Mongolia: the next global power player?

A stopover in Mongolia by the new US secretary of defence during his first foreign trip since taking on the role has prompted questions over Washington’s interest in the region.

Mark Esper - who replaced James “Mad Dog” Mattis in July - met senior Mongolian politicians in the country’s capital of Ulaanbaatar on Thursday, in a bid to “deepen US ties with the nation”, according to the The Washington Post.

“It is my deep privilege to be here, to be with you and to have the opportunity to look at different ways we can further strengthen the ties between our two countries,” Esper said prior to the meeting.

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Mongolia’s leaders proved equally conciliatory, welcoming the new US defence chief with a ceremony during which he was gifted a seven-year-old horse - “the ultimate status gift for a warrior”, says Business Insider.

But the Trump administration appears to be seeking a lot more than a stallion in courting closer ties with Mongolia: Washington sees the central Asian nation, sandwiched between China to the south and Russia to the north, as a key strategic ally in the region.

When it comes to resisting the ever-reaching hands of Beijing and Moscow, Mongolia has form. Following the overthrow of its authoritarian communist regime in 1990, the country has sought to maintain independence from China and Russia by developing its relations with other world powers, strongly favouring United Nations sanctions against North Korea and once describing the US as a “third neighbour”.

But if Washington already has a friend in Ulaanbaatar, what is behind the recent rekindling of the US-Mongolia love affair? And could the Trump administration help Mongolia become the world’s most unlikely superpower?

How are Mongolia-China relations?

Despite their geographical closeness, Mongolian leaders have worked hard to distance themselves from Moscow and Beijing.

In 2017, businessman Khaltmaa Battulga - often described as “Mongolia’s Trump” - was elected to the presidency on a “populist and sometimes anti-Chinese platform”, signally the country’s increasingly disillusionment with “Beijing’s growing regional dominance”, says Reuters.

All the same, Mongolia remains somewhat hamstrung by its location, with more than 90% of its trade currently going through China, according to Foreign Policy magazine.

Ulaanbaatar is understood to be seeking alternative trade routes and production methods, including “help developing cashmere wool, one of its main exports, into finished products so that it doesn’t have to be shipped to China for processing”, says Bloomberg.

Mongolia has also risked China’s wrath by teaming up with the US in military operations. During his visit this week, Esper noted that Mongolia “has been a reliable contributor to operations in Afghanistan and provides unique cold-weather training opportunities for US troops”, Foreign Policy reports.

What is the US doing?

This growing tension between China and Mongolia has set the stage for a US diplomatic charm offensive.

Washington looks eager to fill the trade gap left by Mongolia’s shift away from Beijing, and President Battulga has expressed similar enthusiasm, hinting that his government is seeking investment from its “third neighbours”.

The US seems likely to fulfil this hope as it wages an escalating trade war with China that has seen both countries using investments in infrastructure to cement their ties with global allies. While China and Russia throw money around in the South Pacific, Southeast Asia, Africa and the Middle East, Mongolia would be a strategic coup for the US, acting as a key economic ally in central Asia.

However, some regional experts have questioned what Mongolia really stands to gain from such an economic partnership.

In an article on the website of Seoul-based think-tank the Asan Institute for Policy Studies, Sergey Radchenko of Cardiff University says that “US-Mongolia trade relations failed to clear even $100m in 2017. Meanwhile, 87.8% of Mongolian exports went to China in 2017, and 41.8% of imports came from China.”

The “real money” lies in China, and to a lesser extent in Russia, and “the opportunity to profit comes from being sandwiched between the two”, he continues.

That is “why Mongolian policymakers have long been attached to the idea of building ‘economic corridors’ connecting China and Russia”, while Ulaanbaatar’s ongoing fling with the US appears to amount to a diplomatic exercise exemplified by the so-called Mongolia Third Neighbour Trade Act, Radchenko argues.

The US bill, which has yet to appear before Congress, claims that Washington can help rescue Mongolia from “the overwhelming influence of its much larger and more populous neighbours” simply by waiving duties on Mongolian cashmere exports.

What about Russia?

Despite their stormy relations during the Cold War, Mongolia now enjoys a relatively amicable - if distant - relationship with Russia.

However, the current US administration takes a dimmer view of Moscow, and last year put Russia at the centre of a new national defence strategy, “shifting priorities after more than a decade and a half of focusing on the fight against Islamist militants”, Reuters says.

From a purely military stance, Mongolia’s strategic location could prove useful to the US, with a senior Pentagon official recently commenting that as the landlocked East Asian nation “lives in a tough neighborhood surrounded by Russia and China”, it can be a “major contributor to peacekeeping”, reports Foreign Policy.

Meanwhile, Russia is keeping a close eye on the relationship between Trump and Battulga. Reporting on the recently signed Declaration on the Strategic Partnership between the United States of America and Mongolia, Russian state news agency TASS says that “experts” claim such agreements are largely meaningless and merely designed to demonstrate growing international support for Mongolia.

“There will be no significant consequences [for Mongolia’s relations with Russia and China] after this declaration,” Valdai International Discussion Club chair Andrey Systritsky told the agency. “It is rather a demonstrative political gesture aimed at showing to Mongolia’s neighbours that Mongolia has some additional real or imaginary political support.”

Systritsky also claimed that Mongolia has nothing to fear from its neighbours, insisting that Ulaanbaatar “is somewhat cautious about China, not because there is a specific reason for that, but just because China is so big and strong”.

Will Mongolia become a superpower?

It’s unlikely but possible.

Mongolia has a wealth of natural resources and, according to Wired, spent much of the 2000s “in the midst of an epic gold rush spawning the modern equivalent of the forty-niners who rushed to California in 1849”. The country also boasts vast deposits of coal and copper - two resources needed by China and Russia for housing construction and energy.

Indeed, in the early 2010s pundits were predicting that a mining boom would make Mongolia one of the fastest-growing economies in the world by 2020.

Yet instead, the country’s debt has surged, currency value has plummeted and the national budget deficit has widened alarmingly, while “foreign investment has dried up and economic growth all but ceased”, Bloomberg reported in 2017.

The news site blamed this downturn, in large part, on over-reliance on mining and on trade with China, which saw its economy slow significantly in the mid-2010s - another reason why Mongolia wishes to form trade relations with other nations.

An additional hurdle to claiming superpower status is Mongolia’s standing in the eyes of the international community, argues Cardiff University’s Radchenko. Previous Mongolian governments have tried to deepen diplomatic ties with the West multiple times, with “very limited results”, he writes on the Asan Institute website.

As recently as last year, Radchenko notes, Ulaanbaatar’s offer to host the first meeting between North Korea’s leader Kim Jong Un and Donald Trump was snubbed in favour of Singapore, demonstrating that the Mongolians had “overrated themselves” as global powerbrokers - at least for now.