By Julian Dierkes
Repercussions of the Russian invasion of Ukraine were a major topic of conversation during my visit to Mongolia this August. I had arrived with a sense of frustration that the MPP government wouldn’t publicly take a stance to defend Ukraine, but was persuaded through several conversations to see Mongolia’s abstention on UN resolutions as a version of sticking their neck out as far as they feel they can.
I wrote an article for Foreign Policy on this general geopolitical challenge that Mongolia is facing. I found much of my conclusions confirmed by conversations in Ulaanbaatar in November.
This is the question I would like to ask here today: how was Mongolia able to resist Russian pressure in 2009 and what can we conclude about the current situation from understanding that example?
Well, then logical question would be Is there any actual or expressed threat from Russia to Mongolia in case Mongolia decides to vote against the Russian claim?
— Usukhuu (@ChUsukhbold) October 13, 2022
One of my conversations produced a very graphic version of what Mongolia’s geopolitical position is and feels like.
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Note the looming buildings that are leaving a very narrow visual field for the Mongolian flag.
Here’s another version of visualizing that situation:
Mongolia has to pretend to be a blind when in the room is a killer pic.twitter.com/xqp2o1nPVp
— Батый (@batengineer) October 28, 2022
Another version of this is to think back to the trash compactor that Luke Skywalker gets himself stuck in on the Death Star when the walls start moving in.
What was reinforced to me through conversations was the sense that no one would come to Mongolia’s defence in the way that Ukraine is at least receiving some support from NATO countries. That is in part because there is no access to support landlocked Mongolia, but also because it seems unlikely that Mongolia would be able to mobilize a coalition of support.
Conventional Wisdom: Resisting Russia
The general perception is that because of Mongolia’s energy dependency on Russia in particular, it would be impossible for the Mongolian government to resist any Russian government requests in a serious way. If the government of Mongolia angers Russia, energy flows might be curtailed leaving Mongolia very vulnerable, especially in the winter. This is akin to an acknowledgment that any agreement between China and Russia adds up to a loss of manoeuvring room for an independent Mongolian foreign policy. When I heard these kind of arguments, however, I wanted to consider examples of Mongolian resistance in recent times.
SCO: Resisting China
The first example that came to my mind is the Shanghai Cooperation Organization. It has long been assumed that the Chinese regime is applying some – though unclear how much – pressure on the Mongolian government to level up from an observer to a full member of the SCO. We have examined this issue several times in the past. L Bolor has also looked at the recent SCO Summit from a similar perspective. Yet, despite this presumed pressure, Mongolia retains its observer status.
The next example is the attempted gas station takeover in 2008 and that is the example I want to focus on below.
Giving in to Russian Demands: Uranium Mining
But to set the stage for that and from a Canadian perspective, we might also consider uranium mining. That had been a sector that Canadian investors had been active in, including Western Prospector and Khan Resources. To make a long story short, various licenses were expropriated in October 2009, presumably at the behest of the Russian government, and ultimately, the Mongolian government had to pay more than $80m to Canadian investors based on this expropriation. A bad deal for the Mongolian government, clearly. But, perhaps, retribution for resisting Rosneft attempt to integrate its fuel business in Mongolia by setting up its own gas stations as a distribution network?
The Gas Station Thing and Its Context
Without going into a great amount of detail which is difficult to reconstruct, essentially Rosneft was going to set up a distribution network for its petroleum products, i.e. a network of gas stations. All refined fuels are imported from Russia already, so the distribution network would have given Rosneft perfect vertical integration from production through distribution.
The prime minister at the time was S Bayar, notable also for getting the Investment Agreement for Oyu Tolgoi signed. Ultimately, parliament rejected the request from Rosneft to set up a distribution network and Bayar was able to point to that rejection as a face-saving way to avoid denying the application outright, but to most observers, he was the driving force behind this defiance of a Russian request. Obviously, there have been several deals on fuel supplies with Rosneft since then (see 2019 Jargal de Facto article on Rosneft dealings), so it doesn’t appear that there was much of a “punishment” for this defiance, making this an example of outright defiance of a Russian wish by the Mongolian government to consider what might happen if there were direct statements criticizing Moscow for aggression against Ukraine or a vote supporting the various UN attempts to censure Russia.
S Bayar seems an unlikely resistor to Russian requests and wishes, how was it possible that he became the face of the most notable instance of resistance in 2008?
He had received his university education at Moscow State Univ in the late 1970s and was ambassador to Russia from 2001 to 2005. At the time, he was said to be quite close and friendly with the Russian leadership. In 2022, this biography would make him a likely member of the Russophile community in Mongolia.
I have only met Bayar very briefly once, so I don’t have any insights into his character or what might have led him to defy Russia in 2008. I have also not had a chance to look at his biography that has received praise from many directions. If any readers wanted to comment on this post drawing on Bayar’s memoirs, that would be very welcome.
Was it just self-confidence?
So, what might have prompted an apparently Russophile prime minister who was generally perceived to be in office primarily to get the OT agreement signed, to resist Russia? All the arguments about Mongolia’s energy dependence on Russia that hold today, held then. Russia was not the international quasi-pariah that it has become now, so there was no glory in defiance, third neighbours did not cheer this defiance on particularly loudly, for example. The relationship with China was also not fundamentally different. Yes, this was pre-“wolf diplomacy” and a pathway toward greater integration with the U.S. and OECD countries generally seemed more possible, but Mongolia was just as dependent on China for consumer goods imports then as it is now.
In several conversations I had, the only explanation that was offered was, “those were different times”, meaning that Mongolia was ascendent and full of self-confidence.
The conclusion of an OT investment agreement was on the horizon and that buoyed the Mongolian economy and mood. Some of the implications of negotiations over an equity stake in the operation – like the debt that would have to be carried to acquire that stake until it was finally written off by Rio Tinto earlier this year – were not yet apparent.
The MPRP had won a comfortable majority in the parliamentary election that year (45 of 76 seats), re-confirming Bayar as prime minister. The riots surrounding the election had obviously been a shock to many Mongolians and to international observers, but after that had passed by and the government was duly seated, the positive mood returned. Perhaps crucially, the MPRP did not govern on its own, despite its majority, but instead Bayar was elected prime minister by an MPRP-DP coalition. This may have been significant in defying Rosneft as Bayar was able to not only point to the will of parliament as the locus of resistance, but also implicate the DP as a coalition partner, thus presumably deflecting direct criticism of his government.
The Dalai Lama was still coming to visit Mongolia occasionally in open defiance of the wishes of the Chinese regime. There really wasn’t very much of a relationship with Russia at the time.
Implied threats or lacking self-confidence
There is no way for me to claim whether there have been quiet threats against Mongolia from Russia to prevent the government from taking the stance on Ukraine that some at least are calling for. But, if it was a sense of general confidence and optimism that made defiance of Russia possible in 2008, perhaps that is what is missing at the moment.
Obviously, overall confidence would be a parsimonious explanation, but can’t be the entire story. Alternative explanations would focus on private interactions between the Mongolian and Russian governments, but those are not available to a public analysis.
Or, does the explanation lie in less belligerence on the part of Russia/V Putin?
A final answer to these questions is hard to find, but I hope that thinking through this question might provide some inspiration for thinking about future Mongolian foreign policy, for example in the event of a further implosion of Russia or in other scenarios.