Mongolia: Growth, Democracy, and Two Wary Neighbors

Since its transition from a single-party Communist system with strong ties to the Soviet Union to a multiparty democracy in 1990, Mongolia has made large strides in its democratic and economic transformation. Now considered one of the world’s fastest-growing economies thanks to an expanding mining sector, Mongolia is trying to reach out beyond China and Russia—who have historically considered Ulaanbaatar part of their sphere of influence—to what it calls its “third neighbors,” such as the United States and the advanced economies of Asia and Europe.

NBR recently interviewed Alan Wachman, an Associate Professor of International Politics at the Fletcher School of Law and Diplomacy at Tufts University, for insight into Mongolia’s achievements and its relationship with Beijing, Moscow, and its third neighbors, as well as into how the United States views Mongolia’s role in the international system.

Mongolia has experienced rapid economic and democratic growth since the country’s democratic revolution in 1990, following seven decades of Communist rule. Can you briefly describe the path that Mongolia has taken to achieve this rate of growth?

First, it is worth observing that Mongolia—with a population of about 2.7 million people—has a comparatively small economy. The World Bank reports that in 2010, the total value of Mongolia’s GDP was only about $6.2 billion. The GDP increased impressively in 2011, by what the Economist Intelligence Unit states as 17.3%, and is anticipated by the IMF and other observers to grow again this year by nearly 15%, a phenomenon driven primarily by the acceleration of investment in the mining industry.

However, in the immediate aftermath of Mongolia’s assertion of independence after seven decades of subservience to Moscow, Soviet subsidies—once amounting to about one-third of GDP—dried up and for several years, Mongolia’s economy was in recession. Then, despite all the dislocations and difficulties associated with a transition from a command economy to market economy as well as the privatization of resources, Mongolia began to claw its way back to economic stability, but the pace was gradual.

Until quite recently, the economy had been almost entirely dependent on herding and agricultural production. So, severe drought or cold—which Mongolia has suffered repeatedly—exacts a painful toll on the country’s economy. Abnormally cold winters cause livestock to freeze and die en masse, destroying the livelihood of herding families and crippling the national economy as a whole. Such was the case early in this decade, when GDP growth was only 1.1% in 2000 and 1% in 2001.

So, the rapid economic growth of which one now reads frequently, as well as projections for continued rapid growth, is largely the result of political decisions made since 2009 to invite foreign investment in the exploitation of Mongolia’s vast, but essentially untapped, mineral resources. Mining enterprises from around the world are competing fiercely to secure licenses from the government of Mongolia to extract copper, gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten—access to which has, until quite recently, been severely restricted.

In the past couple of years, Mongolia has already begun to benefit from massive investments, as mining firms and the service industries that serve them have undertaken the establishment of the infrastructure needed to draw minerals out of the ground and transport them to market. Grand expectations of substantial economic growth in the years ahead, leading to the transformation and diversification of Mongolia’s economy, rest on how successfully Mongolia will steer clear of the manifold pitfalls of a resource-based economy.

Naturally, the efficiency of Mongolia’s democracy, the viability of its legal and regulatory environments, and the transparency and “cleanliness” of its governing processes have had—and will continue to exert—a disproportionate influence over these economic changes. Thus far, Mongolia has achieved much of which it can be proud. It managed to make a relatively rapid, essentially nonviolent transition in the years since 1990, from one-party, authoritarian rule to a multiparty, representative democracy. Neither North Korea—the other former Soviet client state in North Asia—nor any of the Central Asian republics that emerged from the Soviet Union have come even close to doing what Mongolia has done. Indeed, Mongolia now has more in common with South Korea, Taiwan, and the Philippines—Asian states that were part of what political scientists saw as a “wave” of states that undertook the transition from one-party authoritarianism to multiparty democracies in the same period that Mongolia did—than with states that were once dependent on Soviet largesse and subject to Soviet caprice.

Last June, Mongolian president Tsakhia Elbegdorj, visited Washington, D.C., where he spoke proudly of the political transition his state has made. He asserted that in December 1989, at a moment when the Soviet Union was intact and the PRC (People’s Republic of China) was still coping with the aftereffects of its violent suppression of the demonstrations in Tiananmen Square, “small Mongolia” dismantled the long-ruling authoritarian regime and, in its place, established the foundations of democracy without bloodshed or “shattering [a] single window.” Elbegdorj exclaimed, “Now, my country is becoming the beacon for democratic developments. I call my country the ‘democratic anchor in the East.’”

Mongolia has indeed come a long way in about two decades. Legislative and presidential elections have prompted a turnover of party control several times, as well as periods of coalition government. It is telling that on July 1, 2011, Mongolia assumed the rotating chairmanship of the Community of Democracies.

Notwithstanding Mongolia’s successes, the transition to democracy has not been problem-free. A still-unresolved murder of a popular democratic opposition leader and an instance of political violence in 2008, when election results were contested by street demonstrators, several of whom were shot and killed by police, have stained an otherwise promising transformation.

Nevertheless, while external observers continue to report concerns about the corrupting effects of venal political figures padding personal coffers at public expense, government accountability, procedural transparency, bureaucratic and legislative efficiency, and rule of law, most Mongolians surveyed about the changes undertaken in the past two decades report a greater satisfaction with their democratic system—warts and all—than with the one-party system under which they suffered in the seven decades that preceded the transformation. Thus, most observers agree that Mongolia has moved beyond the point of no return and that democracy, even if of suboptimal quality, is likely to survive. Of course, one can hope that with greater practice and a generational shift among the power-holding elites, Mongolia’s democracy will not just survive, but thrive.

Since the 1990s, Mongolia has been seeking to build relations with its so-called third neighbors—the United States, South Korea, Japan, and European countries—to balance the influence of its physical neighbors China and Russia. Can you explain Mongolia’s “third neighbor” policy and the drivers for this doctrine?

Mongolia’s “third neighbor” approach to foreign relations is driven most forcefully by geography. Mongolia is landlocked and shares borders with only two neighboring states: the Russian Federation and the PRC. As a class of states, those that are landlocked face monumental challenges to development. That Mongolia is bounded by only two states and that those two happen to be communist behemoths, compounds the difficulty that other landlocked states routinely face.

What Mongolia has done reveals a capacity for deft diplomacy that to date has served it rather well. Mongolia’s legacy of dependence on one master—for centuries the Qing (Manchu) empire and later the Soviet Union—led it in its independence to seek more balanced relations with its two much-larger neighbors. This notion was enshrined in a foundational document titled “The Concept of National Security,” in which Mongolia asserted, “A policy of non-involvement and neutrality shall be pursued in relation to the disputes between the two neighbors unless the disputes affect the vital national interests of Mongolia.”

Beyond that, Mongolia has assiduously labored to cultivate supportive relationships with powerful states far afield to counterbalance the modern-day influence of Russia and the PRC. In another foundational document, “The Concept of Foreign Policy,” Ulaanbaatar stated its intention to establish “friendly relations with highly developed countries of the West and East such as the United States of America, Japan and the Federal Republic of Germany.” The same document continues: “[Mongolia] will also pursue a policy aimed at promoting friendly relations with such countries as India, the Republic of Korea, Thailand, Singapore, Turkey, Denmark, the Netherlands, Finland, Austria, Sweden, and Switzerland and at creating and bringing to an appropriate level their economic and other interests in Mongolia.”

So, the heart of Mongolia’s “third neighbor” foreign policy is to ensure cordial and balanced relations with its two proximate neighbors, while encouraging other states—many of them established and comparatively wealthy democracies—to take interest in Mongolia’s development. Since 1990, Beijing and Moscow have generally respected Ulaanbaatar’s independence and—with some trepidation—its relations with other states.

By linking its security to a roster of states other than Russia and China, Mongolia has made clear its intention to act internationally with as much freedom as it can muster from constraints that Moscow or Beijing might wish to impose. Both Russia and the PRC are still rather wary of external powers—notably the United States—setting down roots in states along their borders. The Chinese are vigilant about the prospect of encirclement. Russia seems especially unsettled by the prospect of a democratic Mongolia entangled with powerful Western democracies elsewhere, the United States chief among those democracies.

However, Mongolia’s premise seems to be that integration in the world outside its immediate ambit will help assure its security, should that be undermined by the interests, ambitions, or actions of its immediate neighbors. It is not so much that Ulaanbaatar expects its “third neighbors” to ride in to rescue it should Moscow or Beijing impose with military force. If push comes to that particular shove, Mongolian statesmen realize that they may be compelled to revert to an earlier practice and choose an alliance with one of its two neighbors in opposition to the other. Nevertheless, it appears that so long as Russia and China hold each other in check, Mongolia hopes its “third neighbor” approach to security will encourage those external balancers to develop interests—economic, ideological, and strategic—in Mongolia that would significantly impede the effort of either Russia or China to trample Mongolia’s independence.

In 2005, George W. Bush became the first sitting U.S. president to visit Mongolia. The visit was seen as a gesture of thanks to Ulaanbaatar for its support in the war on terrorism, as well as a sign of the two countries’ growing closeness. How has the U.S.-Mongolia relationship evolved since Mongolia’s democratic transition in 1990? What interests does the United States have in Mongolia today?

It is true that the visit by President George W. Bush to Mongolia in 2005—albeit only four hours in duration—was then perceived as a capstone to years of courtship and evolving relations. President Bush was, indeed, the first sitting U.S. president to visit Mongolia, even though Herbert Hoover visited in his capacity as a mining engineer in 1899, thirty years before he became president. Interviews with White House officials involved in planning President Bush’s trip suggest that beyond any wish to express appreciation for Mongolia’s participation in the “coalition of the willing,” President Bush—like his father, who expressed a wish to visit Mongolia but never did, and his father’s secretary of state, James Baker, who visited twice while in office and twice since—viewed Mongolia through Texan eyes. Thus, Bush apparently expressed an affinity with Mongolia: a place where a vast, rugged land is dominated by proudly individualistic, horse-riding herdsmen.

So, it may be that personal predilections, as much as national interest, played some part in the early receptivity of Washington to establishing relations with Mongolia. By far the greater influence was a sense in Washington that it must support a fledgling democracy growing in the shadow of two communist colossi. In 1921, Mongolia became the world’s second communist state. During the late Reagan and early George H.W. Bush administrations, Mongolia showed every sign of turning its back on Communism and authoritarianism and starting down the treacherous path toward liberalization and, ultimately, democracy.

Since the establishment of diplomatic relations in 1987, the 25th anniversary of which is this year, four Mongolian presidents have visited the United States and a roster of prominent American political and military luminaries have visited Ulaanbaatar. Whenever these visits occur, the press and commentariat—both in the United States and abroad—have mused about the nature of U.S. interests in Mongolia.

Both the Chinese and the Russians have concluded that the United States aims to export its values to Mongolia, while drawing Mongolia into the U.S. security network in a way that may be deleterious to Moscow’s or Beijing’s interests. By contrast, American officials, and most Mongolians as well, assert that the relationship is founded on common values. They dismiss the notion that there is a “Mongolia card” that Washington can play in some grand geostrategic rivalry with Russia and the PRC.

American uniformed and civilian officials point out that Mongolia is entirely bounded by Russian and Chinese territory. Even if Washington was inclined to use Mongolian territory for strategic purposes, it would have to do so knowing that any troops or materiel transported to Mongolia would have to pass through Russian or Chinese territory or airspace, a severe constraint on incautious ambitions. Moreover, in its “Concept of Foreign Policy,” Mongolia pledged to “pursue a policy of refraining from joining any military alliance or grouping, allowing the use of its territory or air space against any other country, and the stationing of foreign troops or weapons, including nuclear or any other type of mass destruction weapons in its territory.”

If American statesmen are to be believed, Washington is principally interested in Mongolia because of its embrace of democracy, its devotion to economic reform and development, and its intent on acting in a responsible way—contributing constructively to, not just sucking support from—the international system. It is a value-centric approach to international political relations, tempered by a wish to avoid having a “failed” state in Asia as a provocation to chaos.

John Dinger, U.S. ambassador to Mongolia in the period 2000–2003, said in a conversation recorded at the Asia Society in New York, that in the early stages of the U.S.-Mongolia relationship, Washington regarded Mongolia as “the little democracy that could.” Beyond that, Dinger asserts, it was in the interest of the United States to support Mongolia because “weak states are more likely to threaten America’s interests than great states.” Dinger said that the United States “wanted Mongolia to succeed” because “it would contribute to the political stability in…a very rough neighborhood, where two enormous nuclear armed powers and one rogue state, North Korea, meet. It is a good place to have a stable country.”

Is the U.S.-Mongolia relationship today primarily strategic, economic, or both?

The relationship today should probably be viewed as principally ideological, rather than either strategic or economic. That may strike some readers as fantastic, given the propensity of most analysts to view international politics through the lens of realism. However, it is worth noting that, first, the United States has not sunk much capital into Mongolia, especially by comparison with what Russia and China have donated or loaned to Ulaanbaatar. Beyond that, in the minds of some political practitioners, ideological affinity—if played skillfully—can sound strategic overtones that are useful to sustain in case, at some later date, Washington seeks to transform the relationship for more explicitly strategic ends.

To date, however, even though some observers perpetually imagine that they detect the aroma of strategic intrigue in the relationship, they have not identified the simmering cauldron from which the alluring scent emerges. In an effort to locate the strategic cause for Washington’s interest in Mongolia, much has been made of the cooperative defense relationship between the United States and Mongolia. However, according to a report by the Congressional Research Service, that relationship has thus far entailed an effort to enhance English-language education of Mongolian troops so as to allow for greater interoperability with the United States and its allies, as well as upgrading professional military education. Mongolia dispatched troops in ten deployments to Iraq and has been engaged in assisting NATO’s efforts in Afghanistan. For instance, in March of this year, 130 Mongolian troops were deployed to Afghanistan, where they will serve as security guards at U.S. installations under Operation Enduring Freedom.

The United States initiated and remains active in a yearly peacekeeping exercise in Mongolia, “Khaan Quest,” which involves American and Mongolian troops, as well as those from 30 other nations engaged in peacekeeping. The long-standing effort to train Mongolian troops for international peacekeeping has enabled Mongolia to benefit from opportunities to participate in peacekeeping missions established under the United Nations flag. Since 2002, more than 5,000 Mongolian troops have served in fourteen peacekeeping missions abroad. The United States has also supported an annual joint-military exercise focused on disaster preparedness, known as “Gobi Wolf.”

As to economic interests, while these may expand in the years ahead, as American firms gain some share of the mining pie that is now being divvied up by Ulaanbaatar, to date economic self-interest has played a minor role in U.S. considerations regarding Mongolia.

As mentioned before, Beijing and Moscow have historically viewed Mongolia as within their respective spheres of influence. What effect has Ulaanbaatar’s relationship with the United States had on China’s and Russia’s expectations of whether they can influence Mongolia’s economic or strategic policies? And is there any tension between Mongolia and its physical neighbors due to its U.S. ties?

The most prominent dynamic arising from Moscow’s and Beijing’s historic associations with Mongolia probably have more to do with Russian resentment of China’s commercial and economic dominance in Mongolia rather than any tension stemming from Mongolia’s U.S. ties. A still-unbroken Russian habit of imagining itself to be the most influential foreign power in Ulaanbaatar makes Moscow quite frustrated by how deeply the Chinese have entrenched themselves in the trade and development of their mutual neighbor, at what Moscow views as its own commercial expense. It will be interesting to see how this tendency develops once Vladimir Putin resumes his role as Russia’s president on May 7 of this year.

Nevertheless, it appears that—for the time being, at least—Moscow is content to have some influence in Ulaanbaatar and is comforted by the knowledge that Beijing does not utterly dictate what choices Mongolia makes. Likewise, Beijing seems confident that Mongolia’s need of a ready market for its mining products and an equally ready source of foodstuffs, industrial products, and experienced construction laborers, will ensure a reasonably high degree of deference to the PRC, blunting any possibility that Ulaanbaatar will lean too far toward Moscow in the near term.

All that notwithstanding, the greatest irritant in this otherwise mutually accepted, albeit ephemeral, balance is the role of the United States. For Mongolia, the United States’ comparative power, wealth, democracy—and distance from Mongolia—make it a much-valued source of support and security. Of course, Ulaanbaatar is well-aware that the close bond that has arisen between it and Washington is viewed with some skepticism in Moscow and Beijing. There are plenty of unofficial musings by Chinese and Russians online and in print about the nefarious intentions of the United States to export democracy, engage in a form of containment, or otherwise use a relationship with Mongolia to the disadvantage of the Russians or Chinese, even though this discomfiture does not arise explicitly in official public pronouncements by Moscow or Beijing.

As for Ulaanbaatar, it understands well that it must tread carefully, enjoying some fruit of the U.S.-Mongolia relationship, but curbing its appetite for too close a relationship out of concern that it not alienate its two proximate neighbors. Mongolian statesmen keenly appreciate that they must live with and within the implicit bounds imposed by Moscow and Beijing. They have cleverly navigated a perilous course that has enabled them to take advantage of U.S. goodwill toward Mongolia without stumbling over either Moscow’s or Beijing’s implicit “red lines.”

There have been instances in the past when Beijing seemed to express its displeasure at the growing closeness of U.S. and Mongolian military relations. For instance, on occasion the PRC has denied permission for U.S. military transport planes to fly through Chinese airspace to Mongolia. For several years, Beijing turned aside invitations from Mongolia to participate in—or even to send observers to—the annual “Khaan Quest” peacekeeping mission, in which the United States has played a prominent role. Ultimately, Beijing relented and sent a few observers, but swiftly thereafter established its own bilateral peacekeeping exercises with Mongolia.

The PRC has gone overboard in stating its respect for Mongolia’s independence, territorial integrity, and sovereignty in almost every bilateral document emerging since the two states reaffirmed their diplomatic relationship in 1994, following decades of tension. However, in interviews Chinese diplomats and think tank analysts have cautioned that Beijing will not sit idly by if Mongolia allows foreign bases to be established on Mongolian territory, or foreign troops to be stationed there. Doing so, they state, would challenge Chinese national security. It seems that these are oblique references to the presumed intentions of the United States.

Likewise, several years ago, Russia chafed at Mongolia’s eagerness to accept $285 million from the U.S. Millennium Challenge Corporation to upgrade a portion of the rail in Mongolia, a line that is jointly owned by Russian and Mongolian enterprises—a vestige of Soviet dominance in an earlier era. Mongolia was obliged to turn the funds aside, accepted Russian loans to upgrade the rail, and thereafter negotiated a different use for the sum that Washington was prepared to donate.

These and other signs suggest that on the surface, Moscow and Beijing have no wish to interfere too blatantly in Mongolia’s relationship with the United States, but are determined that Mongolia not grow too close to Washington in ways that either the Russian or Chinese government sees as imposing on its own interests. So, while there certainly are tensions in Mongolia’s relationship with both Moscow and Beijing that arise from Ulaanbaatar’s ties to Washington, both Mongolian and American officials have been vigilant in their efforts to avoid provoking Russian or Chinese sensibilities. Both parties understand that Mongolia cannot escape its geography and that the United States, whatever goodwill it may have toward Mongolia, is not likely to be in a position to shield Mongolia from the wrath of its neighbors, should they be provoked.

What role, if any, does Mongolia play in the United States’ new strategic vision for Asia? How does Ulaanbaatar see the United States’ role in Mongolia’s future?

In January 2012, the United States released a document titled “Sustaining U.S. Global Leadership: Priorities for 21st Century Defense,” which was widely understood as offering a new strategic vision for the United States. It is unsurprising that the word “Mongolia” does not even appear in that document. The principal focus of U.S. strategic interest in Asia is in the maritime domain, not deep in the Eurasian heartland, where Mongolia is situated. One can see this from the repeated reference within the document to concerns about “Asia-Pacific.”

To be sure, there are ample references to “friends and allies,” and Mongolia is certainly a friend. In extremis, one can surely imagine ways in which that friendship may be useful to the advancement of U.S. strategic objectives, but one can also imagine how difficult it would be for the United States to exploit such a friendship without exposing Mongolia to countervailing pressures from either Moscow or Beijing, or both. So, I would guess that the United States does not presently expect Mongolia to serve any role in its strategic vision in Asia, other than the one it already plays: a young democracy that shares ideals the United States holds dear, engaged peacefully and constructively in the international community by active involvement in regional and international organizations that promote objectives from which both countries benefit, as well as by sustaining friendly relations with its neighbors, near and far.

As for the role Mongolia hopes the United States will play in Mongolia’s future, Ulaanbaatar would undoubtedly look with great pleasure on more substantial American munificence, investment, and attention. Mongolia already derives a degree of moral support from the interest that Washington has taken in its development, but would welcome even more. In August 2011, Vice President Joe Biden visited Ulaanbaatar, which certainly was another tangible sign of American interest, but the United States would have to do a good deal of work to keep up with the frequency of visits to Mongolia by Russian and Chinese political luminaries, and of Mongolian statesmen to Moscow and Beijing.

Some Mongolian scholars have said in private conversations that they hope the U.S. relationship with Mongolia will evolve to be as robust as the one the United States has with Taiwan. In that relationship, unlike the one that the United States has with Mongolia, defense cooperation entails not peacekeeping and disaster relief, but the upgrading of defense capabilities, the supply of military hardware, and an implied determination by the United States to defend Taiwan if it came under attack. For the most part, though, the Mongolian political elite seem to understand that there are limits to how much they can expect of the United States, and how much their two neighbors will tolerate.

Allen Wagner is an intern at NBR. A recent graduate of the University of Washington, Allen holds a BA in Asian Studies and Political Science.

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