This profile is intended to serve as public goods to facilitate upstream country diagnostics, policy dialogue, and strategic planning by providing comprehensive overviews of trends and projected changes in key climate parameters, sector-specific implications, relevant policies and programs, adaptation priorities and opportunities for further actions. Mongolia is a landlocked country of East Asia characterized by unique ecosystems and cultures. The contribution of agriculture to Mongolia’s economy has declined in recent years, constituting 12% of GDP, compared to the 50% contribution from the service sector. Historical climate warming is believed to have taken place at some of the fastest rates in the world in Mongolia and other shifts in climate dynamics are already strongly impacting on lives and livelihoods. In response, Mongolia has engaged closely with international efforts to mitigate climate change and its impacts.

This profile provides a number of key messages regarding the future of climate risk for Mongolia, including:

Mongolia has already experienced significant climate changes, with warming of over 2°C and declines in rainfall reported between 1940 and 2015.

The intensity of extreme climate-driven hazards including heat wave, drought, and river flood, is expected to increase.

Without concerted disaster risk reduction efforts and support to communities to adapt Mongolia’s poorest communities face significant damage and loss.

Focus is needed on the interplay between climate changes and current development trends in Mongolia, unplanned development in flood exposed areas and air pollution issues could interact with climate changes to enhance health risks and inequalities.

Ulaanbaatar /MONTSAME/. As reported by the National Statistics Office, the nation's inflation was at 6.2 percent by May 2021. The inflation rate was 6.1% in May 2018, 8.0% in May 2019, 3.3% in May 2020 and reached 6.2% in May 2021, increased by 2.9 percentage points from the same period of previous year. The increase was mainly due to 13.1 percent price increase in food and non-alcoholic beverages, and a five percent price increase in housing, water, electricity, gas, and fuels.

In terms of contribution of price changes of goods and services groups to 6.2% inflation rate in May 2021, 3.6 units (58.1%) were contributed from changes in prices of food and non-alcoholic beverages group. Moreover, 35.5% of 6.2% inflation rate was mainly contributed by an increase in prices of imported goods and services. However, the contribution of prices of imported goods and services increased by 14.3 percentage points compared to May 2020.

From May 2020 to March 2021, the domestic inflation rate fluctuated between 2-3 percent, falling below the central bank's target. Analysts say this indicates a decline in economic activity during that period. During the pandemic, the government regulated price reductions for some goods and services. On the supply side, changes in the prices of government-regulated goods and services contributed to higher inflation, according to the central bank. In addition, commodity prices have been rising sharply with the easing of lockdown measures and while the economy recovers.

In Ulaanbaatar, inflation was at 6.7 percent in May. According to the Bank of Mongolia, inflation is expected to rise to 7-8 percent by the fourth quarter of this year.

Ulaanbaatar /MONTSAME/. A specialized laboratory for hide and leather research has been established at the School of Industrial Technology of the Mongolian University of Science and Technology.

Statistics show that 80 percent of livestock hide is discarded without being processed. However, by putting the laboratory into operation, it will become possible to properly utilize up to 90 percent. More specifically, the laboratory will define the characteristics of the hide and leather as well as whether it meets quality standards. In other words, it will become easy for manufacturers to decide whether to use the material for making products such as shoes or bags.

Despite counting 60-70 million heads of livestock annually, only 10 thousand items of hide are processed each year. The hide of sheep, goats, and cattle are predominantly processed. In the last few years, however, horsehide has also begun to increase in use.

The laboratory will specifically define which parts of the hide are suitable for making certain products. For instance, following a study that found that horsehide is suitable for manufacturing coats due to its softness, horsehide began to be increasingly processed in the country. Thus, herders are currently being advised by researchers and manufacturers to protect their livestock’s skin and hide by protecting them from various insects as well as to not use lacquers in marking them.

Hide and leather manufacturers expressed their hope in the laboratory to make significant contributions in the development of the light industry.

Ulaanbaatar /MONTSAME/. Manual on Reporting Suspicious Transactions for financial and non-financial professional service providers and intermediaries was published by the Financial Regulatory Commission (FRC). The contents of the manual include the following:

General concept of anti-money laundering and combatting the financing of terrorism;

How to identify and detect suspicious transactions and their characteristics;

Records of customers’ documents; and

Organization, frequency and scope of internal training.

The FRC and the Financial Information Unit have conducted online training involving 359 entities; from among those responsible for reporting. During the training, the manual was introduced to participant.

Source: Financial Regulatory Commission

Last week Mongolians went to the polls to vote for a new President. The Mongolian Presidential elections saw the victory of former Prime Minister Ukhnaa Khurelsukh of the Mongolian People’s Party (MPP). Khurelsukh won in a landslide, securing 68% of the votes against the 20,1% and 6%, won by Sodnomzundui Erdene of the Democratic Party (DP), and Dangaasuren Enkhbat of the Right Person Electorate Coalition, respectively.

Khurelsukh will take over from Khaltmaa Battulga, who was prevented from seeking reelection after a controversial attempt to amend the Mongolian Constitution. The MPP had in 2019 modified the Constitution in an effort to consolidate power and inserted a clause that limits presidents to one six-year mandate. The Mongolian Presidency is a largely ceremonial position; most power is held by the State Great Khural, Mongolia’s parliament, as well as Prime Minister and cabinet. Since 2016 the MPP holds a supermajority in the State Great Khural and consequently determines who the Prime Minister will be and who will make up the cabinet. Erdene, the DP candidate, had warned the Mongolian population against the possibility of a dictatorship under the MPP during the elections. Indeed, Khurelsukh is expected to grant the MPP a higher degree of control over the country’s levers of power.

Background to the Elections

Khurelsukh was forced to resign with his Cabinet on January 21, 2021, due to protests sparked by Mongolia’s response to Covid-19. By November 2020 the Mongolian State Emergency Committee imposed strict countrywide measures in response to community spread of Covid-19. However, these restrictions sparked public anger which stoked widespread protests demanding freedom and the right to assembly. Subsequently, protesters demanded the ousting of various authorities, including the Cabinet and the Prime Minister.

The Prime Minister’s resignation prompted skepticism; his position was stronger than ever, given the MPP’s control of the Cabinet and the Great Khural. It has become evident now that his resignation as Prime Minister was a tactic aimed at bypassing a constitutional requirement that would have otherwise barred him from running as President.

Khurelsukh’s actions have caused many concerns to arise within the general public, the opposition, and foreign observers. Polarization, court rulings, constitutional amendments, and presidential decrees, coupled with Khurelsukh’s background with the Mongolian military (of which he is now commander-in-chief as the President), show the fragility of the current political situation. Furthermore, Mongolia’s election took place during a critical time for its already suffering economy deeply affected by the pandemic.

Ulaanbaatar’s Balancing Act

Mongolia’s geo-economic positioning makes it extremely difficult for Ulaanbaatar to operate without factoring in Moscow and Beijing. In fact, despite extensive attempts undertaken by the various Mongolian governments, Moscow is still Mongolia’s primary energy provider, and Beijing buys circa 90% of Mongolia’s core exports. Additionally, given the country’s current economic crisis, it is to be expected that the government will decide to lean more toward either Moscow or Beijing.

It is yet to be seen whether Khurelsukh will follow Battulga’s foreign policy focused only on Russia while begrudgingly acknowledging China’s growing prominence to its south. However, there might be a turn in Ulaanbaatar’s foreign policy. In fact, during his previous mandate, Khurelsukh seemed to be willing to deepen cooperation with China, as he underscored in a meeting with Wang Yi in 2020. Notably, Khurelsukh also expressed his support for the one-China policy and its domestic and foreign policy.

Additionally, Mongolia’s possible turn to China is dictated by other factors as well. First, Beijing has offered major Covid-relief: Mongolia has so far signed deals for 4.3 million vaccine doses, the bulk of which is produced by China’s Sinopharm vaccine. Second, China has been Mongolia’s primary commercial partner since the fall of the Soviet Union. Back then, Ulaanbaatar, desperate for new economic partners, restructured its economy to meet China’s needs for raw materials. Then as now, the Mongolian mining industry remains vital for Ulaanbaatar to maintain a stable relationship with Beijing. As a result, China remains Mongolia’s top export destination and import supplier in the first quarter of 2021, according to data released by the Mongolian National Statistics: 92.5% of Mongolia’s total exports and 39.1% of its total imports. The mining sector occupies more than 50% of Mongolia’s GDP and roughly 70% of its exports.

Mongolia after the Elections

But overdependence on China’s willingness to buy from Mongolia is extremely dangerous. If Beijing were to close border-crossings, preventing the trade of goods, it would devastate Mongolia’s economy, as the Covid-19 outbreak has shown. Mongolia’s reliance on the mining industry also results in environmental strain and degradation that will, in the long run, engender more economic burdens. Mongolia has seen a gradual degradation of its land, 20.9% of which is available for mining while 44% to 90% is affected by desertification, partially due to mining externalities. It also comes as no surprise that Chinese firms partially own the companies charged with inflicting environmental damage on Mongolia. Therefore, China holds considerable stakes over Mongolia’s mining companies, on top of being its primary export destination.

Mongolia’s dependence on China will probably increase in the years to come. Beijing’s Belt and Road Initiative represents a unique opportunity for Ulaanbaatar to act as a logistical transit hub, given that it lies perfectly in between China and Inner Asia. The MPP has called for increasing Mongolia’s focus on expanding its mining sites, especially the Oyu Tolgoi and Tavan Tolgoi (the closest mines to the Chinese border), and expedite cross-border trade. This decision would grant China power to directly access Mongolia’s land (given Chinese companies own shares in the companies that control the mining sites). Another project that would increase Ulaanbaatar’s reliance on Beijing is Mongolia’s attempt to access the port of Caofeidian in Hebei province. Use of this harbor, which is three times closer than the only other alternative, the port of Vladivostok, would grant Mongolia maritime access; however, Beijing will become Ulaanbaatar’s gateway to conduct commerce with the rest of the world, hence increasing the risk of Mongolia becoming a sort of Chinese province in the future.

Khurelsukh will assume office on July 10th. Alongside his cabinet and Mongolia’s legislature, the new President will need to make tough decisions confronting climate change, geopolitical shifts in East Asia, and domestic challenges. The former MPP candidate, despite his ceremonial position as President, will still play a key role in directing Mongolia’s course of action during his term.

by: Riccardo Villa

June 17 (Xinhua) -- Mongolia registered 2,642 new COVID-19 cases in the past 24 hours, the country's health ministry said Thursday.

This is the eighth straight day of record new infections, bringing the national tally to 85,770, the ministry said.

Meanwhile, 11 patients aged 37-95 died from the disease, bringing the national death toll to 414.

About 1,668,000 Mongolians have so far been fully vaccinated since the country launched a national vaccination campaign in late February, according to the ministry.

WASHINGTON, June 16 (Reuters) - A deal for a five-year ceasefire in a U.S. and EU dispute over aircraft subsidies on Tuesday reflected progress, but the underlying trade relationship remains fragile with many unresolved disagreements, diplomats and trade experts said.

The two economic powers agreed to set aside tariffs on $11.5 billion in U.S. and EU goods hit during the subsidy battle over Boeing Co (BA.N) and Airbus SE (AIR.PA) aircraft, to focus on fighting China’s clear ambition to build and sell its own commercial aircraft.

But the United States warned it could re-impose tariffs "if we’re no longer competing on a level playing field." That warning relates to the big outstanding differences over taxation of big American tech firms; steel and aluminum tariffs and reforms of the World Trade Organization, experts said.

The fact that the two sides failed to hammer out a permanent solution to the aircraft subsidy dispute, after months of optimistic noises from senior officials, showed how deep their differences run.

"It's not as good as what it could be or should be," said one diplomatic source of the five-year hiatus. "They've essentially kicked this into the long grass."

Tensions are also fraught because the Biden administration has moved slowly to review tariffs and other policies introduced by former President Donald Trump. Some European diplomats are frustrated. Many key roles at the U.S. Trade Representative's office remain unfilled, complicating negotiations.

STEEL AND ALUMINUM ROW

At the summit, Washington and Brussels also agreed to discuss U.S. tariffs on EU steel and aluminum imports before the end of the year and address excess capacity in the overall market, notably from China. But prospects for an agreement on rescinding the tariffs looked slim.

U.S. steel industry groups and unions are urging the Biden administration to keep in place the 25% steel and 10% aluminum tariffs imposed three years ago under Trump.

The U.S. tariffs affect 6.4 billion euros of EU metal exports. The European Commission, which wants them removed is challenging the U.S. tariffs at the WTO.

One senior U.S. trade official told reporters on Tuesday that the issue would be "difficult" to resolve.

A EU official said Washington refused point blank to agree to lift the steel and aluminum tariffs by Dec. 1, but said U.S. officials acknowledged that the issue was "something that creates tensions and that needs to be addressed."

In a conciliatory move, the European Commission, which oversees EU trade policy, last month suspended a June 1 doubling of retaliatory tariffs on Harley-Davidson Inc (HOG.N) motorbikes, U.S. whiskey and motorboats for six months, and refrained from taxing more U.S. products.

APPLE, FACEBOOK, GOOGLE

The United States is pushing for an agreement on a global minimum corporate tax, which could help move along multilateral negotiations over digital taxation.

But Washington told France, Italy and others that they face other tariffs if they implement domestic digital services taxes, which Washington says unfairly target U.S. companies, if no international consensus is reached.

U.S. officials have also expressed deep concern about draft rules announced by the EU that would require U.S. tech companies like Alphabet Inc's (GOOGL.O) Google, Apple Inc (AAPL.O) and Facebook Inc (FB.O) to provide far more information, including about takeovers, according to an administration source.

WTO PATENT WAIVERS AND REFORMS

EU officials are still smarting after Washington's abrupt decision to support a temporary waiver of intellectual property rights at the World Trade Organization to help speed production of COVID-19 vaccines.

They said Washington has failed to engage fully on reviving the WTO Appellate Body, its dispute settlement mechanism, after it was essentially dismantled by the former Trump administration.

“We are not really yet seeing a full engagement on the issue,” said one EU official, adding that the Biden administration was still reflecting “on what to do.”

Reporting by Andrea Shalal and Phil Blenkinsop; Editing by Heather Timmons and Cynthia Osterman

Mongolia is shifting its centuries-old festival online due to coronavirus for the second year. Rather than subject the population to an outright cancellation of Naadam, the government has taken the creative decision of moving this ancient festival online. Therefore, the core competitions such as horse racing, archery and wrestling will be held without a live audience. The government has also banned mini-Naadam festivals which normally continue through July and August nationwide in 360 soums and all 21 provinces.

Originally, the government approved a budget of MNT 10 billion for organising Naadam Festival this year; however, it will be economized as shifting to online. The money saved from the Naadam Festival will be used for fighting Covid-19.

This year, Naadam Festival commemorates the 100th anniversary of the Mongolian People’s Revolution.

The second largest festival and sports competition of the year is Mongolian New Year or Tsagaan Sar. It was completely cancelled back in February, for the second time in centuries.

The first official Naadam was held in 1206, the Year of the Tiger, when Temujin, the man who the world would come to know as Genghis Khan, inaugurated the largest celebration that had ever taken place on the Mongolian steppes. According to Jack Weatherford, author of “Genghis Khan and the Making of the Modern World”, the Great Khan called together hundreds of thousands of soldiers, wrestlers, archers, horse racers, women, families, and camp followers for several days of celebration and sports competition.

We often forget that a lot of the clothes we wear come from nature. Natural fibers such as cotton, linen, wool and cashmere are sourced from plants and animals, and need land and water. Sustainable sourcing of raw materials is essential so that we do not overstress land or overuse water, this is especially important in the context of climate change. For World Day to Combat Desertification and Drought, we looked at the impact of fashion on land and water resources on cashmere in Mongolia.

Cashmere comes from the soft coat produced by goats during the winter. By passing a cashmere scarf through a ring, it is said one can assess the fiber’s quality and fineness. “Due to the extreme climate, Mongolian cashmere is the thinnest and highest quality cashmere,” says O. Misheel, Deputy Director of GOBI.

GOBI, a non profit international corporation, has been working in cashmere for almost 40 years. It deals directly with herders and provides training to ensure quality. Through investments in processing, it creates jobs and helps Mongolians benefit from the full value addition of finished products.

“Sustainability is among our core promises to our customer. And we have started communicating our traceability, to make it transparent how we procure our cashmere, as well as manufacture our cashmere,” O. Misheel says.

The demand for cashmere has increased and meeting it has resulted in more goats. It’s a reliable income for the 30 percent of the population that rely on nomadic herding. But goats are particularly harsh on the land, they pull grass out by the root when grazing, keeping it from regenerating.

Traditional grazing methods took this into account and allowed three sheep to one goat to avoid overstressing pastures. However, goats and sheep now graze in about equal ratio.

The overall herd size has also grown, doubling to about 70 million animals since 2000 and exceeding the land’s carrying capacity in some areas.

Overgrazing and climate change are both contributing to land degradation and desertification in Mongolia. Higher temperatures and less rain have resulted in a drying trend, affecting pastures and water supplies.

“Pasture resources and water supply, pasture conditions, full nourishing of livestock and proper conducting of animal husbandry and breeding should all go hand in hand. That will allow for sustainable cashmere production,” says herder G. Oyunchimeg.

About 70 percent of pastureland in Mongolia is degraded to some extent. However, through climate-informed planning, protection of land and water sources and sustainable livestock management, most of it can be restored.

With increasing livestock and supply of raw cashmere, can also come price competition and decreasing quality. There is a value to high quality and sustainably sourced products if the means of verification are there - they can reduce herd size, reverse land degradation and lessen pressure on water resources, without an adverse impact on herder income.

But verifying sustainability, or even defining it, is not straightforward. “The fashion and textile industry needs more clarity on what is meant by sustainability, furthermore the validation of information and data needs to be available for the private sector. The infrastructure and ecosystem to provide validity and accountability to the information, on which herders are applying sustainable practices or not, are lacking,” says O. Misheel.

Change can present risks for herders. As B. Batkhishig, co-founder and Country Director of the Sustainable Fibre Alliance says, “Knowledge gaps and willingness to take confident action can be challenges for herders to take on new standards or certification requirements. Establishing trustful and effective communication across multiple actors involved in the cashmere supply chain is the most critical factor to give realistic and common understanding about the benefits and processes related to sustainability standards certification.”

UNDP is supporting the Government of Mongolia through a number of complementary initiatives, including the Improving Adaptive Capacity and Risk Management of Rural Communities in Mongolia project. It brings together climate-informed natural resources management and sustainable livestock planning, building on traditional cooperative approaches among herders while also introducing innovative technologies for traceability and verification of sustainably sourced livestock. UNDP has also launched the Sustainable Cashmere Platform, which engages brands, local processors, herder groups, development partners, civil society organizations and public authorities for common agreement on sustainability in cashmere and establishes partnerships and coordinated investments to advance sustainability in production and processing.

As income from cashmere is primarily from raw cashmere, little value addition comes from processing. About 80 percent of Mongolian cashmere is exported, while only 20 percent is processed, and small businesses can struggle to get finance for value chain investments. The government’s Cashmere Programme aims to increase the level of local processing and UNDP is exploring ways to attract investment which improves both domestic and export opportunities.

Reversing land degradation in Mongolia requires collaborative efforts, to both contribute to the sustainable development ambitions of the country and benefit from the growing consumer demand for sustainability. As consumers, we can support this by asking brands about how they are ensuring that their cashmere is being sustainably sourced – placing greater accountability on brands and providing assurance of the economic viability of sustainability.

Mongolia reported 2,395 new COVID-19 cases over the past 24 hours, the highest daily count since the start of the pandemic

the country's health ministry said Wednesday.

This is the seventh straight day of record new infections, bringing the national tally to 83,128, the ministry said.

Of the latest confirmed cases, 561 are children aged 17 or under, the ministry said, urging citizens to avoid crowded places and maintain good personal hygiene habits to keep themselves and their loved ones safe.

Meanwhile, nine fatalities and 827 recoveries from the coronavirus were reported in the past day, taking the national counts to 403 and 58,649 respectively, the ministry said.

The Asian country launched a national vaccination campaign in late February, aiming to vaccinate at least 60 percent of its 3.3 million population. About 1,667,800 people have been vaccinated so far, according to the health ministry.