Guest Post: Canada and Mongolia – The Enhanced Development Partnership that Never Was

By Stephen Brown

In the early 2010s, the Canadian government, under Conservative Prime Minister Stephen Harper, developed a special interest in Mongolia. In 2014, after a flurry of diplomatic visits, Canada designated Mongolia a “country of focus” for its development assistance. This decision placed Mongolia on Canada’s list of 25 countries in which it would concentrate its foreign aid and committed Canada to building a privileged development relationship with Mongolia. But major aid never really flowed, and any signs of an enhanced partnership had fizzled out by 2022. What went wrong?

A weak starting point

Canada did not have a bilateral development program in Mongolia in 2014, when it decided to concentrate its aid there. It had only opened an embassy in Ulaanbaatar in 2008, at the urging of Canadian mining companies. It thus had limited experience and knowledge of development issues on the ground. As a result, it was poorly placed to quickly build up an aid program.

A poorly designed program

Canada wanted its aid to focus on the extractive sector in order to bring benefits to its own mining companies. Within a couple of years, Canada launched two major aid projects worth Cdn$27 million, both of which supported the extractive sector.

It is hard to build a development program almost from scratch. And there must have been a lot of pressure to get projects up and running fast. The Canadian government conducted little consultation with local actors and, rather than hold an open call for proposals, awarded the grants to a Canadian for-profit consultancy (then known as Agriteam, now Alinea International) and a Canadian NGO (Canadian Executive Service Organization [CESO], now Catalyste+).

Both projects focused on bringing Canadians to Mongolia to train local people. For instance, CESO sent 77 Canadians to Mongolia, almost all on short-term missions. This form of aid, capacity building, has been widely criticized for many decades for being expensive and not especially effective. While I was conducting interviews in Ulaanbaatar in 2018 for a research project, several Mongolians criticized the projects for bringing in only Canadians, most of whom knew nothing about the Mongolian context. One Mongolian, whose organization received Canadian “experts”, complained that “mostly one has to train them first”. Why not use the funds to hire Mongolians or people of other nationalities who have more relevant knowledge and experience? Or give the money to Mongolian organizations to organize their own activities?

It could be that these projects achieved some important results. An official evaluation would be required to provide clear answers. However, the design of the projects and their chosen aid modality suggest that they were flawed from the start. Even though the two projects have ended, the websites of Global Affairs Canada and the two organizations have trouble making a convincing case that the projects had much impact.

A confusing “theory of change”

A Canadian Embassy official in Ulaanbaatar flatly admitted to me, “We’re here because of the mining”. But it was never clear that more mining would reduce poverty, which is the legislated central purpose of Canadian aid. In theory, the Mongolian government could use the extra mining-related revenue to finance poverty reduction programs. However, its record in doing so was rather weak. Even the World Bank has warned that Mongolia has becoming overly “addicted” to mineral wealth. Had Canada wanted to help diversify the economy and pursue more promising paths to poverty reduction, the government of Mongolia had a long list of other sectors in which it was seeking assistance.

The same Canadian Embassy official stated that “The aid program is designed to help Canadian investment”. However, it was also unclear how the mining-focused aid program would actually benefit Canadian companies. Assuming it succeeded in improving the investment environment in the extractive sector, which is far from clear, Canadian companies could make more profits.

However, even before Mongolia became a “country of focus”, Julian Dierkes pointed out in a blog post that there was hardly any significant Canadian involvement in mining in Mongolia, with one notable exception – Ivanhoe, later renamed Turquoise Hill. As he noted, it was “a stretch to call Ivanhoe Mines a Canadian company in any aspect other than its mailing address and the location for its corporate headquarters”. Moreover, it has since been sold to Rio Tinto, a British-Australian behemoth. So there aren’t actually any major Canadian mining interests in Mongolia. And Canadian companies can receive support from the trade section at the Canadian embassy there. As in the past, they can obtain licences without support from the Canadian aid program.

Senior Trade Commissioner Steve Basadur is pleased to be at the PDAC 2020 Convention in Toronto to discuss Canada-Mongolia cooperation in the mining sector. pic.twitter.com/JYjys6X5YM

— Canada in Mongolia (@CanadaMongolia) March 3, 2020

Canada’s “flavour of the month” approach to development assistance

For decades, no matter which party is in power in Ottawa, the Canadian government tends to pursue a “flavour of the month” approach to development assistance. It frequently designates new sectors and new countries on which it wants to focus its aid. Much of this is about ministerial pet projects and branding. As a result, when a new minister or a new government takes over, priorities shift. After the Liberals, under Justin Trudeau, were elected in 2015, they de-emphasized the place of mining in the aid program and recast the overall aid program as “feminist”, with an overarching focus on women, girls and gender equality. They also eliminated the practice of maintaining an (ever-changing) list of countries of focus. As a result, both Mongolia and mining soon lost their place of privilege in the Canadian aid program.

Mongolia never was anywhere near being a top-25 recipient of Canadian aid. In 2020, it came in 46^th. And Canada never became a significant donor from the Mongolian perspective. In 2020, it provided only 1% of the bilateral aid Mongolia received from Western countries, a smaller share than Hungary and Poland.

What went wrong? Ostensibly, Canada’s enhanced development partnership with Mongolia was poorly planned and executed, propelled by political and commercial interests rather than poverty reduction concerns and aid effectiveness principles. And then Canada dropped the partnership before it ever took off.

About Stephen Brown

Stephen Brown is a Professor at the School of Political Studies, University of Ottawa. Much of his research focuses on foreign aid, especially Canada’s. This blog entry draws from his article “Mining self-interest? Canadian foreign aid and the extractive sector in Mongolia”, published in the Canadian Journal of Development Studies.

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