U.S. Secretary of State, John Kerry, visited Mongolia on Sunday as Mongolian leadership aims to foster closer ties to the United States, according to PBS. Mongolia retains partnerships with China and Russia, but will also align closer with Washington to secure economic stability. Mongolian elections take place next month as some protesters call for the disbanding of parliament.
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.
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.
Mongolia reached a settlement over an arbitration award requiring the government to pay $100 million to Canada-based Khan Resources, according to Reuters. Under the terms, Mongolia will pay $70 million by May 15, 2016, including another term barring the government from trying to have the award agreement revoked in France, and Khan will cease legal action against Mongolia in seizing commercial assets to fulfill payment.
The Mongolian government approved a deal with Canada-based Centerra Gold Inc. to mine gold reserves in the Gatsurt Gold region, according to Reuters. The deal stipulates that Centerra hold 66% equity in the region, while the government retains 34% equity. Mongolia aims to bring in additional revenue this year after suffering a meager growth rate of around 3.0% in 2015.
This year marked the 25th anniversary of Mongolia’s democratic revolution. So after 25 years of democracy, where does Mongolia stand? In addition, what role does Asia’s only post-state socialist democracy play internationally?
Politically, it was a quiet year. The Mongolian economy remains moribund largely due to domestic policy decisions, exacerbated by international commodity prices. Yet Mongolia has continued to be active in the international arena.
Mongolia plunges further into an economic crisis, stemming from lacking Chinese demand and falling commodities prices, according to Bloomberg Business. The government announced emergency austerity measures that would consolidate government departments and cut various public-sector jobs. In 2014, over 80 percent of Mongolia’s export sector comprised of commodities going to China, and the Chinese provide 30 percent of the nation’s imports.
International mining firm, Rio Tinto Ltd., plans to invest anywhere from $250 to $350 million in Mongolia’s Oyu Tolgoi construction efforts, according to Reuters. Oyu Tolgoi is a massive gold and copper mine that is crucial for Mongolia’s economy. The second phase of the construction process expects to commence in 2015. Development of the mine is just part of the government’s larger scheme to modernize Mongolia.
The economy expects to grow by 7 percent in 2014. This is a healthy pace. But the majority of this growth has come from the mining sector, which experienced a significant boost from the production ramp up in the first phase of the Oyu Tolgoi project.
Mongolia faced several challenges on the economic front in 2014. The country needed to address these issues in order to avoid falling into another recession similar to that of 2008–09. Since the beginning of the year, unfortunately, the economic environment has not improved. Some might even argue it worsened.
It was meant to be a relatively quiet year for Mongolia. There were no parliamentary or presidential elections and most observers expected that some of the economic troubles Mongolia has been facing would be resolved. But the year brought foreign policy turmoil and a continuing economic crisis, and is now ending amidst domestic political chaos.
