Speaker G.Zandanshatar visits construction site of oil refinery in Dornogobi aimag www.montsame.mn

Ulaanbaatar /MONTSAME/. Speaker of the Parliament G.Zandanshatar visited Altanshiree soum of Dornogobi aimag yesterday, July 21, and got acquainted with the construction process of the oil refining plant.

Bezos, beware! Elon Musk is now the FIFTH-RICHEST person on the planet www.rt.com

Tesla and SpaceX CEO Elon Musk’s net worth surpassed $74 billion as of Monday. According to Forbes’ Billionaires List, his fortune has nearly tripled since mid-March, making him the world’s fifth-wealthiest man.
The 49-year-old businessman, who ranked 31st globally as of March, with a net worth just under $25 billion, has now outpaced former Microsoft CEO Steve Ballmer and Berkshire Hathaway chairman Warren Buffett.

Flash Floods - Emergency Plan of Action (EPoA) DREF Operation n° MDRMN012 www.reliefweb.int

Flash floods have been occurring all around the country at different scales due to prolonged heavy rain fall since middle of June and still on going. The rainfall is averaged to be 50-60 millimeters across the country and the highest sum of precipitation was 85 mm in Bulgan province on 8 July 2020.

“Darkhan leather and hide processing complex holds capacity to diversify economy” www.montsame.mn

Ulaanbaatar /MONTSAME/. On July 18, Minister of Food, Agriculture and Light Industry Z.Mendsaikhan became acquainted with the operations of the complex of the National Center for Livestock Gene Bank and the Institute of Plant and Agricultural Sciences in Darkhan city.

"What development means in a post pandemic Mongolia?" www.montsame.mn

Ulaanbaatar /MONTSAME/ The United Nations Development Programme (UNDP) in Mongolia has commissioned an initiative to explore the answers to “What development means in a post pandemic Mongolia? What continues? What is restored? What can never be redone? What new opportunities now exist?”.

Over 20 Mongolian COVID-19 patients retest positive after recovery www.xinhuanet.com

More than 20 Mongolian people tested positive again for COVID-19 after they had recovered and been discharged from hospital, the country's National Center for Communicable Diseases (NCCD) said Tuesday.

Silver price hits highest level since 2016 www.mining.com

Silver prices are latching onto gold’s rally, reaching their highest levels since 2016 on Monday, as concerns about the global economy and market dynamics continue to shift investor attention towards safe haven metals.

3,400 Mongolians to be brought back from abroad in July www.montsame.mn

Ulaanbaatar /MONTSAME/. During the press conference of the State Emergency Commission (SEC) on July 17, Deputy Prime Minister Ya.Sodbaatar, who heads the COVID-19 Operative Team of the SEC, announced that the Government does not have enough capacity to bring back all of over 10 thousand Mongolian citizens, who are currently stranded abroad due to Mongolia’s border closure to all passengers caused by concerns over COVID-19 pandemic, within only one month.

Wary of Sino-Russian influence, Mongolia seeks better ties with the US www.thinkchina.sg

The ruling Mongolian People’s Party (MPP) won a strong mandate in recent elections where it secured 62 seats out of 76. While it has done well to manage the Covid-19 crisis in Mongolia, its foreign policy room for manoeuvre remains limited due to the need to juggle demands from its closest neighbours, China and Russia. How will it keep the balls in the air with the US thrown into the mix?

Amid the Covid-19 crisis and uncertain international political climate, countries are holding national elections to maintain internal political stability and continuity in the process of governance. Mongolia held parliamentary elections on 24 June 2020. This was the eighth parliamentary election since the advent of democracy in 1990.

The elections were centred on the agendas of looming corruption, anti-incumbency, and dissatisfaction with the government. Despite these challenges, MPP managed its re-election due to having a strong political base as the oldest party.
Despite doubts that the incumbent Mongolian People’s Party (MPP) would face a tough challenge from the opposition Democratic Party, MPP confirmed its re-election by winning 62 seats out of total 76 in the parliament, though this was three seats less from its 2016 tally. MPP received 44.9% of the popular vote under the multi-member plurality voting system. The elections saw a total of 606 candidates in the contest across 13 mainstream parties, four major coalitions and a record 121 independent candidates seeking election to the State Great Khural (parliament).

The elections were centred on the agendas of looming corruption, anti-incumbency, and dissatisfaction with the government. Despite these challenges, MPP managed its re-election due to having a strong political base as the oldest party. MPP was founded in 1920 as Mongolian People’s Revolutionary Party and remained the only ruling political party until 1997. With the rise of democracy and new political parties in the 1990s, the party has constantly gone through several changes. The fact that MPP is led by several young parliamentarians has also helped convince the people that the party is active and competent.

Inspired by the 1989 democratic innovations in the neighbouring erstwhile Soviet Union and Eastern European countries including Hungary, East Germany, Bulgaria, Czechoslovakia and Romania, Mongolia’s 1989 democratic movement brought a multi-party system along with a new constitution in 1992. In the past thirty years, the democratic system in Mongolia has gone through a number of changes in governance and constitution. In 2008, a multi-party plurality system was adopted followed by constitutional amendments focusing on the power balance between the president and prime minister.

With his re-election as the prime minister, U.Khurelsukh faces immediate challenges both, at home and aboard. At home, Khurelsukh will have to bridge the economic divide between urban and rural Mongolia. Even during elections, rural candidates were outnumbered by the urban ones, creating an urban-rural divide in representation. Corruption and poor economic policies have led the country towards 30% of people living in poverty. Controlling pollution is another challenge faced by the government. The capital city Ulaanbaatar has become the symbol of an acute shortage of fresh drinking water and air. Also, the country has a high rate of unemployment. In 2019, Mongolia's unemployment rate reached a record all-time high of 11.8%. While policies have been made to meet these challenges, implementation remains to be seen.

The young Mongolians are miffed by the two-front involvement from China and Russia in draining the country’s natural resources in the name of foreign direct investment, including hydro-electricity development by China.
During his oath-taking ceremony on 2 July 2020, Prime Minister U.Khurelsukh promised to focus on promoting social justice and building a “Digital Mongolia", improving livelihoods and expanding the middle class, and sustaining balance between urban and rural development. In fact, Mongolia has become a global example in controlling the spread of Covid-19 cases. It is among very few countries to have closed its borders in January as part of its preventive measures to control Covid-19. As of 2 July, Mongolia has reported a total of 220 cases with no casualties.

On the foreign policy front, Mongolia has been hindered by the external influence from China and Russia. Mongolia was considered a satellite state of the erstwhile Soviet Union and with the disintegration of the Soviet Union in 1990, China began to tie its hands in terms of trade and investment. A resource-rich country with coal and copper, Mongolia exports 90% of its mined products to China, invariably, making it dependent on the latter for cash inflow. For its petroleum needs, Mongolia depends on supplies from Russia. The young Mongolians are miffed by the two-front involvement from China and Russia in draining the country’s natural resources in the name of foreign direct investment, including hydro-electricity development by China.

Meanwhile, it has been difficult for Mongolia to do away with the Sino-Russian influence, especially on the strategic front. For instance, with its stated military prowess, China wants Mongolia to join the Beijing-based Shanghai Cooperation Organisation. Mongolia actually wishes to diversify its strategic ties with other countries, especially the US. President Trump has been vocal in bringing Mongolia under NATO as a partner, but considering the unpredictability of President Trump, Mongolia cannot risk intimidating its neighbours. India is also looked upon as a promising partner of Mongolia. In October 2019, President Khaltmaagiin Battulga paid a state visit to India which caused immense unease in China. It was reflected through a muted coverage of the visit by Chinese media. A similar pattern of Chinese unease was observed during Prime Minister Modi’s visit to Mongolia in 2015, the first-ever visit by an Indian Prime Minister. However, the viability of these options is held hostage by its geography.

To conclude, the newly elected government in Mongolia led by Prime Minister U.Khurelsukh has a clear political mandate. Having proven its success in handling the Covid-19 crisis, the government can further focus on improving employment, water and air quality and socio-political and economic divide between urban and rural Mongolia. Although the country has long-lasting coal and copper reserves, their export story must be reflected in the financial well-being of the country. Similarly, Mongolia can look to diversify its ties away from China and Russia on the strategic front but it will be a challenge to avoid Sino-Russian high-handedness.

Mongolia and the Belt and Road Initiative: The Prospects for the China-Mongolia-Russia Economic Corridor www.ocnus.net

Mongolia is a landlocked country with a population of roughly 3.3 million people, bordering on only two nations, China and Russia. The country痴 primary exports are largely minerals and raw materials, making trade with countries other than its immediate neighbors difficult. China痴 Belt and Road Initiative (BRI)預nd specifically, its primary Mongolian component, the China-Mongolia-Russia-Economic Corridor (CMREC)用romises to facilitate trade between Mongolia and its neighbors, as well as granting Mongolia access to overland routes to the European Union and sea ports in Asia.

The possibilities under BRI/CMREC have drawn praise from a number of voices in Mongolia. Demberel Sambuu, CEO of the Economic Research and Training Institute at the Central Bank of Mongolia, has stated that irrespective of the name given to it, the corridor is natural, inevitable, and necessary. [1] Lakshmi Boojoo, Director General of Mongolia痴 Economic Policy and Competitive Research Center (EPCRC), agrees that the corridor is necessary, but that there are many considerations which must be taken into account before borrowing or spending begins. These factors include needs analysis, feasibility studies, regulatory reform, capacity building, and standardization, among others. [2]

Mongolia and Its Economic Relationship with China

During the period of the Mongolian People痴 Republic (1924-1992), Mongolia was a client state of the USSR, and Soviet engineers built much of the country痴 infrastructure, including the capital city of Ulaanbaatar. There was steady urbanization during this period, a trend that further accelerated after the fall of communism in the early 1990s. Today, over 65% of Mongolians are urban dwellers, with Ulaanbaatar accounting for 45% of the population (Statista, July 9; World Population Review, 2020). Mongolia is classified as a lower-middle income country, with a nominal annual GDP per capita in 2018 of $4,200 (CEIC Data, 2020).

Historically, Mongolia was almost completely dependent on animal husbandry; however, by 2014 exports accounted for more than half of Mongolia痴 GDP. These exports include: copper, apparel, livestock, animal products, cashmere, wool, hides, fluorspar, other nonferrous metals, coal and crude oil. Mongolia痴 primary export market is China, which purchases 84% of its export products (USTR, undated). As it is largely reliant on commodities exports預nd a single, large export partner葉he economy of Mongolia is directly dependent on both global prices for minerals and the performance of the Chinese economy. Conclusions reached by Mongolia痴 Economic Policy and Competitive Research Center corroborate research conducted by international institutions: Mongolia needs diversification in both its exports and export partners, as well as a movement up the value chain. [3]

The BRI痴 Attractiveness to Landlocked Countries

Mongolia痴 status as a landlocked developing country (LLDC) poses particular challenges for its economy預 fact reflected in the creation of the United Nations-affiliated 的nternational Think Tank for Land-Locked Developing Countries� in Ulaanbaatar (United Nations, June 11, 2018). The transportation infrastructure possibilities of the BRI hold particular attractiveness for Mongolia: speaking at the 鉄econd Belt and Road Forum for International Cooperation� held in Beijing in April 2019, Mongolian Minister of Road and Transport Development Byambasuren Enkh-Amgala stated: 典he BRI provides huge economic opportunities for landlocked countries like our country by mitigating their disadvantages of geographical position� Thus, Mongolia has actively participated in the BRI construction from the onset in order to accelerate its economic development by reducing the disadvantages associated with the lack of access to the sea� (Xinhua, April 26, 2019).

The Central Asian republics, which are the countries most similar in geography and circumstances to Mongolia, are landlocked members of the BRI. [4] Being landlocked dramatically decreases a country痴 GDP: the average GDP of the Central Asian republics is only 57% of their neighboring countries who possess access to the sea. It has been estimated that export costs from the Central Asian states are 10% higher than those from countries with maritime access (CACI Analyst, April 30, 2018). Lakshmi Boojoo, Director General of EPCRC, estimates that export costs from Mongolia are even higher. Alongside the distances that must be travelled by rail and auto (both of which are less efficient than shipborne commerce), there is the additional problem of having to pay duties and meet standards for transshipping through a neighboring country. She estimates that this raises the cost of exports by as much as 40%. [5]

Mongolia痴 total production is quite small. The factors of distance, difficulties in shipping, and regulatory restrictions all reduce Mongolia痴 hopes of achieving economies of scale. These problems reduce the competitiveness of Mongolian exports, which in turn causes the country to focus on a very small number of products. In its recommendations to countries considering BRI investment, the World Bank recommends only making the investment when a country expects to achieve economies of scale (World Bank, undated). With Mongolia痴 small population, that may be very difficult to achieve.

The realities of the economic challenges faced by landlocked countries help to explain why landlocked countries such as the Central Asian republics and Mongolia have embraced the BRI. LLDCs like Mongolia see the BRI as a means of obtaining financing for large scale infrastructure projects necessary for economic diversification, accelerated structural development, participation in regional cooperation, and increased trade. Through BRI projects, they can access funding from the Asian Infrastructure Investment Bank (AIIB) and other sources (CACI Analyst, April 30, 2018). The Central Asian republics have also joined the Shanghai Cooperation Organization (SCO)擁n which both China and Russia are leading participants葉hereby creating a platform for economic development and cooperation throughout the region. Mongolia has not formally joined the SCO, but enjoys observer status.

Image: A map of proposed railway construction to be undertaken for the 鼎hina-Russia-Mongolia Economic Corridor,� a key component of the BRI as envisioned for Mongolia. (Image source: Belt and Road Ventures, September 30, 2018)
The China-Mongolia-Russia Economic Corridor

Plans to develop a 鼎hina-Mongolia-Russia Economic Corridor� (CMREC) were jointly announced in 2016 by the leaders of the three countries. A Xinhua statement at the time indicated that the three countries would 途enovate ports of entry and overhaul customs procedures;� conduct 田loser cooperation in energy and mineral resources, high tech, manufacturing, agriculture and forestry;� and 兎xpand trade at border regions and widen services trade� [and promote] cooperation in education, science and technology, culture, tourism, medical care and intellectual property� (China Daily, September 16, 2016). Pursuant to these plans, the three countries have signed various agreements to cooperate on improving rail transit and highways through Mongolia, offering increased connections between China and Russia. Freight traffic has increased dramatically over the past few years: in 2014, only 10 China-Europe freight trains passed through Mongolia, but in 2018 there were around 900 (Xinhua, April 26, 2019).

The Mongolian government sees CMREC as a potential means of overcoming 斗andlockedness,� and as a program that could be integrated with Mongolia痴 own domestic development plans. Mongolia is pursuing its own Steppe Road Plan, a reported $50 billion infrastructure development program announced in 2014 that aims to boost energy, telecommunications, mining, and tourism, as well as to build or upgrade road and transport infrastructure (Eurasia Net, July 7, 2017). The PRC has touted the BRI as being 塗ighly consistent with Mongolia痴 Steppe Road program,� and as an initiative that 努ill guide the win-win cooperation between the two countries� (Xinhua, October 2, 2016).

Amid its benefits, one of the most salient potential drawbacks for the BRI/CMREC is the implications that it bears for Mongolian sovereignty. The completion of CMREC would require a large investment in transportation infrastructure, thereby increasing Mongolia痴 external debt, which already stands at 221% of nominal GDP (CEIC Data, 2020). Such a prospect carries the possibility of Mongolia being subjected to a BRI-related 電ebt trap� of the sort faced by countries such as Sri Lanka (China Brief, January 5, 2019; China Brief, April 13).

Analysis of the Economic Impact on Mongolia

The International Think Tank for Landlocked Developing Countries (ITTLLDC) in Ulaanbaatar has published models that examine three possible economic corridors, and their respective impacts on Mongolia and China. The models made several assumptions擁ncluding that the projects would be completed by 2020預nd then measured what their impact would be in 2030. The models assumed that average highway speed would be raised from 19.25 kilometers per hour (km/h) to 38.5km/h, and that average rail speed would improve from 19.1km/h to 40.0km/h. The models further assumed that customs facilitations would be undertaken, cutting the time and cost of clearing borders in half (ITTLLDC, 2017).

Per this analysis, the first corridor, connecting China and Russia through the Western part of Mongolia, resulted in the largest economic benefit going to China. Consequently, ITTLLDC speculated that China might be most interested in funding this corridor. The second corridor, connecting China and Russia through Ulaanbaatar, benefited the largest number of countries葉hus potentially making the project eligible for international funding through China, the EU, and Russia. The third corridor, connecting Bichigt, Mon and Ulaanbaatar, had a positive impact for both China and Mongolia葉herefore raising the likelihood that the two governments might collaborate on funding (ITTLLDC, 2017).

Conclusion

Despite the benefits, economic corridors such as the envisioned CMREC also carry with them some risks. These include a massive inflow of foreign direct investment, which could crowd out or decimate local industries; as well as a dramatic increase in migrant labor and goods imports, which could threaten domestic small and medium sized enterprises. From a geopolitical standpoint, Mongolia also bears a certain amount of risk, as it must balance its engagement with Russia against its engagement with China, without alienating one or the other. Deeper engagement with China痴 BRI program could offer considerable economic benefits to Mongolia傭ut it also presents complex political issues for Mongolia痴 leaders to consider as they contemplate their country痴 future.

Antonio Graceffo, PhD is an economic researcher and China analyst based out of Ulaanbaatar, Mongolia.