PACNET May 2005

Mongolia Receives Conflicting Advice on Asian Policies
from U.S. at 1st Bilateral Conference
By Dr. Alicia Campi

The First Bilateral Conference—“A Comprehensive U.S.-Mongolia Partnership,” was held in Washington, D.C. February 28-March 1, 2005 to discuss all aspects of the two nations’ relationship. The brainchild of Ambassador R. Bold, Ambassador of Mongolia to the U.S., the conference’s other co-sponsors were the Asian Studies Center of the Heritage Foundation, the Center for International Strategy, Technology and Policy of Georgia Institute of Technology, The Asia Foundation, and the Mongolian Institute for Strategic Studies in Ulaanbaatar. U.S. and Mongolian government and elected officials, political scientists, economists, academics, and NGO representatives participated. Although panel discussions were organized around three major topics—Mongolia’s international and regional relations, U.S.-Mongolian trade and investment relations, and the development of democratic institutions in Mongolia, the large shadow of what role Mongolia should play in the Asian region dominated the presentations.

Deputy Assistant Secretary of State Randy Schriver, who during his first trip to Mongolia in 1996 negotiated the Military Agreement on Exchanges and Visits, stressed that Mongolia was a great democratic success story in Asia. He proclaimed that the U.S. needed partners in the world, and “there is no better potential partner than Mongolia.” For his part, Ambassador Bold asserted that his country’s post-socialist experience is a positive model for North Korea and the Central Asian republics. Munkh-Ochir, Executive Director for the Mongolian Association of Cold War Studies and Senior Researcher of Mongolia’s Institute for Strategic Studies, noted the deepening bilateral military cooperation, which has already significantly strengthened Mongolia’s peacekeeping and defense capabilities. This upbeat assessment was echoed by all of the political and government officials. However, the U.S. side offered conflicting advice to their Mongolian counterparts re Mongolia’s potential role in Korean peninsula talks and how Mongolia should manage its rapidly expanding relations with China.

Regarding the sticky question of the Korean peninsula, some American strategic specialists on Northeast Asia such as John Endicott of Georgia’s Tech encouraged Mongolia to become more actively involved in the Korean Peninsula six-party talks, even to the extent of being a seventh party. Others such as John Tkacik, Senior China Researcher at Heritage, argued that Mongolia could contribute to the South Korean-Japanese-U.S. dialogue and even host the six-parties, but should not be a formal member. Ralph Scossa of the Pacific Forum advised Mongolia to avoid the six-party talks, biding its time until there was a follow-up organization, while Mike Green from the National Security Council also cautioned Mongolia against joining as a full member. The unspoken question was should Mongolia be a full active partner with other neighbors in regional security matters, even the highly dangerous and difficult ones, or should it continue to play a minor, unequal role, letting other nations decide its future, while trying not to be dragged into very complicated regional disputes?

There was even more disagreement on how Mongolia should manage its economic relationship with China, and how much the U.S. should be involved in structuring Mongolia’s relations with China? Some cautioned that the fact that now over 60% of Mongolia’s exports are going to China and China is Mongolia’s leading investor would have military and political implications negative to U.S. and Japanese interests if not carefully managed. Yet, while the all the U.S. political scientists, government officials, and the entire Mongolian delegation were concerned about China’s growing influence in the Mongolian economy, incongruously they also were overwhelmingly supportive of Mongolia pursuing an active policy of integration with Northeast Asia, claiming it is the best chance for the country to develop and prosper. Even Mongolian Parliamentarian and former Foreign Minister Amarjargal argued that Mongolia needs a Free Trade Agreement from the U.S. in order to increase its economic integration with Northeast Asia, not because the volume of U.S.-Mongolian trade requires it.

Scalapino, Endicott, and former U.S. Ambassador to Mongolia Alphonse La Porta called for Mongolia to use Northeast Asia as a “Third Neighbor” to balance out giant neighbors Russia and China. But, how can such economic policies help Mongolia avoid economic domination by the Chinese and Russians, when these two nations are the dominant players in the very same region? In the 1990s US$1.5 billion was invested in Northeast Asia, but $520 million went to one province of China (Jilin), and another $530 million went to the Russian Far East. Mongolia only received less than 1% of this FDI, second only to North Korea.

On the business and investment side, U.S. participants such as Steve Saunders, Executive Director of the North American-Mongolian Business Council, and Ambassador La Porta maintain that the only way for Mongolia to develop its infrastructure, lower poverty, and integrate itself into the global economy is to more closely align itself to the Chinese economic powerhouse and readily supply the Chinese market with its copper, oil, coal, and other minerals. These economic experts did not argue with Batchimeg, China specialist from Mongolia’s Centre for Strategic Studies, who believes that like it or not, Chinese investment is going to play a key role in Mongolian economy for the next decades, and developing close and friendly relations with China is the top priority of Mongolian foreign policy, because Mongolia’s increasing economic dependency on China is unavoidable.

Yet, should Mongolia sacrifice its national security for economic development? What other choices does Mongolia have for attracting foreign investment and expanding trade beyond the nearby, hungry market of China? If Mongolia does not consciously favor American, Japanese, South Korean and European economic partners over Chinese in many crucial sectors like minerals and energy, how can it protect itself from being bought up by China? And, how can the U.S. accept the rapidly expanding Chinese economic political influence in Mongolia? This kind of debate never took place at the conference, since most of the U.S. and Mongolian political scientists and officials did not stay in the room to listen to the opinions of the business people.

Batchimeg believes that Sino-U.S. relations, not Mongolia-China relations or Mongolia-U.S. relations, “is the main determinant factor of the bilateral relations among the three nations.” But the U.S. position of supporting Mongolia’s entrance into the WTO and dropping all protectionist barriers will inexorably lead to overwhelming Chinese domination of Mongolia’s economy. In April-May analysts from the Millennium Challenge Corporation are in Ulaanbaatar to discuss the whole U.S. economic assistance program and Mongolia’s 5-year request for $252.34 million in economic development funds. It is time for U.S. and Mongolian military and political strategists, policymakers, free marketeers, development assistance, and democracy proponents to take a holistic look at the implications of their diverse advice and programs for the Mongolian Government, lest American economic and business policies prove counterproductive to maintaining Mongolia and the United States’ national and global security interests.