Guest Post: Mongolian “Resource Nationalism”

Guest Post by Marissa Smith

Complicating Understandings of Mongolian “Resource Nationalism” Ahead of the Parliamentary Elections

The concept of “resource nationalism” has become prevalent not only within mineral industry and investment communities but also in popular media to describe difficult encounters between global mining companies and local governments. The term has an ominous connotation, compounding the usual sense of irrationality associated with “nationalism” with that of greed. Though it is important to consider the role of appeals to raw emotion such as anger and frustration in electoral politics, I hope to enrich our understanding of current Mongolian electoral politics through the examination of Mongolian understandings of economy and governance that are held throughout the society as a result of long-term processes rather than short-term effects of demagoguery.

I base my suggestions on continuing ethnographic research conducted since 2007 for the most part in Erdenet, but also in Ulaanbaatar and visits to Hentii, Bayanhongor, Uvurhangai and the Altai region. I also base my analysis in no small part to time spent living in and studying Russian society.

Attending to wider understandings of economy and governance may be especially important in the Mongolian context. Enkhbayar’s pre-arrest release of documents supposedly revealing discussions between top politicians after the 2008 protests and his televised interview/arrest demonstrate that leaders rise and fall quickly in Mongolia and they require the support not only of business and political elites but the wider population. I am now considering these features of broad support for powerful leaders and their quick changes in fortune through an analysis of power and hierarchy in the workplace and home, but this is beyond the scope of this post. In any case, currently voters seem to be arguing not whether Enkhbayar’s policies are sound, but whether he is a criminal or a victim. Either way, many are calling the incident a “show” (шоу). The policy path that Enkhbayar or any other Mongolian leader should take is clear and undisputed for many Mongolians, and not only Enkhbayar is failing to successfully trod it.

As I suggested in a comment on this blog a few days ago, Mongolians are widely unsatisfied with the very measures that commentators most often point to as especially “populist:” nationalization of mineral industries and cash handouts. I will focus on two aspects of Mongolian economic expectations and practice to suggest why these moves are not popular with Mongolians, including perhaps in some contexts among politicians themselves.

1. Soviet legacies: industrial cities and international development with national characteristics

Across generations, professions and income levels Mongolians are today expressing their hopes that Oyu Tolgoi will become the center of a new city as Erdenet did in the late 1970s. Erdenet was planned and developed as a city, with a constellation of smaller industrial units, such as meat processing and carpet making, around a major industrial complex, the mine and mineral processing factory. Planning was carried out by Soviet agencies and Mongolians were trained under Soviet specialists, including from Kazak and Armenian copper mining and processing enterprises. Today Erdenet is by far Mongolia’s single largest industrial and economic unit. It continues to be a Russian-Mongolian joint corporaion.

This expectation of a “modern” Erdenet indexes Mongolian ideas of development as not only centrally planned but based around imports of infrastructure and technology executed with foreign assistance. With this in mind, one can see how total nationalization and cash handouts might be viewed as, at best, temporary solutions. Mongolians view their country as needing assistance from more “developed” countries (and their corporations) to develop not only Mongolia’s infrastructure and industrial base but also professionals and workers. It is also important to point out that this does not necessarily conflict with wide participation and high valuation of nomadic pastoralism among Mongolians. As socialism itself was viewed to be developed along national lines, so today is industry and now capitalism. Indeed, for the past seventy or so years many Mongolians (and not a few foreigners) have intended to technologically enrich nomadic pastoralism rather than abandon or replace it. Leading to my next point, I would also point out that like industry and unlike service sectors, nomadic pastoralism is based on production of tangibles. Employment in taxi driving, teaching, and medicine on the other hand have ambiguous value.

2. Finance as foreign

Recently, Mongolians have been trying to plan large infrastructure projects and seek foreign partners to provide funds and technology for their realization. The way that Mongolians have been going about the Tavan Tolgoi tenders and IPO and the development of an industrial park at Sainshand suggest that ideas that many international investors hold as universal, at least among business and finance elites, are not sinking in. This is in large part due to a difference between nationally-oriented values and globally or individually oriented ones. But I would also point out that Mongolians largely do not accept the value of “financial products” or speculation (consider not only socialism but also the Manchu period when “predatory lending” by Chinese traders was rampant). It is interesting in this context to note that Mongolian business is dominated by conglomerates such as Max Group, Nomin Holdings, Monnis Group, and Erel Group based on small mines and mineral processing, imports of consumer goods, construction, and processing of raw materials sourced from nomadic pastoralists. Though involvement in insurance by these conglomerates seems to be growing, Erel Bank is exceptional as part of a conglomerate also holding placer gold mines and the Darkhan cement factory, and the Trade and Development Bank, arguably Mongolia’s most prestigious financial institution, is headed up by an American. In this context, understandings of highly flexible multinationals that open and close mines as global markets and financial opportunities shift are unlikely to be emotionally positive, and the service and financial sectors that multinationals claim will arise from mining income and replace it are also unlikely to develop. Thus, Mongolian dissatisfaction with the likes of Rio Tinto and politicians working with them are unlikely to be short-term.

With these factors in mind, it is more understandable that Mongolian encounters with foreign investment have been complicated and that Mongolian politicians campaign on platforms that seem simplistic and disingenuous especially to international investors. Mongolian electoral politics is in part based on a combination of highly divergent understandings between Mongolians and the foreign partners they hope to enlist in national projects with a political culture requiring leaders to have wide support and that is accepting of frequent changes in leadership.

About Marissa Smith

Marissa Smith is a PhD Candidate in the Department of Anthropology at Princeton University. She has also studied Russian, Mongolian and anthropology at Beloit College, the Russian State University for the Humanities, and the School for International Training’s Mongolia program. Her ongoing dissertation research explores the dual involvement of Erdenet Mining Corporation engineers and workers in both urban industrial spaces and rural pastoral ones to investigate domestic and global economic and political processes at work in Mongolia.

About Julian Dierkes

Julian Dierkes is a sociologist by training (PhD Princeton Univ) and a Mongolist by choice and passion since around 2005. He teaches in the Master of Public Policy and Global Affairs at the University of British Columbia in Vancouver, Canada. He toots and tweets @jdierkes
This entry was posted in Development, Erdenet, Ikh Khural 2012, Marissa Smith, Mining, Nationalism, Oyu Tolgoi, Policy, Politics, Social Issues. Bookmark the permalink.

7 Responses to Guest Post: Mongolian “Resource Nationalism”

  1. Dave says:

    1 quesiton on Oyu Tolgoi

    How are Rio Tinto playing their hand? Are they trying to drive a hard bargain? Get the Mongolian government to pay for most of the infrastructure, and then take the profit?

    • Not much from RT on the proposal for further investment regulation, mostly staying quiet. My sense is that frankly, RT is so busy with managing the OT project and its huge logistical and organizational demands that they might not have the time to be driving any bargains at the moment. Anything formal would be on hold pending the election in any case, I would think.

  2. Lauren Bonilla says:

    Marissa, I very much agree with your point that the notion of “resource nationalism” in the Mongolian context does not just refer to state-control. There is a broader idea that mining can (and perhaps should) involve domestic and foreign private capital and business interests so long as there are benefits to Mongolians.

    The developments that are taking place in Tsogttsetsii soum in Omnogobi aimag–the site of the Tavan Tolgoi coal deposit–are in line with the Erdenet model. These developments are led not by the state-owned Erdenes Tavan Tolgoi, but by Energy Resources, a private Mongolian company part of the powerful MCS conglomerate that also gets financing from the European Bank for Reconstruction and Development. However, while Energy is working with the Mongolian government to provide the tangible development assets that people expect (electricity, paved roads, apartment buildings, and schools), the mega-mining areas of the Gobi can never become viable, livable places with a future beyond mining. The people of Erdenet have access to water, relatively clean air, and fresh meat; the people of Tsogttestii are drinking salty water, breathing coal dust, and eating the meat of skinny and sickly animals.

    • Marissa Smith says:

      Yes, and there are certainly alot of anxieties about Erdenet’s sustainability as well. I was having a conversation with a Mongolian working on a World Bank funded project when they said that the Erdenet Mining Corporation should do more. The ger districts are huge, people are coming not just from Zavkhan and Uvs but Hovd, Bayan Ulgii, and Gov-Altai with their yaks and camels. Meanwhile, longterm residents are highly concerned about what will happen in the future as the ore quality degrades.

      Water is an issue even in Erdenet. The mining processes use water recycled from the tailings pond (which is enormous, check out Google Earth), but the city water is pumped from the Selenge River, 40 km away. Tailings are also easily airborne so at least some of the meat is coming from animals grazing grass grown on contaminated soils and drinking out of the tailings pond. There is nothing like the road and coal dust I understand there to be in Umnugov however.

      • Marissa Smith says:

        I meant to say, “for example, I was just having a conversation with a Mongolian”…

  3. Pingback: No Stable Anti-Mining Coalition | Mongolia Today

  4. Anna says:

    Hi Marissa,
    From the current events it seems there is a drumming up of resource nationalism in Mongolia – with government demanding renegotiation of Oyu Tolgoi contract, president blaming Rio for not being transparent. I am wondering if there is a general feeling of frustration towards the mining projects among the public – maybe they felt the previous promises by mining companies are unfulfilled ?

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