By Julian Dierkes
An article in the January 21 2012 edition of The Economist vividly describes Ulaanbaatar and Oyu Tolgoi in the winter of 2012. The story that some have been telling for some years, “Mongolia is the next Eldorado” is repeated here with only some cautionary notes on Dutch disease, inflation and the like.
Some of the usual suspects when it comes to foreign views of Mongolian development, turn up in this article, like Munhkbayar of the Ongi River Movement and the Hon. Oyun. Ms Oyun especially is a wonderful interlocutor when it comes to understanding contemporary Mongolia, of course.
What I find missing in the article is the extent to which the promise of a mining boom is skewing and distorting all aspects of Mongolian development – economic, political and social.
This is the point I made when I presented at a symposium at Hokkaido University yesterday.
The Central Role of Resource Policy for Mongolian Development in the Past and Coming 10 Years on Prezi
Take the political populism that the Economist article refers to. This is a product – in my mind – of the on-going discussion about what to do with coming mining riches in the 2000s. While political development was focused on democratization and the construction of the attendant institutions in the 1990s, the 2000s were the decade where patronage politics established itself as a product of politicians desire to join in the decision-making (and, apparently, spoils) about mining policy. Rewards for supporters and clinging to power (note the long duration of the grand DP and MPP coalition) have become the political modus operandi.
The Economist article is quite right to ask whether Mongolia will be able to “handle” the revenue streams that will be growing steadily, especially with the beginning of production at Oyu Tolgoi. Elsewhere, I’ve written and spoken about the long-term stability of democracy in Mongolia. One of the main concerns beyond Dutch disease and related macroeconomic threats is rising inequality. Currently, while the poor are not getting poorer, they are also not getting significantly less poor through the increased economic activity related to mining. Ultimately, even in a small population, not everyone will be able to work at OT, TT or any other large and small projects that might still develop. So far, the Mongolian government has primarily headed for an emphasis on transfer payments (to children, to the old, etc.) and financial stakes in mining projects (whether that is the government stake in OT or the stakes in TT that are to be distributed). Whether that will be a successful strategy in the long term to avoid unrest and to begin to think about a diversification of the Mongolian economy will remain to be seen.
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