cooperation

By Chung Joo-won

SEOUL, April 29 (Yonhap) -- South Korea's No. 1 newswire Yonhap News Agency and top representatives from Mongolia's media agreed Friday to enhance media content for global readers by strengthing cooperative ties.

A Mongolian delegation of 10, including Confederation of Mongolian Journalists vice president Khurelbaatar Batkhishig and Undesnii Shuudan chief editor Dashtseren Zayabat, visited Yonhap headquarters in central Seoul.

A Mongolian media delegation visits the headquarters of Yonhap News Agency in Seoul, on April 29, 2016. (Yonhap)

The guided tour kicked off with a presentation on Yonhap's domestic and overseas operation.

"I was particularly impressed with Yonhap's global newswire services in six different languages," said Batkhishig during the group tour of Yonhap's news rooms and broadcasting studios.

Batkhishig welcomed active exchange of media insight between Yonhap and Mongolian media outlets. Mongolian broadcasting media Contents & Gogo.com is particularly positive about such exchange, he added.

A Mongolian media delegation visits the broadcasting studio in the headquarters of Yonhap News Agency in Seoul, on April 29, 2016. (Yonhap)

Yonhap began providing news content since 1980 as the country's leading newswire agency, employing some 590 reporters.

The South Korean media company played a leading role in covering the Seoul Olympics in 1988, an economic milestone for Asia's fourth largest economy.

With 50 correspondents operating in 33 cities of 25 countries, Yonhap currently provides newswire services to 83 news agencies around the world in English, Chinese, Japanese, Arabian, Spanish and French.

A Mongolian media delegation visits the broadcasting room at the headquarters of Yonhap News Agency in Seoul, on April 29, 2016. (Yonhap)

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Receivers and managers of shares in Mongolian Coal Corporation Limited appointed

On 26 April 2016, pursuant to a Share Charge dated 29 March 2012, the Shared Security Agent acting on the instructions of BNP Paribas and Industrial and Commercial Bank of China appointed Rod Sutton, John Batchelor and Kenneth Fung, Senior Managing Directors of FTI Consulting, as Receivers and Managers of all of the shares in Mongolian Coal Corporation Limited ("MCCL"), a wholly owned subsidiary of Hong Kong Stock Exchange listed Mongolian Mining Corporation ("MMC", Stock Code: 975).

The Receivers and Managers advise that the key operating entities of the MMC group in Mongolia are unaffected by this appointment and will continue with their normal operations.

Mr. Batchelor stated, "The focus is to drive an offshore restructuring to ensure the ongoing long term viability of MMC and its subsidiaries. In consultation with management, an urgent assessment of the operations will be undertaken to determine the optimal financial and capital structure for stakeholders."

About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. With more than 4,600 employees located in 28 countries, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as restructuring, investigations, litigation, mergers and acquisitions, regulatory issues, reputation management and strategic communications. 

For more information, please visit : http://www.fticonsulting.com

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Cops nab 7 Mongolian shoplifters in Macau, 7 more on the run

"Macau Post Daily" run a story about police arrest of seven suspects from Mongolia suspected for shoplifting in Macau. 

According to the story the police arrested seven suspects from the Republic of Mongolia on Tuesday for their involvement in a number of shoplifting cases in the peninsula and Taipa this year, a Public Security Police (PSP) spokesperson said yesterday.

The spokesperson announced the case during a special press briefing at the PSP headquarters in Zape.

According to the spokesperson, while investigating a shoplifting case in a shop near the St Paul’s Ruins last Wednesday, police officers quickly identified the seven suspects.

The seven hooded shoplifting suspects from Mongolia pose in a pressroom at the Public Security Police (PSP) headquarters before yesterday’s briefing about their case, with evidence on display. Photo: Leong Lok Ian

Source:www.macaupostdaily.com

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Rio set to OK $US4bn Oyu Tolgoi expansion

Matt Chambers

Resources reporter

Melbourne

Rio Tinto appears set to approve the long-awaited $US4 billion ($5.25bn) expansion of the Oyu Tolgoi copper and gold mine in Mongolia as early as next week, in a move analysts say could add $US4.7bn of value to the company and pave the way for further expansion.

The miner, whose copper boss Jean-Sebastien Jacques will take over as chief executive from Sam Walsh in July, holds its annual general meeting in Brisbane next Thursday ahead of what is likely to be the board’s final meeting for the first half.

And with Rio this month saying it was on track for a June-quarter decision on the expansion, which was stalled for 18 months because of disagreements between Rio and Mongolia, an investment decision looks increasingly likely.

In December, Rio said the disagreement had been settled, paving the way for project financing deals and the coming approval of the expansion, which is designed to unlock the up to 80 per cent of the value of the project that cannot be accessed by the open pit mine.

“We expect the Oyu Tolgoi project to be approved by Rio Tinto, Turquoise Hill (the Canadian listed Rio subsidiary that operates the project) and the Mongolian government during the second quarter,” Deutsche Bank analysts said yesterday in a note to clients. “We value Rio’s 34 per cent share of the underground phase 1 at $US4.7bn, or $3.50 per share, with the project delivering an internal rate of return of 25 per cent at our long-term copper price of $US3 a pound.”

The latest cost estimate for the underground expansion issued by Rio was $US4.9bn in October 2014.

Deutsche Bank says this could have been whittled down to about $US4bn because of reductions in construction costs that the downturn has brought.

In its March quarter report, released last week, Rio said the board was expected to make an investment decision on the Oyu Tolgoi underground this quarter, which is a good indication management thinks the project is set to go ahead.

At full production, Oyu Tolgoi is expected to produce about 700,000 tonnes of copper and 500,000 ounces of gold a year at a cost of US70c a pound (net of gold credits).

Deutsche Bank said there was the potential to expand the mine through further development of other deposits.

It said a second phase could mine another 2.5 billion tonnes of resource at a cost of $US4bn, including boosting the size of the mill by 50 per cent to be able to process 210,000 tonnes of ore per day. That could another $US1.1bn of value to Rio, the bank said.

Source:http://www.theaustralian.com.au/

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Mongolia’s Opposition Parties Fail to Reach Consensus as June Elections Draw Near

The Mongolian People’s Revolutionary Party (MPRP) and the Mongolian People’s Party (MPP) severed a political alliance as negotiations over seating arrangements fell through, according to Channel NewsAsia. MPP aims to unite against incumbent Mongolian Democratic Party (MDP), as Prime Minister Chimed Saikhanbileg struggles to jumpstart an economy suffering from lower commodity prices and diminished foreign investment. According to recent polls, MPP is more popular than MDP, while MPRP takes third place.

The momentum should swing in MPP’s favor as the political establishment undergoes scrutiny over the economy’s poor status. The MPP governed during Mongolia’s commodities boom in previous years, with growth reaching 17.5% in 2011 alone. Regardless of the election outcome, new and established leaders will struggle to foster growth because the economy is so heavily dependent on the commodities sector.

Furthermore, China’s lacking growth takes a heavy toll on Mongolia’s economy, as the Chinese buy over 90% of Mongolian resources that include copper and coal, and Beijing is curbing coal production to reduce pollution in major cities. Russia is another viable business partner for Mongolia, but the Russian economy is faring through a low-priced energy market and Western sanctions. Moreover, many foreign investors have lost interest due to a non-conducive business climate and the government’s fallout with mining companies.

Authorities reached an agreement with investors, but Saikhanbileg has paid a political price, as many feel incumbent officials are caving into big industry at the expense of poor Mongolians, and protests have erupted against the prime minister’s administration in the past few months.

Despite the East Asian’s country’s success in resource extraction, many people have remained impoverished, benefiting little from the economic boom that took place years ago. Many herders from the countryside moved to the city in search of new opportunities, but high-quality jobs remain scarce in a tougher economy, and more people have slipped into poverty as a result.

Mongolia failed to follow the Chinese model, where a bustling manufacturing sector became a primary factor propelling robust growth in the Middle Kingdom. Mongolia’s manufacturing sector is ill-equipped to become a major sector, and the same can be said of tourism. Tourism shows vast potential, but the sector is in the middle of a slowdown, as Russian and Chinese tourists visit the country less frequently, notes UPI.

Aside from tourism and commodities, Mongolia has little else to fall back on, and leaders on all sides of the political aisle have failed to upgrade the economy while searching for alternative avenues that could have fueled prosperity for decades to come. Economic innovation, however, requires some level of cooperation between parties, but leadership remains steeped in political battles, holding back Mongolian progress.

Source:http://www.economywatch.com/

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Mongolia is so much more than a bucket-list destination

By Andrew Sessa

April 26, 2016 | 6:45am

Mongolians call their country “munkh khukh tengeriin oron” — “land of the eternal blue sky” — and driving across the Gobi desert, deep in the nation’s south, it’s easy to see why. A ceiling of nearly cloudless cerulean curves overhead, from horizon to horizon, extending over the flat, softly verdant landscape like a dome. Despite being the world’s fourth-largest desert — “gobi” even means “desert” in Mongolian — in the wetter season, the ground sprouts green here, like the African savannah after the rains.

As for that horizon, it’s clearly visible for 360 degrees, 20, 30 miles in the distance, demarcated in the furthest stretches only by the bruise-colored silhouettes of low mountain ranges. As the heat picks up, your eyes tell you that placid lakes shimmer at the base of these ridges, and you’ll swear they’re right until the lakes never get any closer, and you realize they were only a mirage.

Mongolia can sometimes seem more like an idea than an actual place, a name you conjure when trying to think of the most out-there, far-flung destination you could go, a land of bucket-list bragging rights, a Place To See Before You Die. People go to say they’ve gone without really knowing what they’re going to see. These people may find themselves disappointed, for the pleasures of Mongolia aren’t like those of similarly heralded exotic locales. They’re not the colors and swirls of India or Morocco, the big game of East Africa, the calving glaciers and soaring icebergs of Patagonia or Antarctica.

Mongolia’s joys are quieter, more subtle, found in the sweep of the arm of a nomadic archer as she take aim, or in a slow ride on a double-humped camel between golden desert dunes, or in the glow of the first sliver of the full moon as it rises, like a giant Chinese lantern, on that distant desert horizon.

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Double-humped Bactrian camels are native to the region.Photo: Nomadic Expeditions

I started my Mongolia trip, as most do, in Ulaanbaatar, the capital city. But the adventure really began on my last evening in New York, when friends who’d already been to the country gave me a series of dire warnings: Pack a sleeping bag (nomadic hospitality, while genuine, doesn’t extend to bed linens, or even necessarily mattresses). Don’t eat the food (unless you fancy gristly, greasy mutton and fermented mare’s milk). If you do eat the food, bring soy sauce (everything, they said, is better with soy sauce).

They also offered a reading recommendation, the memoir-cum-travelogue “Wild East,” by Jill Lawless, a Canadian journalist who spent a few years in Mongolia in the mid-’90s, just after seven decades of Soviet Communism fell here. Her harrowing, often hilarious, stories of expat life, which I read on the plane on the way over, surpassed even those of my friends’ holiday.

Upon arriving, however, and over the course of my week in Ulaanbaatar and the Gobi, I found that the rumors of Mongolia’s miseries had been greatly exaggerated. (Of course, there were always indications of luxer leanings given the country’s robust cashmere economy; Mongolia stands among world’s top produces of the sought-after wool, which is one of its primary exports.)

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A deluxe room at the Shangri-La, the first real five-star hotel in Shangri-La in Ulaanbaatar.Photo: Shangri-La Hotels and Resorts

These days, the capital has gotten its first true five-star hotel, the Shangri-La (from $238/night), where I stayed, in quarters that combine ancient Mongolian motifs and materials with every thoughtful comfort and convenience you’d expect from an Internet-age international brand.

And, thanks to the work of Nomadic Expeditions (10-day trips from $4,595) — a full-service high-end travel outfitter founded by a Mongolian-American, which organized my trip — the Gobi has thoroughly comfortable eco-camp options: Three Camel Lodge (doubles from $670) is comprised of some 40 luxed-up gers, the country’s typical round nomadic dwellings equivalent to yurts; as of this year, most of those gers even have hot water and flush toilets in their ensuite local-stone bathrooms. Neither the Shangri-La nor Three Camel serves Mongolian food at its most traditional, and they’re the better for it.

In Ulaanbaatar, a capital planned for 270,000 but now home to nearly half the country’s 3 million inhabitants, buildings sprawl from a center of glass skyscrapers and pastel-hued government buildings (designed in an often bombastic style known as Stalin Gothic) past mid-century housing blocs to felt-sided gers that ring the periphery.

The touristic must-sees I saw seemingly sought to remind visitors that Mongolia under Genghis Khan — here known as Chinggis — and his progeny were once the center of the world, even if it now feels a bit caught in the middle of Europe and Asia. While nodding to communism, the National Museum celebrates Chinggis and his sway over the two continents, and even the Central Museum of Mongolian Dinosaurs, despite being unceremoniously constrained by temporary quarters in a mall basement — turn left at the gelato kiosk for the fossils! — asserts the country’s import as the home of the greatest beings to have ever walked the earth.

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A massive monument to Genghis Khan just outside Ulaanbaatar. (Mongolians call him Chinggis Khaan.)Photo: Shangri-La Hotels and Resorts

The city has been slow to slough off its Soviet past, however, even as it propels itself forward. In the main square, a relatively new statue of Chinggis, for whom the plaza is now named, sits in the façade of the parliament building, but in the middle is a statue of Sükhbaatar, the square’s previous namesake, who led the communist revolt against the then-colonizing Chinese in the 1920s, and came to be called “the Lenin of Mongolia” by the Soviets.

And at the 200-year-old Tibetan-style Gandan Monastery — one of only a handful allowed to remain open by the communists, who otherwise destroyed the buildings and killed thousands of monks and lamas — a massive, 85-foot-tall golden Buddha, serenely standing under intricately painted wooden rafters, dates only to 1996, when it replaced the one Moscow ripped out in the 1930s.

Plans are underway now for a huge temple complex on the city’s outskirts, a sprawling, Jetsonian development crowned by a 35-story stupa and a Buddha taller than the Statue of Liberty. In a city of big construction cranes, and even bigger dreams, a city very much in a state of becoming, anything is possible.

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A ger at Three Camel Lodge.Photo: Nomadic Expeditions

I traveled 300 miles southwest towards the Chinese border. Off the grid in the Gobi, clambering up a rocky hillside to spot petroglyphs that range in age from 2,000 to 10,000 years old, watching nomads as young as seven hoot and holler as they race their ponies, or just looking out the bright orange door of myger at Three Camel across a seemingly endless green expanse punctuated only by herds of goats, I remember Ulaanbaatar as a metropolis.

From the top of a sand dune or a plateau of the craggy, rust-colored Flaming Cliffs — where in the 1920s an American Museum of Natural History scientist happened upon the first fossilized dinosaur nest ever to be discovered — the city and the plush Shangri-La seem impossibly, wonderfully far away, even though they’re just a 90-minute flight and a few hours’ drive away. Even surprise sunset cocktails and a pop-up four-course dinner, served safari-style under an open-sided canvas tent at the base of the cliffs can’t make civilization seem any closer.

In the early morning hours of our final day in the Gobi, as we ride across the desert back to the airport in Nomadic Expedition’s fleet of Land Cruisers, the silvery full moon still hangs above the horizon to our right as the sun rises on the left, silhouetting a caravan of camels. It’s an in-between, both-and moment that strikes me as just right for Mongolia right now. Go soon, before it picks a side.

Source:http://nypost.com/

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SouthGobi Shares Fall 10% After Update on Turquoise Hill Shareholder Loan (TSE:SGQ)

SouthGobi Resources Ltd. (SGQ.TO) shares are lower after the company has released an update on the shareholder loan due to Turquoise Hill Resources Ltd. On October 27, 2015, the Company and Turquoise Hill entered into a deferral agreement, in which Turquoise Hill agreed to defer the repayment of the shareholder loan to April 22, 2016.

The Company had not repaid the shareholder loan on April 22, 2016, and is currently in discussions with Turquoise Hill for a new repayment plan of the shareholder loan which has an outstanding loan principal of US$3.4 million and interest accrued up to April 22, 2016 of US$0.7 million. While SouthGobi believes it will be able to reach such a new repayment plan with Turquoise Hill, there is no assurance that the repayment plan will be favorable to SouthGobi. SouthGobi’s shares were last down 10% at $0.45 apiece. Turquoise Hill’s shares were last down 0.9%.

The stock is down 31.11% or $0.14 after the news, hitting $0.31 per share. About 5,800 shares traded hands or 259.80% up from the average. SouthGobi Resources Ltd (TSE:SGQ) has risen 9.76% since September 17, 2015 and is uptrending. It has outperformed by 4.66% the S&P500.

SouthGobi Resources Ltd. is a coal mining, development and exploration company. The company has a market cap of $85.15 million. The Firm owns coal projects in Mongolia, which includes the Ovoot Tolgoi open pit producing coal mine (Ovoot Tolgoi Mine) and other development projects, including the Ovoot Tolgoi Underground Deposit, the Soumber Deposit and the Zag Suuj Deposit. It currently has negative earnings. These projects are located in the Umnugobi Aimag (South Gobi Province) of Mongolia, within 150 kilometers of each other close to the Mongolia-China border.

Source:SouthGobi Resources Ltd

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Can Mongolia be saved from low commodity prices?

By Jeremy Luedi, Global Risk Insights  

Having capitalized on the global commodity boom, and its proximity to a ravenous China, Mongolia has until recently seen rapid economic growth. As Chinese growth forecasts in the coming years sink towards the mid-single-digit range, Mongolia enters 2016 skirting with recession.

Battulga Khaltmaa, member of Mongolia Parliament, questions where the money from the country's mining boom is going. Photo courtesy of Battulga Khaltmaa/Twitter

As commodity exports dry up, Mongolia is faced with a revenue shortfall. On March 14, the government received a $250 million loan from Credit Suisse. Furthermore, Mongolia also recently issued $500 million in government bonds, in order to raise needed capital. Taken together, the new bonds and Credit Suisse loan represent efforts to raise funds equivalent to 6.5 percent of GDP.

These are vital cash injections, as Mongolia has seen its GDP growth rate drop from a high of 17.5 percent earlier in the decade to just 0.7 percent for 2016 and 0.6 percent for 2017, according to the Asian Development Bank. Ayumi Konishi, director general of the ADB's East Asia department, sums up the situation facing Mongolia.



"Consistent fiscal policy, effective continuing efforts to diversify the economy, and ensuring social protection are important challenges of economic management in Mongolia. In this light, the decline in the country's consolidated deficit from 11.4 percent of GDP in 2014 to 7.9 percent in 2015 is a commendable achievement, although further steps are needed."

Mongolia's mineral wealth is well documented, and accounts for 94 percent of the nation's exports. This over-reliance was feasible during the days of heady commodity prices and double-digit growth rates in China, but is increasingly causing problems. As commodity prices have dropped, foreign investment in Mongolia has effectively dried up. While economic factors are limiting extractive sector growth, political and public tensions are also exacerbating the issue.

Divisions in Mongolia's parliament saw the government block a development proposal from an international mining consortium (including China's Shenhua and Japan's Sumitomo) in 2015. On March 30, thousands demonstrated in Ulaanbaatar, protesting the unequal distribution of wealth that has arisen in the wake of the nation's mining boom. Opposition lawmaker Battulga Khaltmaa, spoke to the crowd, "our wealth is being shipped outside of [the] country. Where is that money going?"

Despite the billions from mining concessions, one-third of Mongolians still live in poverty, with Battulga arguing that around two dozen families associated with both the ruling Mongolian Democratic Party and opposition Mongolian People's Party are reaping the rewards. Through their ties with the state-run Mongolian Mining Corp., listed in Hong Kong, a small group of elite families are profiteering from Mongolia's mining dependence.

Battulga and his supporters are especially critical of Rio Tinto's $5.4 billion Oyu Tolgoi copper mine, as the mine's expansion has been bogged down by government demands for more money. Similarly, there is opposition to efforts to revive the Tavan Tolgoi coal mine, as mine income is seen as only benefiting local elites. This is not the first hurdle faced by Tavan Tolgoi, as the mine saw a $4 billion expansion deal fall through in Q3 2015 due to slowing demand in China.

Other efforts to jump-start mining in Mongolia have met with similar opposition, such as the government's plans for increasing uranium mining. In 2015 the government issued three uranium mining permits to French mining firm Areva, with production slated to begin in 2017. This endeavor has drawn protests from locals, and does not bode well for Areva, which was forced to cease operations in 2013 due to local opposition.

Environmentalists and local advocacy groups in Mongolia are also protesting efforts by the government to join the 1994 Nuclear Safety Convention and 1997 Joint Convention on the Safety of Spent Fuel Management. If Mongolia accedes to these treaties it will be obligated to accept and dispose of nuclear materials that originated from Mongolia. Opponents claim that Mongolia does not have the capacity or resources to do this.

It is likely that the government is considering joining these conventions in order to make it attractive to Russia and China, two major nuclear energy users. Mongolia may be trying to position itself as an attractive location for nuclear waste management, thus seeking additional income from user countries. This may find fertile ground as environmental concerns among Chinese citizens pressure Beijing to export its waste to quell public anger.

Commodity price volatility has highlighted the need for Mongolia to diversify its economy. To this end, Mongolia has received a $60 million loan from the ADB to improve the country's credit guarantee system. According to ADB country director for Mongolia, Robert Schoellhammer, "the project will help...Mongolian SMEs get more access to finance from commercial banks, which will help diversify the economy." With the ADB's help, the Credit Guarantee Fund of Mongolia will offer $432 million in SME sub-project loans.

Despite the monies from said fund, SMEs in Mongolia are facing many hurdles. For instance, Mongolian SMEs are facing headwinds from new government VAT legislation that came into effect in January. Under the new guidelines, businesses are able to recoup 20 percent of their VAT expenditures, yet must do so by providing receipts from a standardized cash register. Many small Mongolian businesses do not use receipts, and as such are unable to receive the tax refund.

Furthermore, Mongolia's tourism sector, which accounts for 9 percent of GDP, has potential yet requires more support. Tourism to Mongolia has risen from 55,000 in 1997 to 476,000 in 2012, with the government aiming for a million annual visitors by 2020 – an ambitious target in a country of barely 3 million people.

Currently, Mongolian tourism firms are facing a decline in visitor numbers as their two largest tourist source countries – Russia and China – are facing difficult economic times. Sanctions and low oil prices in Russia, and slower domestic growth in China are leading to fewer visitors. Furthermore, Mongolia's relative isolation is a major problem for its tourism industry: Chinggis Khaan International Airport only has direct connections to nine destinations. That being said, flagship MIAT Mongolian Airlines is expanding its fleet by 40 percent, adding two Boeing 737-800s.

Lastly, to add to Mongolia's worries, the country is experiencing a zud or a severe winter in which many livestock die due to an inability to graze. Estimates of livestock death are around 1.2 million for the 2015-16 winter, with Mongolia receiving UN relief to aid communities suffering from the die-off.

Mongolia's mineral wealth-to-population ratio gives it the potential to create prosperity for all its citizens, yet sustained flourishing remains predicated on stable economics and diversified risk.

Source:http://www.upi.com/

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Smoking is fun: Communist Mongolian cigarette advertisement

How Communist Mongolia or rather Soviet Union promoted smoking in Mongolia

RBTH or Russia Beyond the Headline published a story about how smoking was widely promoted in USSR.  The story featured several advertisements of cigarettes produced in Soviet Union. One of the cigarettes had “Old Mongolian script” or “traditional Mongolian script”on it. The caption of the cigarette said “Red Army Soldier smoking the cigarette brand “Fun” and is shown image of a Red Army soldier with pointed hat being offered a box of cigarette.

 Most interesting thing is the old Mongolian scripts on the box. I read the smaller Mongolian scripts on the left as “High grade 25 pieces”  or  “Дээд Зэрэг 25 ширхэг”. The larger writing on the right side of the soldier says “Mixed cigarette named  Peoples Fun” or “Ардын зугаа хэмээх хуйлмал тамхи”.

I have never seen this brand of cigarette in Mongolia. Most likely this dates back to 1920s when Red Army soldiers were wearing this kind of pointed hat and “Old Mongolian script” or the traditional script was officially used. The soldier's image clearly has distinctive Mongolian features-broad cheekbones and jutted chin and big ear.

By Ganbat Namjilsangarav

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Mongolia opposition party pact fails ahead of June election

An electoral pact between the two main opposition parties in Mongolia collapsed this week, weakening the odds of victory for the Mongolian People's Party (MPP), which oversaw the world's highest economic growth five years ago, in crucial polls set to take place in June.

The ruling Mongolian Democratic Party was expected to come under intense pressure at this year's elections, scheduled for June 29, after four straight years of slowing growth and declining foreign investment, but it remains unclear if the MPP now can take advantage.

The MPP oversaw the country's highest-ever growth in 2011 and the strongest in the world that year at 17.5 percent. It was also in power for the signing of the investment agreement for the giant Oyu Tolgoi copper-gold mine in 2009, which spearheaded a three-year mining boom as world coal prices rallied.

Since then, the country's mining sector has taken a hit as a result of a dispute with Anglo-Australian miner Rio Tinto over Oyu Tolgoi, which has recently been resolved.

Mineral-dependent Mongolia is also one of the countries worst affected by slowing growth in China, which buys up nearly all of its northern neighbour's copper, gold and coal.

Negotiations fell through on Wednesday between the MPP, which ruled when Mongolia was a one-party state under Soviet hegemony before 1990, and the breakaway Mongolian People's Revolutionary Party (MPRP). The two sides disagreed over how seats would be divided in an electoral pact, according to a statement from the MPP.

"It would have been a hit with the electorate because they're splitting each other's votes," said Dale Choi, analyst and head of the Mongolian Metals & Mining research group, about the proposed campaign pact. "It absolutely would have given the MPP the upper hand."

The MPRP first ran for elections in 2012 under the leadership of former president Nambaryn Enkhbayar, who was convicted on corruption charges in 2012 and pardoned the following year.

The MPP currently has a small lead over the Democrats, according to poll published this month from the Sant Maral Foundation.

The poll gives the MPP a 14.6 percent approval rating from voters, higher than the 11.1 percent scored by the incumbent Democratic Party. The MPRP was the third most popular party, with a 6.8 percent approval rate.

Government under the Democrats has been dogged by party infighting, with one dispute derailing a deal that would have brought $4 billion of investment into the country's enormous Tavan Tolgoi coal mine.

The government of the current prime minister, Chimed Saikhanbileg, negotiated the deal in 2015 but it was blocked by Zandaakhuu Enkhbold, the parliamentary speaker, on the day when investors were due to sign the final agreement in Ulaanbaatar.

(Reporting by Terrence Edwards; Editing by David Stanway and Nick Macfie)

Source:Reuters news agency

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India, Mongolia should take ties to next level: Mahajan

India and Mongolia "share common values and understanding" on a range of issues, and the "warm relationship" of the two nations needs to be strengthened further, Lok Sabha Speaker Sumitra Mahajan said here on Wednesday.

Mahajan, who is leading an Indian parliamentary delegation to Mongolia, said the ties between India and Mongolia are quite old as they have "interacted since antiquity".

Common values and understanding between the countries have laid the ground for constructive engagement across several sectors, she observed, a press release said.

She said that strong political relations must be complemented by ties of trade, economy and investment between the two countries.

Mahajan has met Mongolian President Ts Elbegdorj, Prime Minister Saikhanbileg and her counterpart Chairman of the Great Hural of Mongolian Parliament Z. Enkhbold in the government palace and shared views on a host of issues, including matters of mutual interest, the statement added.

Mahajan also informed Enkhbold that the Indian parliament would be happy to share its expertise in strengthening democratic institutions and parliamentary processes to Mongolia.

--IANS

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Strong India-Mongolia ties need trade boost: Mahajan

Ulan-Bator, Apr 20 (PTI) Strong political relations between India and Mongolia must be complemented by robust ties of trade, economy and investment, Lok Sabha Speaker Sumitra Mahajan said today.

Mahajan, leading an Indian Parliamentary delegation here to attend a meeting of the Asia-Europe Parliamentary Partnership (ASEP), also appealed to the top leadership and business community here to seize opportunities arising out of Indias economic rise.

She said that India and Mongolia share common values and understanding on a range of issues.

Mahajan called on Mongolian President Ts. Elbegdorj during which she recalled that both India and Mongolia enjoy deep and warm relationship and that there is an imperative need to further strengthening and diversifying this relationship.

Earlier, she met Mongolian Prime Minister Saikhanbileg and discussed matters of mutual interest.

She also held a meeting with her counterpart Z Enkhbold, the Chairman of the Great Hural (Mongolian Parliament), in the Government Palace and shared views on a host of issues.

Observing that common values and understanding between the countries have laid the ground for constructive engagement across several sectors, she opined that strong political relations must be complemented by ties of trade, economy and investment.

Later, at a banquet hosted by Enkhbold, Mahajan noted that India and Mongolia have interacted since time immemorial.

"Following the emergence of Mongolia as a modern nation state in the 20th century, the two countries have continued to build relations based on the shared historical and cultural legacy, especially of Buddhism. India also supported Mongolia for membership in the United Nations and to the Non-Aligned Movement (NAM).

"As befits spiritual neighbours, civilisational friends and fellow democracies, today we are also strategic partners," she said.

Mahajan also informed her counterpart that Parliament of India would be happy to share its expertise in strengthening democratic institutions and parliamentary processes to Mongolia.

Lok Sabha MPs Rajendra Agrawal and Heena Vijay Kumar Gavit of BJP, Dr Shrikant Eknath Shinde (Shiv Sena) and Butta Renuka (YSR Congress) are part of the delegation along with Rajya Sabha MPs Shantaram Naik (Congress) and K C Tyagi (JD-U) for the six-day visit beginning April 17.

ASEP, a parliamentary forum, is linked to the inter- governmental dialogue that has been established between Europe and Asia to consider political, economic and cultural issues.

The Asia-Europe meeting is part of the overall Asia- Europe partnership process. It serves as a forum for building inter-parliamentary contacts, exchanges and diplomacy and promoting mutual understanding among the people and countries of Asia and Europe. PTI AMR SAI AKJ SAI

Source:Press Trust of India

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How Russian Blue Jeans Created a Diplomatic Incident in Mongolia

Russia’s Foreign Minister Sergey Lavrov insulted his hosts by wearing blue jeans to a red carpet welcome.

By Sergey Radchenko

Russian Foreign Ministry

Long-haul flights are a degrading experience. We’ve all been among the stooping, unshaven, red-eyed passengers emerging to unfamiliar sunlight in the state of semi-stupor. To make life a little easier I always follow CNN’s travel advice and wear comfortable blue jeans. But I travel in the economy class. Maybe if I had my own airplane, I’d make the point, just before landing, of changing into something more respectable — especially if I were the foreign minister of Russia, Sergey Lavrov, arriving in Mongolia to a red-carpet welcome.

Oversights. Omissions. Stubborn little details. In the age of the social media, they are blown out of all proportion, so you’d think people would pay more attention. You’d expect that Lavrov, a man of “formidable talents,” according to a recent assessment in Foreign Policy, would have enough tact and experience to recognize, as he landed in the aptly-named Chinggis (Genghis) Khaan International Airport on April 14, that he should not wear jeans in the presence of a menacing Mongolian warrior honor guard in faux imperial uniforms.

Images proliferated, as did expressions of outrage. Political commentator and People’s Party politician B. Tsogtgerel summed up the prevailing sentiment: “Wearing clothes that one would wear at home when fixing the plumbing, is to snub, to disrespect, in a word, to insult. Lavrov’s jeans have become a manifestation of Mongolian international prestige.” Lavrov’s subsequent effort to undo the damage – he turned up impeccably dressed for a meeting with the Mongolian President Ts. Elbegdorj, with whom he sniffed ceremonial tobacco in a show of cultural sensitivity – did little to restore the foreign minister’s standing in the eyes of public opinion. Although the visit may have become an important stepping stone towards a deeper Russo-Mongolian engagement, the wider Mongolian public won’t remember and won’t care. They will remember the snub.

The Mongolians live in the past, cherishing memories of Genghis Khan’s great empire, when Mongolia was the superpower of Eurasia. Eight hundred years later, Genghis’ proud progeny are on the whole a poor lot, ever dependent on their two powerful neighbors, China and Russia. For this reason, perhaps, the Mongolians are hypersensitive to slight. They are ever on the lookout for signs of bullying and disrespect, interpreting even the most innocent oversight as deliberate humiliation. Lavrov should have known better.

He should have known, for instance, that when Ts. Elbegdorj turned up in Moscow in May 2015 for the anniversary of Russia’s victory in the World War II, Mongolian commentators were all up in arms about the fact that he was seated too far from Vladimir Putin at the military parade.

He should have remembered the embarrassing highlight of Chinese President Xi Jinping’s August 2014 visit to Mongolia, when Xi, in an apparent show of respect, quoted a famous poem by D. Natsagdorj: “This, this is my native land, / The lovely country; My Mongolia.” Oh, good grief – what can go wrong when you cite a famous Mongolian poem? The Chinese protocol officials should have pondered the sensitivities, for the Mongolia social media reaction was one of outrage for Xi Jinping daring to call Mongolia the land where he was born. (Hidden irredentism, no doubt!)

Finally, Lavrov could have learned from U.S. President Barack Obama’s unhappy experience back in September 2011, when Obama, in a group photo, waved his hand, covering Elbegdorj’s face. Obama, perhaps, would hardly remember the episode, but in Mongolia his negligence is still perceived as the deepest of insults.

Little things matter, especially in a fiercely nationalistic, immensely proud nation like Mongolia. Dealing with the Mongolians requires constant attention to minor details, to ceremony, to protocol. And even then, one can never be sure one’s actions won’t be misconstrued as a hidden insult or a hideous plot. If there is one lesson that Lavrov’s little misadventure in Mongolia suggests, it is that of the immense importance of respecting one’s neighbors. For Russia, as for any other great power that has habitually dominated and coerced its neighbors, such lessons will take time to sink in.

Sergey Radchenko is Professor of International Relations at Cardiff University and Global Fellow at the Woodrow Wilson Center for International Scholars. 

Source:http://thediplomat.com/

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