All is well in Mongolia?

By Julian Dierkes

After the recent flurry of reporting (Economist I, Economist II, National Post, Globe & Mail, The Northern Miner, The Financial Times, The Australian, on the electionineering sparring match between some Mongolian MPs and, who?, Ivanhoe?, the current government? China? some writers (Peter Koven for the National Post, Brenda Mouw for the Globe & Mail) are now giving the all clear because the Government of Mongolia has released a joint statement with Ivanhoe and Rio Tinto reaffirming support for the 2009 Investment Agreement.

This “all clear” is appropriate, but also comes a bit too quickly in my view.

Yes, All Clear!

Yes, negotiations over the Investment Agreement are not being reopened, but that’s not much of a surprise. A succession of governments in Mongolia have fought for and supported a comprehensive agreement with the foreign investors who are making development of the OT project possible in a way that would not be imaginable through domestic efforts alone (technological as well as financial hurdles). I emphasize governments to mean the executive, i.e. the president and cabinet, not members of the Ikh Khural.

Because there was a petition and it was addressed (though I wonder what exactly any discussions may have consisted of other than recognizing that IVN and RT responded, “No way are we re-negotiating at this point!”), this should quell some of the agitation among MPs.

Namely, if my analyses are right that a) this is primarily an election issues, and b) we will not see the emergence of a stable anti- or pro-mining political movement, then this means that there should be no formal attempts to revisit this issue, at least until this current government including its coalition arrangement fall, or the election, possibly even the presidential election in 2013.

Hang on a Second!

The underlying issue hasn’t gone away and we’re likely to see agitation on this issue – namely how to structure resource development so that it satisfies social demands for equitable and sustainable development – for years to come. We saw lots of discussions, including some grandstanding and nationalism, but also some very reasonable attempts to come to sensible solutions, for the five years leading up to the OT IA. It is therefore not at all surprising to see that these discussions are continuing and not terribly insightful to predict that they will continue.

What is less fortunate in this entire situation is that politicians’ attempts to initiate such discussions are frequently not channeled into a careful consideration of underlying issues involved, prompting much more long-term thinking and deeper analysis, but instead that the past two weeks clearly point to electoral positioning. Some of the people involved appear to be prioritizing personal political ambitions over national development goals which may OR MAY NOT best be served by attracting foreign investors to develop mineral deposits.

Musings that destabilize the investment climate and, possibly, Mongolia’s international positions for the sole benefit of possible electoral gain are certainly not a way to move a careful analysis of the issues facing Mongolia forward.

Other Immediate Implications

Perhaps the start and stop of re-negotiations cleared the air a little bit, but it’s hard not to think that the recent turmoil will have an impact on further negotiations regarding Tavan Tolgoi, the large coal project that the government wants to subcontract to international mining companies.

This entry was posted in International Agreements, Mining, Oyu Tolgoi, Politics, Research on Mongolia and tagged . Bookmark the permalink.

1 Response to All is well in Mongolia?

  1. friendofMongolia says:

    “Some of the people involved appear to be prioritizing personal political ambitions over national development goals”. —be careful. The majority of the parliament members are rich business people who usually prioritise their own agendas over the needs of the people. This certainly happended during the previous agreements with Dirty Bob.

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