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| February
2004 MODERN MONGOLIAN-CHINESE STRATEGIC
RELATIONS:CHALLENGES FOR THE NEW CENTURY With the 21st Century upon us, Mongolia and its neighbor and traditional antagonist China are carving out a new multi-faceted strategic relationship. The two nations have had rocky historical ties for over 1000 years. In the beginning of the 20th century the two were part of the dying Manchu Empire, and then both experienced two major political revolutions to restore their national sovereignty and move them into the internationalist socialist camp. Yet, by the end of the century Mongolia and China had emerged from decades of isolation and embraced market economy principles for their development strategies. Certainly these two countries have very different cultural and economic mindsets, which have negatively impacted on mutual understanding and political relations throughout history. Over the last 400 years Russia has imposed itself into the bilateral strategic balance and remains an important, although diminishing factor, in today's calculation. New players in the strategic equation for the 21st century are East Asian regional cooperation in diverse forms, the North Korean nuclear and refugee problem, environmental degradation, international terrorism, and even the United States. The 1990s brought significant changes to Mongolia domestically and internationally. Its 70 year alliance with the Soviet Union ended peacefully with the adoption of a democratic Constitution and democratic elections in 1992. Mongolia, at least the Outer Mongolia of Manchu times, had seen the Soviets as protectors against their giant Chinese southern neighbor. Mongolian relations with China, Republican and Communist, ebbed and flowed with Sino-Soviet relations. Although Stalin-inspired purges in the 1930s decimated the traditional noble class, Lamaist Church, and nomadic economy, many Mongols saw Stalin sympathetically as the man who preserved the independence of Mongolia at Yalta. After a plebiscite was conducted in the country in October 1945, Kuomintang China recognized the Mongolian People's Republic in January 1946. With the success of the Chinese Communist revolution, Mongolia immediately recognized the new Chinese government on October 6, 1949. However, it took a trip of Mao Zedong to Moscow in early 1950 for the Chinese to accede to the independent status of Mongolia in a joint Sino-Soviet communiqué. One should note that after the Communist Revolution, the Kuomintang Government on Taiwan rescinded its recognition of independent Mongolia until February 2002. Although the Taiwan Kuomintang-controlled Government had an active assistance program in Mongolia since the 1990s, brought Mongols to Taiwan for Chinese language training and research, and had strong and growing trade ties, Mongols still resented that Taiwan publicly treated Mongolian citizens as their own, and did not recognize the Mongol passport. In 2002 after national elections installed a non-Kuomintang Government, Taiwan agreed to recognize Mongolian independence, phase out the centuries-old special bureaucracy Mongolian and Tibetan Affairs Commission, and in principle seek to change the Republic of China’s Constitution to reflect its new view of Mongolia. Taiwanese Foreign Minister Eugene Chien said, "The agreements signed by the two sides were based on the principles of equality and reciprocity, but did not involve diplomatic recognition." (1) Even though the change to the Constitution has still been blocked and mutual diplomatic recognition cannot take place as long as Mongolia follows a one-China policy, these substantive moves on Taiwan’s part were warmly received by the Mongol Government which in September 2002 agreed to the opening of a trade office in Ulaanbaatar called "The Taipei Trade and Economic Representative Office." By 2003 Mongolia’s own economic office in Taipei was upgraded and its two diplomats adopted a higher profile. In the 1950s Sino-Soviet relations were friendly, and so were Sino-Mongolian relations. Thousands of Chinese workers were sent up by train to Ulaanbaatar to provide manpower and expertise for building projects. Trade relations were based on mutual assistance with China supplying grants and soft loans as well as manpower. Mongolia provided the Chinese with horses for the army and transport. (2) But with the Sino-Soviet split in the mid-1960s, Mongolia was forced by its ally to push away from China. Between 1960 to 1980 relations were stagnant. A bilateral treaty was signed with Moscow in 1966 which included secret defense-related clauses and was the sparkplug for a massive buildup of Soviet troops and missile bases, particularly along the border. Even the death of Mao in 1976 did not unfreeze relations. In fact, Mongolia doubled the size of its army as requested by Soviet defense minister Ustinov. In 1979 Soviet forces in Mongolia reached a peak of 120,000. As Ts. Batbayar, one of Mongolia's leading researchers on strategic and development studies, notes, Mongolia's top leadership played its own "China card" with the Soviets during that period to squeeze out more Soviet economic assistance. The Chinese Red Guards during the Cultural Revolution denounced Mongolia as a neo-colony of the Soviet Union. During the years between 1970 and 1990 the Soviets spent 600 million rubles to build a huge copper plant called Erdenet in northern Mongolia, making it the largest revenue-generating enterprise in the country. The Soviets gave nearly 6 billion rubles to Mongolia in soft loans for capital investment, 670 million rubles in non-repayable aid, and over 2 billion rubles in loans for balancing trade deficits. In the decade of the 1980s long after a warming in Sino-Soviet relations, Mongolia received the majority of this assistance. (3) Gorbachev sought to remove some of the Soviet soldiers and encouraged the new Mongolian leadership under Premier Batmonkh to adopt economic reforms. Concurrently, Mongolia was watching the economic changes in the PRC during the 1980s. With new policies under the Deng Xiaoping government in 1985 the basis for the explosion of Chinese-Mongolian economic relations was laid. Ulaanbaatar exchanged visits with Beijing on a vice-minister level before Moscow did, and as early as 1987 was talking about creating a mechanism of political dialogue among Northeast Asian countries. (4) Dr. Batbayar believes the breakthrough in Mongolia's relations with China was the May 1990 visit to Beijing of newly elected President P. Ochirbat, because this was the first time a Mongol President went first to Beijing not Moscow, and so effectively ended two decades of hostility. In 1991 Chinese President Yang Shangkun paid an official four-day visit to Mongolia and concluded an agreement guaranteeing access to the sea via Tianjin. Soviet troops were withdrawn from Mongolia by early 1992. Chinese Premier Li Peng came in April 1994 and signed a new bilateral treaty. In the treaty's Article 4 the signatories promised not to take party in military-political alliances against each other with third countries. (5) The main pillars of Mongolia's post-Cold War international relations are outlined in two documents published in the 1990s: Concept of National Security and Concept of Foreign Policy. In these Mongolia sought continuity of foreign policy objectives during its transition period after the collapse of communism. It proclaimed an open, multi-pillared foreign policy, respect for human rights, rule of law, support for democracy, free markets, and in 2002 added fighting international terrorism. One of its main foreign policy objectives is "long term stable development of good neighborly, equal and mutually beneficial ties with the Russian Federation and People's Republic of China." (6) The Treaty on Friendly Relations and Cooperation with the Russian Federation was signed in 1993, replacing the 1966 “Agreement on Friendship and Co-operation” in which the ally-relationship between the Soviet Union and Mongolia was codified. Economic relations became the focus of Mongol-Russian relations since the mid-1990s. Foreign ministerial and presidential visits between the two countries take place on a regular basis. V.V. Putin, President of the Russian Federation made a State visit to Mongolia November 13-14, 2000, the first such visit in 26 years. Although the resulting “Ulaanbaatar Declaration” reaffirmed the importance of this old relationship, the issue of Mongolia’s debt to Russia was not resolved. Progress on this thorny issue was made during the June 2003 official visit to Moscow of Mongolian Prime Minister N. Enkhbayar and subsequent January 13-14, 2004 visit of Russian Foreign Minister Igor Ivanov to Ulaanbaatar. The matter finally was settled when Mongolia agreed that 98% of the US$10 billion debt would be considered as investment and the remaining 2% or US$250 million would be repaid by the Mongolian Government. As documented in a recent paper by Ts. Batbayar and K. Demberel, Russia has been gradually driven out of the Mongolian market. Russian market share fell from 85% in the early 1990s to only 25% at the end of the decade. Russia retains special influence only in the energy sector since it is a key supplier of oil and some electricity. “Russia is in a weak position to guarantee positive economic cooperation (the sending of experts, aid, loans and investment etc) for near future.” (7) In 1998 40% of Mongolia's imports were Russian, but only 10% of its exports were sent to Russia. Mongolian export volume to Russia fell about 5 times because of high customs and transit transportation tariffs and lack of solvent Russian partners. Although Mongolian-Russian trade totaled $267.7 million in 2002, a 12.4% increase over 2001, the trade volume was not close to the level of the socialist era. It is very clear that the trade pattern is changing in favor of one nation--China. In 1990 the USSR received 78.3% of Mongolia’s exports and Mongolia imported 77.5% of its imports from the USSR. The Soviet Union in 1990 accounted for 77.9% of Mongolia’s total trade. In 1990 the PRC received only 1.7% of Mongolia’s exports and Mongolia imported 2.4% of its imports from PRC China. Trade turnover with China in 1990 stood at 2.1%. However, by 2001, Mongolian exports to Russia fell dramatically to 10.3% and imports from Russia fell to 36.4%. The trade volume with Russia was only 25.7% in 2001. Meanwhile, by 2001 Mongolian exports to China grew to 55.7% and Mongolia imported 21.9% from China. China’s position as Mongolia’s largest trade volume partner stood at 35.5%, a full 10 percentage points higher than Russia. (8) In 2002 the Mongol press reported there have been 260 joint ventures with China, the value of investment put at US$236 million compared to Russian investment value of US$31 million (less than the U.S. investment of US$50 million). (9) This represents 31% of all foreign enterprises in Mongolia and 21% of the total foreign investment. According to a high-ranking Mongol official writing one year later, there were 687 officially registered Chinese enterprises (349 joint ventures and 84 100% Chinese investment companies), while only 297 Russian companies (170 being investment companies). The same official source cited China as the largest investor in Mongolia from 1990-2001 with investment of US$136.9 million while Russia was the 5th largest investor in Mongolia for a total of US$29.8 million. (10). The majority of these Chinese investments in the 1990s were in animal husbandry and by-products light industry, construction, agriculture and the service industry because the Mongolian Government deliberately kept the Chinese presence in the large state industries including the mineral sector to a minimum. However, in the last two years gold, oil, and other mineral concessions have been let out to Chinese, so major investment has accelerated. In 1997 China became Mongolia’s leading
investor and Mongolian-Chinese trade turnover stood at $252 million,
an increase of 26.7% over 1996. Reasons for the increase were the
mutual decision to reduce trade charges 50% and increase foreign
trade transportation between Mongolia and China, China’s takeover
of the Mongol cashmere goat hair export market, and Mongolia export
of oil almost exclusively to the Chinese. (11) At the September
2002 Foreign Investor Conference in Ulaanbaatar, about 150 investors
from over 100 companies were from China, the highest number of attendees,
while only 84 came from Russia and 29 from the U.S. (12) Since the Mongol debt to Russia has just been settled, attention will turn to the formidable debt owed to China. Mongolia owes China 28.3 million convertible roubles including interest from 1958-1960 loans. There is also outstanding trade fees equaling 5.6 million Swiss francs and in 2006 payment must begin on 130 million yuan interest-free loans borrowed between 1991-1994. There were additional Chinese interest-free loans of 100 million yuan in 1998, 100 million yuan in 2000, and 300 million yuan in 2003. During the past decade Russian financial assistance has dried up while Chinese aid has become significant. During the period of 1991-1997 42.6 million yuan was given to Mongolia in aid. The next two years saw aid increase to 30 million yuan per year. Although the assistance program fell to only 1 million yuan in 2000 and 4 million yuan in 2001, large assistance resumed in 2002 and 2003 to the level of 50 million yuan per year, mainly in the building sector for constructing apartments for military personnel. (16) In 2000-200l China donated 2 million yuan to fight foot and mouth disease and winter disaster assistance. (17) Cultural and educational contacts also are blossoming. At the end of the socialist era a few Mongol teachers and 15 Mongol students went each year to China. By 2000 these numbers in the student exchange program had grown to 50, and privately funded students in China also increased. (18) In October 2002 77 Chinese students from Hebei University and Inner Mongolia began studying at a new university in Ulaanbaatar. (19) The President of the Chinese Olympics Committee visited Ulaanbaatar to exchange views on preparation for the 2008 Olympic Games. In September 2002 over fifty art perfomers led by the Ulaanbaatar Mayor, M. Enkhbold, attended Ulaanbaatar Cultural Days in Hohehot in Inner Mongolia, China. The Mayor signed a document for cooperation between the two cities for 2003-2005 with the Mayor of Hohehot. In addition to the art and photo exhibitions, about 20 Mongolian companies advertised their products and held meetings with Chinese counterparts. (20) On the occasion of the 53rd anniversary of the PRC, the Chinese Ambassador to Mongolia Huang Yakui gave an interview to a major Mongolian newspaper and said "Let's cooperate for development and renovation!" He emphasized his government was paying more attention to developing relations and trade with Mongolia, and noted that when he arrived in the country three years earlier, there were 400 Chinese companies active. By mid-2002 the number had increased to over 600. (21) Prior to 1990 Mongols could not travel to China. Visa requirements have now been relaxed so that Mongolian citizens can go to China without a visa up to one month. Mongolians also are eligible to participate in the inexpensive health service in China, so many Mongols go there for medical treatment since the 1999 Medical Treatment Agreement was signed. In 2001 33,000 Mongols took part in such medical travel. (22) There appears a consensus in Mongolia today that the national interest is best served by a China involved in economic development and committed to peaceful cooperation with its neighbors. (23) Arising from this point of view is the belief of many Mongolian policymakers and strategists that it would be to Mongolia's advantage to align itself with Northeast Asian countries or even Central Asian countries to assure economic growth. Mongolia sees itself as a potential landbridge to Europe and the Middle East for East Asia. This would give it greater leverage in its bilateral relations with China. Whether or not the Chinese would encourage such a new role for Mongolia is not very clear. Mongolia in the 1990s was a successful conduit for trade between China and Siberian Russia that overcame the history of contentious relations between the two peoples, so perhaps Mongolia in the future could facilitate trade for China in a westerly direction into Turkic Muslim areas. On the northern border with Russia the Mongolian Parliament seeks to create a free trade zone between the Mongol city of Altanbulag and the Russian city of Khiagt. On September 24, 2002 a new transport checkpoint opened with capacity for 500 trucks and 2300 persons daily. The Mongols spent $US 5 million to open the center. On the Mongolian Russian border 29 land harbors (4 international and cargo, 9 two-way for travel and cargo, 9 temporary, and 7 pass-through posts) have been established. (24) However, only Khiagt and Khandgait have major facilities. In fact, in the July 31, 2002 edition of the Business & Economic News in the English-language newspaper, The Mongol Messenger, in Ulaanbaatar, the parliamentarian responsible for economics told the press that with China in the WTO, its economy should grow even more rapidly with bigger foreign investors in its market: "Thus, the legislation for the Altanbulag Free Trade Zone was an important step towards Mongolian access to the markets of its two neighbors." (25) The legal basis for a similar trade free zone has been established at the railway border point into China. The Mongol city of Zamin Uud and Chinese city of Erlien span this area. Plans for development include the establishment of manufacturing plants and a Chinese casino. The population of Zamin Uud would likely increase from 10,000 to 30,000. The Chinese are interested in building a modern road network from Inner Mongolia into the Gobi provinces. This would facilitate expansion of Chinese investment in mineral deposits and large-scale animal husbandry operations in southern and eastern Mongolia. (26) Nevertheless, the Mongol authorities are resisting Chinese pressure to develop this zone quickly. Discussion in January 2002 took place in Beijing between Mongol Prime Minister Enkhbayar and Chinese Premier Zhu Rongji to work out the technical problems. Mongols would like to establish the northern Russian border zone first and then move to the southern Chinese border project. The hesitation, frankly, is involved with Mongolian feelings that the Chinese businessmen/settlers/tourists could overwhelm them. Today Chinese migration flows north along the railway in large numbers to Russian Siberian cities. This phenomenon is seen by some analysts as part of a great historical migration of urban Chinese, coveting oil, coal, mineral deposits and empty grasslands of Mongolia and Siberia. The history of mistrust and hostility still influences decisionmaking on both sides. Mongolian officials in private express their strong fear of expansionist China, which has in the past fifty years reabsorbed Tibet, Macao and Hong Kong, and now is fixating on Taiwan and Mongolia: “China is not interested in developing Mongolia’s economy, but in exploiting our natural resources. …The Chinese have the possibility to utterly absorb us.” (27) It has been said that a weak, fragmented China is feared even more by the Mongols, who remember the civil wars of the early Twentieth Century and the fallout from the Cultural Revolution in the 1960s and 1970s, because it could cause the growth of Central Asian terrorism and drug trafficking organized by Muslim Uighur and Chechen militants and organized crime to spill into Mongolian territory. Foreign policy researchers in Mongolia have not published much on this topic as if unwilling to conceive of the possibility of a breakup of their southern neighbor while still experiencing all the shocks from the dissolution of their Soviet former protector. Only during the last twenty years has China showed much interest in regional cooperation, but "as economic development and modernization became the driving force for Chinese foreign policy, Beijing has taken a more positive view of East Asian regional economic cooperation." (28) Yet, China remains sensitive to the concept of regional interdependence, because it may impose limits on domestic and foreign policy options. The Deng Xiaoping era moved the Chinese focus to economic reforms and modernization and away from politics and ideology. In the post-Deng era the political elite continue to share this view, so based on a domestic political consensus, China's foreign policy goal since the late 1970s is to maintain a peaceful international environment. In order to speed up development and modernization China believes economic ties with other Asian states should expand through economic cooperation and eventually they will integrate the Chinese economy into the global economy. This strategy will bring political power to China and greater national security. Thus China felt it was important to be a member of APEC and then the World Trade Organization. Now its policymakers are seriously examining the various formulations for a Northeast Asian Economic Cooperation Zone. Chinese scholar Hu Weixing claims that China's attitudes towards regional cooperation stem from certain contextual theories: 1) regional cooperation is conducive to Chinese economic development. 2) potential costs of regional integration should be carefully examined. 3) Asian countries should have a common position on human rights and democratization to balance that of the West. 4) East Asian relations require security issues to be solved bilaterally not multilaterally. 5) no effective multilateral security regime can be established without full consent of all member states. (29) Of course, China like Mongolia and really all countries derives its economic and security policies from its view of its economic interests and regional security concerns. This paper will not examine in depth the political ramifications within China because of the country's turn to international trade and subsequent internal disparity of income with social instability. But, these trends have actually affected the Chinese bi-lateral relationship with Mongolia to perhaps unexpected degrees. Because China's inland provinces and West have not benefited much from China's meteoric economic rise, and in the regions along the northern border with Mongolia and Russia there is ethnic unrest particularly among Muslim peoples, China sees new benefit from expanding bilateral and regional cooperation with Mongolia. China’s development strategy from the 1980s focused on the Southeast coastal region and its relationships with the big powers, Soviet Russia, the U.S. and Japan. At the end of the 20th century China launched its West development strategy and saw value in regional cooperation, e.g. the Shanghai Cooperation Organization. Another new influence has been its entrance into the WTO. China is paying attention to cross-boundary ethnic groups and their separatist inclinations. Western China is 56% of the Chinese territory holding 50% of the country’s minerals. The goals of its policy go beyond economic development to “create a prosperous and stable frontier area.” (30) The growth rates in the west are still considerably below the east coast of China. The western development strategy is trying to increase development rates by the middle of the 21st century. The government is trying to put in place legislation to achieve sustainable development and prevent ecological deterioration, trying to learn from the negative experience of eastern provincial development. Already there are laws to increase financial aid and investment to ethnic autonomous regions with special preferential tax treatment to promote agriculture, processing of minerals and tourism. The focus of the development is in the provinces of Gansu, Ningxia, Xinjiang, Shanxi, and Inner Mongolia, and Chinese authorities recognize that these regions must emphasize closer ties with the Russian Far East and Mongolia. The Chinese central government has agreed that “local governments can go ahead” in the region to avoid the central government becoming involved in local disputes. The PRC leaders believe that because the surrounding countries see West China as a huge potential international market, increasing economic growth and living standards in West China will improve the nation’s foreign trade, investment, and cooperation with neighbors. Therefore, the Chinese have promoted concrete actions such as establishing more boundary-trade ports with Mongolia, as well as with Kazakhstan, Kyrgyzstan and Pakistan, encouraging foreign investment by nationals of these countries, and facilitating custom systems. (31) However, to do this China must have a peaceful surrounding environment for its internal stability and development, as well as to obtain resources from the border nations to meet its energy, oil, and food needs. Central Asian countries and Mongolia are frequently mentioned as the countries concerned that share “crucial geopolitical interests” with China and its west development strategy. (32) In the 1990s and particularly since Sept. 11th, China sees the necessity of expanding ties with neighboring states to restrict operations of Islamic separatist groups who were/are supported by Iran, Afghanistan Taliban, and Saudi Arabia. (33) One forgets that Mongolia stretches across the Xinjiang as well as Inner Mongolian border with China. Chinese policymakers regard a good China-Mongolia relationship as a significant matter for the security and stability of their north. (34) Some new factors suddenly intrude into this picture of bilateral strategic relations. In the post-September 11, 2001 world the remaining superpower, the United States, has encouraged all countries to focus on international terrorism. Mongolia, which immediately supported the U.S. verbally after the attack, has been surprised by the reaction of its giant neighbors, which so heavily influence Mongolian mentality. For example, former Ambassador to the United Nations Enksaihan in an April 5, 2002 speech in Washington, DC noted: “The first stage of fight against terrorism (i.e. within the confines of Afghanistan, against Al Qaeda and the Taliban) seems to bring the three powers closer together. However, it is not clear if the second stage, if there is to be a second stage, might, depending on the purpose and content of that stage, alienate United States from Russia and China, and drive the later two closer together." (35) Washington and Moscow are cooperating almost like defacto allies, despite initial disagreement on the need to go to war in Iraq, bolstered by the positive chemistry between Bush and Putin. Putin agreed for the former Central Asian republics to permit U.S. forces to base planes for the war in Afghanistan. The possibility of Russian-Chinese rapprochement to counter U.S. influence in the world has been tossed to the side. Ralph Cossa at the 5th Symposium on Northeast Asian Security in Ulaanbaatar in fact claimed that China has lost its "Russian Card." (36). Sino-American relations, so strained in the late Clinton-early Bush administrations, also dramatically improved after September 11th. Bush has dropped the "strategic competitor" rhetoric and both sides seem more committed to building a cooperative, constructive relationship under the mantle of a new common enemy, terrorism. Thus the Chinese obtained American support for some groups of Uighur independence movement fighters in Xinjiang being labeled as international terrorists. China sees the revival of Islamic religious nationalism as the greatest threat to its stability. Calling such elements international terrorists allows the Chinese to increase repressive policies without totally alienating most of its regional Islamic neighbors. Nowadays both China and Mongolia have a vested interest in stopping unrest and cross-border political activities. U.S. Admiral Eric A. McVadon in May 2002 warned that Mongolia could become a tempting alternative location for Islamic terrorists since its Western regions are vast, basically unpopulated except for Mongolia’s own Muslim minority Kazaks, and far away from the central government’s careful monitoring. Because of the still harsh economic times since the institution of a free market economy, some Mongols and other foreign nationals could be willing to promote terrorists in western Mongolia for a price, like what happened in Afghanistan. (37) Reflecting this new view of Mongolia’s military and strategic importance is the Defense Attaché office in the U.S. Embassy in Ulaanbaatar. The Defense Attaché also functions as the Security Assistance officer and the Liaison for the American military’s Pacific Command (PACOM). After 9.11 U.S.-Mongolian defense relations were refocused from the aid, environmental, and training programs of the 1990s to integration into the “three pillars” strategy for the country as developed under U.S. Ambassador John Dinger. The three pillars are: 1) Securing Mongolia’s borders against illegal border incursions, criminal activities to finance terrorism, and transnational terrorism, especially Uighur separatists of western China. 2) Preparing the Mongolian military to act as international peacekeepers, as evidenced by the dispatch of Mongol soldiers to both Afghanistan and Iraq. 3) Improving Mongolia’s capacity to responds to natural disasters. (38) Mongolia immediately aftger September 11th issued a commemorative stamp to raise money for the Twin Tower victims and dispatched a few soldiers for international peacekeeping duties in Bangaladesh as tangible evidence of its pro-U.S. policy. The United States in its reexamination of its anti-terrorism strategic thinking concluded that Mongolia could be a potential model for post-Cold War countries such as Afghanistan and even North Korea. (39) Mongolia's pursuits of simultaneous political and economic reform is supported enthusiastically by Washington, which has a vested interest in the success of its democratic experiment. Mongolia has been cited as the competing model to that of the PRC, because China has utilized the concept of an Asian model of development that stresses economic reform over political democratization and now is at odds with Washington over human rights issues. Mongolia's decision to do both democratization and economic liberalization together has met with strong Congressional approval and the country has become a favored donor aid recipient (even though its economic success has been uneven and corruption has grown to an alarming degree). China surely watches carefully the great attention lavished on Mongolia by the U.S. The glowing reports by First Lady Hillary Rodman Clinton about idyllic Mongolia after the tumultuous and negative American reaction to events in Beijing during the UN Conference on Women in 1995, the recent expansion of the Defense Attache's office in the U.S. Embassy in Ulaanbaatar, the 2002 creation of a U.S. Embassy regional security office in Mongolia, and U.S. encouraged Mongol troop deployment in Afghanistan and especially Iraq are examples of Mongolian-American bilateral activities which certainly must concern China. The U.S. military is contemplating utilizing in a limited way the abandoned ex-Soviet airbase at Choir, only 500 miles from North Korea. At this time it is not likely Choir would be transformed into a significant American base but only repaired so its runway could handle U.S. planes. (40) American businessmen are very active in mineral and energy sectors in Mongolia. China knows that the donor community program in Mongolia is dominated by the U.S., even though Japan and Germany rank above the Americans in the level of assistance. It has been claimed the invitation for the Mongol Prime Minister to go to Beijing and talk with Premier Zhu Rongji in January 2002 was likely just as much motivated by China’s concern over the meeting of the Mongol Prime Minister in November 2001 with President Bush, the first such meeting in history, as by China’s desire to explain to its neighbor its WTO strategy. (41) The January 31-February 1, 2004 visit of U.S. Deputy Secretary of State Richard Armitage, which resulted in agreement for Mongol President Bagabandi to make a state visit to Washington, DC, is likely to elicit Chinese response. There are many minor irritants in the Mongolian-Chinese relationship today which could grow into more serious issues in the future if the climate between the U.S. and China cools. Because Mongolia shares a 4,677 km. border
with China, most of which is contiguous with minority regions, border
issues are always delicate. In principle, the two countries have
no outstanding, unresolved border disputes. Yet, other problems
involving the borders have developed in the 1990s. Mongolian strategic security planning was rocked by the North Korean 2003 declaration of its nuclear power status. An even more sensitive issue has arisen involving the smuggling of North Koreans into North China via Mongolia. The number of such trespassers in 2000 increased noticeably, and over 150 crossed the northern border of Mongolia illegally in 2001. A few of the illegals were Chinese citizens but most were North Korean nationals. One method of exit for the North Koreans now is to flee to South Korea or China through Mongolia, helped by Inner Mongols and Chinese Koreans. North Koreans who reach Mongolia even approach the South Korean Embassy for asylum. More than one hundred North Koreans left for Seoul in this way in 2001. Often they escape to the Mongol Zamin-Uud border station on the Chinese border as a way to get to the South Korean Embassy in Ulaanbaatar. In the summer of 2002 the head of the Mongolian Ministry of Foreign Affair's Press Department denied the truth of a Reuter's wire service story which mentioned Mongolia would establish special refugee camps for North Koreans. The spokesman reminded the press that Mongolia was not a signatory to the international treaty assuring protection for asylum seekers. (45) The PRC sees the growing North Korean refugee problem as impacting on its own domestic security. Of course, North Korea is also displeased and Mongolia is forced to make amends to maintain good ties. For example, in November 2001 Mongolia delivered 10 tons of meat, some horses and goats to North Korea as "aid". (46) The Tibetan issue also adds friction to the Sino-Mongolian relationship. In the democratic era Mongols are increasingly avid Tibetan-style Buddhists with strong loyalty to the Dalai Lama. His Holiness has visited Mongolia several times, but in recent years has not been able to come because the Russians, in deference to the Chinese, would not issue a transit visa. (47) It should be pointed out that the Russian decision came after Chinese President Jiang Zemin visited Moscow and signed a new treaty of friendship. Finally, regional cooperation and how Mongolia and China view their place in Asia, may be the most important new factor influencing their strategic considerations in the 21st century. China believes it should be the Asian regional leader (48), and Mongolia, recognizing this Chinese goal, sees developing closer economic and environment links to its big neighbor as its best way to integrate into Northeast Asia and assure its access to the Pacific via Tianjin. The two nations see cooperation as essentially divided into two parts. The first is along the Xinjiang border, primarily for national security and anti-international terrorism reasons, as described above. The other part is along the Inner Mongolian border in contact with Mongolia’s south and eastern provinces. Cooperation here faces different problems than in the Muslim area. Poverty, environmental degradation, and desertification are shared difficulties impacting on economic development. Eastern Mongolia’s Dornod Province is 4.8 times the area of Xingan Prefecture in Inner Mongolia Autonomous Region but Xingan’s population is 9.5 times that of Dornod. Both regions are isolated from the economic centers in their respective countries and have low population densities. Both areas are comparatively poor—Xingan’s GDP per capita of $462 is 8 times lower than China’s average and Dornod’s GDP is 16 times lower than the Mongolian average with one-third of the province below the poverty level. (49) Dornod and other eastern provinces have seen their industrial bases of animal-by products processing and light construction crumble in the post-socialist period. Herding animals is the economic mainstay while agriculture, which could be developed, has regressed. Now there are plans for a Chinese joint venture to open more land there to sustainable farming, and Mongolia seeks Chinese investment in restarting by-products factories. There was a powdered milk factory joint venture with a Chinese company designed to export its product to the PRC, but it stopped because of lack of capital. There is a new joint venture idea for cotton to be imported from the PRC to Mongolia and then re-exported to the U.S., employing 300 Mongols. Wool processing which used to be active in Choibalsan and sold to Russia is now being reoriented to China. (50) Meat exports which were going to Russia in 2002 were banned to stop the spread of food and mouth disease, so increasingly are diverted to the China market. Even fish in local rivers is now being sold to China. Mongolian minerals such as copper and coal could be sold in greater quantities to the PRC and other Northeast countries. The major bottleneck is poor transportation links to bring the ores out. Rail connections between Mongolia and China are not of the same size gauge so what lines exist are not compatible. There are no direct connections from the east of Mongolia to China, although there are many discussions about linking the largest eastern city in Mongolia, Choibalsan, to the Chinese city of Arshan, which then would connect China to Siberian Russian oil and natural gas. There is also an idea to send oil from Mongolia’s Tamsagbulag basin to Ulanhot in Inner Mongolia for refining or even for the Chinese to build a refinery in Choibalsan. Another development proposal is for a PRC loan of $US12.5 million to mine zinc in Suhbaatar province that would be carried by truck to the TransMongolian Railway for shipment to the PRC for processing. Similar ideas exist for brick and concrete fabrication for Choibalsan with Chinese customers and shared ecological tourism development. (51) Ideas abound, but money is scarce or at least the Mongols are not satisfied with the terms for Chinese investment. One special area of Chinese-Mongolian cooperation is in environmental matters. The countries have formulated national and local Agenda 21 policies to promote sustainable development. Both nations are seriously affected by land degradation and desertification. Mongolia established a national program to fight desertification with the support of the ADB, China, Japan, Korea, the UN Nature and Environment Program, and under the UNCED Thematic Program Networks seeks to strengthen capacities for drought impact management and desertification control. Mongolia will implement a $1 million technical assistance project called "Prevention and Control of dust and sandstorms in Northeast Asia." Funding will come from the ADB and the World Wide Nature Conservation Fund. (52) China is taking the lead for the Northeast Asian region to monitor and assess desertification and environmental cooperation. This cooperation is not just in the Gobi border regions, but also in the Altai areas shared by Mongolia, Russia, China and Kazakhstan. A new Fund has been organized to look at maintaining and more carefully exploiting the pure water reserve around Lake Baikal. (53) Prof. N. Altantsetseg believes that the last ten years of the 20th Century were a turning point in the foreign policy of Mongolia as the country transitioned towards democracy and a market economy. The end of the Cold War permitted Mongolia to pursue an independent foreign policy, while safeguarding the independence, security and welfare of the people remain the main goals. Although aiming to diversify its foreign relations, Mongolia’s geographical location between the nuclear powers Russia and China heavily influences its freedom of action and the scope of its relations with other foreign states. Altantsetseg asserts that ““The Mongolian and Chinese Joint Communique” of 1998 and “Mongolo-Russian Declaration of Ulaanbaatar” of 2000 determined the main direction and goals of the relations between our countries.” (54) In her analysis, although Russian-Mongolian political and diplomatic relations in the new century are active again, economic, social, health, and scientific ties are stagnant, whereas China has expanded its relations with Mongolia in all areas significantly. (55) The next decades of the 21st century present interesting yet complex opportunities for Mongolian-Chinese cooperation which impact directly on both nations’ strategic concerns. While the view of Professor Morris Rossabi of Columbia University that "Mongolia has all but become a Chinese satellite" (56) is an exaggeration, the possibility is not that far-fetched if the Mongolian Government does not control the situation. China has the money to exploit the rich oil, uranium, rare earth minerals, coal and salt resources of eastern Mongolia if Mongolian authorities want to tie their economy more closely to that of China, which is a big "if". To move in this direction better transportation links, both rail and road, are needed. A first step is to join the railroads 35 km. from the Mongol border to Arshan in Jilin Province, but this would cost hundreds of millions of dollars. The two nations already have agreed to build a paved road with bridge on the Mongol side to be completed in 2002. The Mongols had hoped an oil pipeline for Siberian oil to Central China would be built through their country. The decision to avoid Mongolia completely, although it would be much more expensive and a longer route, was announced in 2002 by Russia and China. Now Mongolia pins its hopes on a western natural gas pipeline in 10-20 years which would connect Siberia and Xinjiang, The ADB commissioned a study to provide cross-border development strategy to strengthen economic cooperation between the two countries. The study is to develop options, particularly in the transport sector with such ideas as the railway between Choibalsan and Arshan, improving border roads, maintaining a border station, as well as facilitating the export of Mongolian minerals to the PRC, developing eco-tourism and agricultural projects. The ADB is also looking southward from Ulaanbaatar to establish a 700 km road to the Chinese border. The first 230 km was funded in 2002 for building a road to the Mongol city of Choir that later can be extended south to the border city of Zamin-Uud. (57) More elaborate plans also are being discussed, such as that of the Indians, who propose building a railway in the west to connect China and Mongolia from north India through Yarkand to western Mongolia and on to Russia. (58) China and Mongolia enter the 21st century at a turning point in their bilateral relationship. Both countries seek above all to preserve national integrity. Impacting on this are new challenges posed by international terrorism, the rise of the political influence of the U.S. in a uni-superpower world, environmental degradation, and free market economic development which can take them down unwanted and unforeseen paths. These peoples have common cultural and historical backgrounds and histories full of tension and misunderstandings. Whether the future will move the two nations towards cooperation or confrontation is not clear. Certainly today the wind blows towards cooperation, which is a promising scenario both governments welcome.
1. MONTSAME, Ulaanbaatar, September 3, 2002
quoting Reuters.
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