When China restricted its export of rare earth materials earlier this year, the European Union, Japan and the US may want to look to Mongolia.
Mongolia is rich in resources
The small country between Russia and China has less then three million people – but is one of the few countries in the world that is believed to have large resources of rare earths.
Extraction would be expensive, but there is interest in the US as well as in Japan in working with Mongolia to extract these resources, says Dr. Michael J. Green. He served as senior director for Asian Affairs at the National Security Council under President George W. Bush. Speaking at an event of the Jamestown Foundation in Washington DC, Green says:
"This is an opportunity for Mongolia to refocus. Around this can be built some bilateral or multilateral investment guarantees, things that China doesn't do. Mongolia as part of its brand can say, 'we will honor our contracts and not violate the WTO by embargoing exports'."
And it is not only rare earths that make Mongolia attractive. A little over a year ago, the Mongolian government signed a four billion mining deal with a Canadian-based company and its Anglo-Australian partner. The companies will jointly develop a project in a location thought to hold one of the world's largest copper and gold reserves.
A gold mine in Mongolia
The US as "a third neighbor"
The US, Green says, can play a critical role in helping Mongolia's security and economy by being a "third neighbor" – in addition to China and Russia – that helps to "galvanize broader relationships for Mongolia throughout the world". One reason is democracy. As recently as 20 years ago, Mongolia achieved its independence from the USSR through a peaceful democratic revolution.
"Mongolia sits in a belt of poor governance and democracy, stretching from Beijing to Russia - where despite what was said about some economic success, let's face it: Russian democracy is going backwards – to Central Asia, to Belarus," explains Michael Green. "You really have to go thousands and thousands of miles from Ulan Bator in some directions before you find a functioning democracy that is as successful, despite challenges, as Mongolia. And that is an example that should be important to the US and the west."
Batchimeg Migeddorj, National Security Advisor to the President of Mongolia, attributes it to the special circumstances that Mongolia was able to develop a democracy. He says: "Exactly during that time, in the nineties, our two neighbors, China and Russia, were concentrating more on internal affairs. That provided Mongolias politicians and political parties with more room to work internally to stabilize institutions."
Sending troops to Afghanistan
But besides being a model democracy, there is more. Mongolia has sent troops to Iraq that have been very effective, according to Green, "taking risks a lot of NATO countries aren't willing to take in terms of being in the line of fire".
Former US President Bush on a visit to Mongolia
"Today, Mongolia has about a platoon, helping with perimeter security for the Germans in Afghanistan," says Green. He argues that Mongolia has more credibility in demanding transparency from China's military. At the same time, he says, the US cannot compete with Russia and China, so the Americans have a strong interest that Mongolia develops strong ties with other democratic countries like Japan; Korea, the EU, India.
Colonel Munch-Ochir Dorjjugder, who served as the Director for International Cooperation of the Mongolian Ministry of Defense and is now a fellow at the Brookings Institution, rejects the negative assessment that Mongolia is "torn" between Russia and China.
Nevertheless, he observes Mongolia's "identity dilemma" between northeast-Asia and Eurasia but comes to the conclusion: "We can promote both agendas as our regional identity. Our culture and our background compels us to do so, our current geographic location compels us to do so, as does our good neighborly relations with Russia and China and our interest in seeking third neighbors elsewhere."
Seeking options besides China
But Mongolia is trying to seek more independence from China. Despite the fact that most of the country's mineral resources are close to the Chinese border, the Mongolian government decided to develop a railway infrastructure within the country and towards the Russian border rather than towards China. 80 percent of imported goods already come through China, Dorjjugder says, and since China occasionally closes its borders or restricts exports, the decision will keep alternatives open.
Riots broke out after the parliamentary election in 2008
Mongolia's new security concept is also a reaction to China's challenge, says Dr. Alicia Campi, President of the US-Mongolia Advisory Group. "While certainly Mongolia does not want to lose its vigorous democracy and free market, and return to cold war era satellite status, policy makers increasingly are thinking that inviting much more sizable Russian FDI (foreign direct investment) and military assistance are not bad ideas at all since Western nations have so far proven slow to act and disappointing. "
At the same time, she says, Mongolians are looking at the Central Asian states and on to Iran and Turkey as well as to the fast rising India. They could play an alternative role in balancing both China and Russia. And in 2010, Iranian delegations have been buying Mongolian meat and animal byproducts. Nobody should be surprised, says Campi, if the Iranians are examining options for investing in Mongolia's mineral sector. This would give the US another reason to strengthen their ties with Mongolia.
Author: Christina Bergmann
Editor: Grahame Lucas