Mongolia at 800: US Views on Mongolia’s Global Role

This year, Mongolia celebrates the 800^th anniversary of the founding of the Mongol state; in 1206, a man named Temujin was proclaimed (Chinggis in Mongolia; Genghis in the West) Khaan of the Mongol tribes and the first unified Mongol state. Over the next 90 years, Chinggis Khaan and his successors conquered a large swath of land (estimated at 11,500,000 square miles) stretching from Korea and China through Russia, Eastern Europe and the Middle East, the largest contiguous land empire ever created. His successors ruled this vast empire, or parts of it, for over 200 years, a period sometimes called the “Pax Mongolica.” 

Chinggis Khaan—the man as well as his impact on the history of the world—has been and continues to be a controversial figure, either reviled or praised. Suffice it to say that historians—both Mongolian and foreign—will continue to debate his role in, and contributions to, world history and to the making of modern Mongolia.

Bio-geneticists tell us that one out of every 200 males (and one out of every 12 Asian males) on earth today is a descendent of one single “patriarch” who lived about 1,000 years ago—and who was Mongol. This individual man’s Y-chromosome is today found in an estimated 16 million of his male line progeny in a vast swath of Asia from Manchuria near the Sea of Japan to Uzbekistan and Afghanistan in Central Asia. Whether or not that single “patriarch” was Chinggis Khaan is not known for certain, but it is likely that it was either Chinggis or one of his immediate ancestors.[1]

Today, Mongolia is once again united behind the image of a progressive and benevolent—even democratic—Chinggis Khaan. And, today, a united, democratic Mongolia is once again on the march.

In the decade and a half since Mongolia threw off the yoke of Communism and replaced it with democracy and a free market economy, contemporary Mongolians have sought to redefine their national identity by harking back to their roots and finding comfort and inspiration in the unifying theme of Chinggis Khaan and the Mongol’s era of greatness. The negative effects and memories of the socio-political divisions and feuds that characterized the period under Manchu rule (Qing Dynasty, from 1691-1911) and the repression that characterized the Communist period under the influence of the Soviet Union (from 1924-1990) are slowly healing—or being erased altogether.

Symbolic of this revival and renewal was the agreement reached by the Grand Coalition government in early 2005 to demolish one of Ulaanbaatar’s historic landmarks—the Communist-era mausoleum, prominently located in front of Government House and overlooking Sukhbaatar Square. Following the July 2005 National Naadam festivities, the bodies of Communist-era heroes interred in the mausoleum were reburied with honor in Heroes Cemetery and the mausoleum was rapidly—in less than a week—torn down. In its place, a gallery encompassing 15-meter tall statues of Chinggis Khaan, Ogedei Khaan (his son and successor, under whom the Mongol Empire reached its geographic zenith), and Kublai Khaan (his grandson and the founder of the Yuan Dynasty in China) was officially opened on the eve of the 2006 National Naadam festival, to mark the 800^th anniversary. The new complex houses a state reception room; visiting dignitaries will be greeted under the watchful eyes of the Great Khaans.

Around Ulaanbaatar, new statues have replaced their Communist-era rivals: Stalin’s place in front of the central library has been replaced by the Mongolian poet/author Renchin. Similar efforts are being undertaken to resurrect Kharkhorin, the capital city of Ogedei Khaan, Chinggis’ son and successor. And in the era of the free market, Chinggis—and Ogedei—Khaan now find themselves (posthumously) endorsing or labeling Mongolian-made products, from furniture to clothing to vodka to beer to instant milk tea.

Mongolia also has begun to break out of the political and economic isolation that characterized its modern history from the 1920s to the 1990s. A new, young generation of Mongolians, which has tasted the rewards of democracy and the opportunity presented by a market economy, is moving into positions of influence and power. Their outlook on the world and Mongolia’s place in it is markedly different than that of their parents and grandparents.

According to historians, the Mongol army under Chinggis Khaan never numbered more than 100,000 warriors, yet it was able to subjugate a huge swath of the then civilized world. Historians also tell us that the Mongols under Chinggis Khaan were innovative, adopting and adapting the technologies, practices and cultures of the peoples they conquered, and spreading these across the Eurasia continent. This was the time of the Pax Mongolica, when the trade in goods and ideas between East and West flourished.

Eight hundred years later, contemporary Mongolians are following in their ancestors’ footsteps. Today, some 100,000 Mongolians are living abroad, and approxi­mately 10,000 to 15,000 of those are in the United States. Today’s Mongol hordes are tapping the expertise of others, learning the ways of the knowledge-based modern world and applying them to and in Mongolia. Collectively, they contribute an estimated $250 million a year to the formal and informal economy, in the form of remittances sent home. More and more young Mongolians are studying abroad, and English is now the official national second language. Tomorrow, this Internet-and English-savvy generation could transform Mongolia into a regional or even a global communications and financial hub.

Mongolia, today, is on the march not only at home, but also on the international scene. Mongolia redefined its vital national security and foreign policy priorities and concepts in a new 1992 Constitution and in a 1994 national security and foreign policy document. Defined as an “open and non-aligned” policy, Mongolia declared it would safeguard its independence and security primarily by political and diplomatic means and by striving to create an external environment that was favorable for its economic, scientific, and technological development. Mongolia’s national security and foreign policy is premised on peaceful and friendly relations with its immediate neighbors, partnerships with “third neighbors,” and integration into existing and new regional and international organizations. 

As in the past, Mongolia seeks to have a broad footprint, not only in its corner of Northeast/Central Asia, but across the whole of Eurasia.

In the past three years alone, Mongolia has become a Partner of the Organization for Security and Cooperation in Europe (OSCE) and an Observer in the Shanghai Cooperation Organization (SCO). Mongolia joined the ASEAN Regional Forum (ARF), the Asia-Pacific’s sole government-level regional security organization, in 1998, and the World Trade Organization in 1997. Mongolia has expressed interest in joining other regional fora such as the Asia Pacific Economic Cooperation organization (APEC) and NATO’s Partnership for Peace.

Mongolia seeks to play a leading role in Northeast Asia, either by joining existing, or creating new, Northeast Asian organizations that will link the economies of the region to each other and to the rest of the world. Currently most of these linkages are bilateral or at the nongovernmental level, but Mongolia is actively engaged. While not a member of the Six Party Talks, Mongolia shares the goal of a nuclear weapons-free Korean Peninsula and supports the objectives of the Talks. We could anticipate that once the six parties have succeeded in reaching agreement on the de-nuclearization of the Korean peninsula, the forum’s agenda and membership could be broadened to include economic integration and Mongolia.

And Mongolia has taken a front-line position in the global war on terrorism—and is pushing the envelope of freedom and democracy. In 2003—745 years after Mongol warriors on horse sacked Baghdad (1258)—Mongolia sent peacekeepers to join the multinational coalitions in Iraq and Afghanistan. This marked Mongolia’s return to the international stage, this time not as a conqueror, but as a peacekeeper. By serving in Iraq and Afghanistan, Mongolia is helping these countries’ reconstruction and democratic transformation.

Since 1999, at the request of the Mongolian Armed Forces (MAF), the United States and other countries have assisted Mongolia to develop a world-class peacekeeping capability. In 2005, the United States recognized Mongolia’s contribution and potential by awarding it $16.65 million, to be used to equip and train a new battalion of peacekeepers and to upgrade its Five Hills Peacekeeping Training Center into a Regional Center of Excellence for Asia. In August of this year, Mongolia and the United States hosted a multi-national peacekeeping exercise, Khaan Quest, in which 21 countries participated.   

As of mid-2006, Mongolia had peacekeepers in not only Iraq and Afghanistan, but also Sierra Leone, where Mongolia is participating in its first UN-mandated peacekeeping role. Not only is peacekeeping a way to keep its military in modern shape and up to international standards, but it also brings in revenue. UN-mandated operations pay handsomely. In the future, Mongolia will not have to rely on donor assistance for its military modernization; it will be able to generate the income it needs to invest in and improve its peacekeeping capability.  

The United States is proud to serve alongside Mongolian peacekeepers in Iraq, Afghanistan and elsewhere, and to be one of Mongolia’s important “third neighbors,” and one of a handful of “comprehensive partners.”

It is in the national security interests of the United States that Mongolia be an independent, sovereign, secure, democratic and prosperous country that enjoys friendly relations with its neighbors and contributes to regional and international peace and stability.  The United States does not have “strategic” interests in Mongolia in the military or security sense. Rather, Mongolia’s strategic importance lies in its commitment to democracy and its willingness to cooperate with fellow democracies to spread freedom and democracy around the world.  

As highlighted in the July 2004 and November 2005 Joint Presidential Statements, issued during the respective official visits of Mongolian President Bagabandi to Washington and of President Bush to Ulaanbaatar, the United States and Mongolia have entered into a comprehensive partnership based on shared values and common strategic interests, the most important of which is the spread of democracy and freedom around the world.  Mongolia is the one of the few functioning democracies in North East Asia; as such, it serves as a model for other post-Communist and post-authoritarian societies still striving to democratize. Mongolia’s experience also serves as a successful road map for those states that still have reservations about taking the path of democracy.   

The United States welcomes Mongolia’s enthusiasm and eagerness to stand with its fellow democracies and to cooperate in international fora to promote democracy. We believe that Mongolia can make a difference and encourage Mongolia to take a leadership role in numerous democracy initiatives. In particular, as one of the 16 members of the Convening Group of the Community of Democracies (COD)—and one of a handful of Asian democracies—Mongolia is in a unique position to play both a global and a regional (in Asia/Pacific) leadership role. We would like to see Mongolia be more active in the Community of Democracies, make a financial contribution to the new UN Democracy Fund (even a token contribution would signal Mongolia’s support for this major new source of funding for democracy building), and show its solidarity with other democracies by supporting democracy initiatives in the UN Commission on Human Rights and freedom of speech resolutions in the UN General Assembly Third Committee. Actions such as these would signal that Mongolia is a serious partner in promoting global democracy.

The United States wants Mongolia to succeed in its democratic transformation. That has meant assisting Mongolia to the tune of over $150 million over the past 15 years, in the form of humanitarian and development assistance. Mongolia has come a long way in the past 15 years, both politically and economically. In May 2004, Mongolia’s achieve-ments in “ruling justly, encouraging economic freedom, and investing in its people’s education and health,” as measured by 16 objective policy indicators, were recognized by the US government’s Millennium Challenge Corporation (MCC) when Mongolia was included among the first group of countries eligible for funding from the Millennium Challenge Account (MCA). Mongolia re-qualified for MCA eligibility in fiscal year 2005 and fiscal year 2006, again demonstrating its strong commitment to reform and good governance.

This performance is noteworthy. But this performance, particularly in the area of “control of corruption” (as measured by the World Bank Institute Good Governance Index) where Mongolia has faltered in recent years, must be sustained if Mongolia is to continue to qualify each year for MCA funding. MCA is intended not only to reward good policies, but also to encourage continued good policies. It does this by providing grants, called Compacts, sufficient to achieve transformative development—that is, produce measurable results and reduce poverty. Mongolia still has a way to go to finalize its Compact. Success will require that, among other things, Mongolia continue to put its internal house in order.

Mongolia remains among the poorest countries in the world, but there are positive signs that average incomes are rising. After years of flat or negative growth rates, economic growth took off in 2004 (10.6 percent) and stabilized at a more realistic 6.2 percent in 2005. The bulk of this growth comes from two sectors—agriculture (livestock) and mining.  

The informal sector accounts for a growing proportion of the economic activity:  a recent study conducted under an USAID contract concludes that the share of the informal economy in Mongolia relative to unadjusted GDP in 2004 was between 45 and 50 percent, in contrast with the official estimate of just 11 percent.  That would put Mongolia’s real GDP in the $4 billion range, with a per capita income of $845. In other words, there is a lot more economic activity being transacted in Mongolia than is officially recorded. The good news is that most of this economic activity is being driven by the private sector, in particular by micro, small and medium-sized businesses.

There are tangible signs of prosperity; wooden or brick houses are springing up alongside—or instead of—gers (also known as a yurt, the traditional felt dwelling) in the urban centers. Ulaanbaatar experiences traffic jams at almost any hour of the day. New shopping malls, restaurants, bars and discos and Internet cafes are opening up every month, not just in Ulaanbaatar but also in provincial centers.

Having said that, however, the appearance of prosperity can be deceptive. Mongolia is in danger of becoming a society of “haves” and “have-nots.”  Certainly this is most visible in Ulaanbaatar where those living without basic utilities in the ger districts can see the contrast—can see others (including some of their elected representatives) driving expensive cars and buying quarter million dollar apartments. I think the increased frequency of—and attendance at—public demonstrations by veterans, trade unions, students and average housewives over the past 18 months reflects public frustration with this growing and highly visible disparity.

Mongolia’s democratic gains are under pressure—if not threatened. But the threat to democracy in Mongolia today comes not from political ideology or foreign influence—Mongolia is not going to revert to Communism or blindly follow the lead of Russia or China—but from endemic corruption and unequal distribution of the benefits of economic growth.  A sizable minority of Mongolians is not sharing in the benefits from growth; too often they do not have access to opportunities to do business and make a decent living. Who—not what—you know is still the largest factor in determining success.

As President Bush stated in his November 8, 2005, interview with a Mongolian reporter (Eagle TV, Washington, DC): “…[T]here should be no corruption in government. One of the foundations of any government is the ability for the people to trust the government.” Corruption threatens democracy by undermining the confidence of the people in their government and elected leaders. President Bush said,  “And a foundation of democracy, and a foundation of our foreign policy, and a foundation of our Millennium Challenge Account is that there be honest government.” 

Mongolia will continue to require assistance from its partners and friends to tackle its socio-economic challenges and to achieve sustainable economic growth. There are limits, however, to what foreign donors and partners such as the US government can do.

Frankly, Mongolia needs more investment and trade, than aid. Over the next decade, Mongolia will require enormous amounts of capital to finance its infrastructure requirements (e.g., $1.3 billion alone—or 80 percent of Mongolia’s 2005 annual GDP—to refurbish the five existing electric and heat power plants so that the lights and heat do not go off in 2015). That amount of capital cannot be raised from Mongolian sources, it has to come from foreign sources.  

Only the private sector—the foreign private sector—can provide the large infusions of capital needed to finance Mongolia’s multi-billion dollar infrastructure requirements. Making it easier to do business, for small local businesses as well as large foreign companies, will go a long way toward attracting the foreign capital that Mongolia so desperately needs—and which donor loans and grants cannot hope to provide.

Mongolia, however, does not score all that well compared to other economies. It ranked 96^th out of 117 countries in the 2005 World Economic Forum’s Growth Competitiveness Index, so there’s plenty of room for improvement. A World Economic Forum survey of Mongolian entrepreneurs shows clearly where businesses see the biggest problems: inefficient government bureaucracy, inadequate infrastructure, excessive tax rates, corruption, excessive tax regulations, and lack of access to financing.

This is why it is so important that the government and parliament take swift action to implement tax reforms, stabilize the macroeconomic framework, reduce red tape, eliminate corruption, and generally extract government from the business sector by privatizing the remaining state-owned enterprises. The recent passage by parliament of landmark legislation to combat money-laundering and corruption and to reform tax rates and administration are important first steps in making Mongolia a “business-friendly” investment destination.

American investment in Mongolia increased by 230 percent over the past three years and there are now some 140 companies registered in Mongolia. The bulk of the investment is in the mining sector—construction and heavy equipment—but there is growing interest in information and medical technology, telecommunications, banking, eco-tourism, agricultural equipment, and food processing. Both the US Overseas Private Investment Corporation (OPIC) and the US Export-Import Bank (EXIM) are now open to qualified American companies interesting in investing in or selling to Mongolia.

On a people-to-people level, Mongolia will continue to benefit from the goodwill of individual Americans and the expansion of sister-city relationships with American cities in Alaska, Montana, Texas and Colorado. I am constantly amazed and gratified at the number of private individuals from all walks of life—aviators, doctors, educators, environmentalists, veterinarians and many more—who have taken an active interest in Mongolia and its future. Certainly there is room for more such people-to-people exchanges and “investments” in Mongolia.

Mongolia has much going for it:  hospitable and capable people, a growing minerals and livestock-based economy, and eco-friendly landscapes. In particular, Mongolia is blessed with an English language- and Internet-savvy younger generation that is “going places” both at home and abroad. Mongolians have truly resumed their rightful place on the global stage and are making a difference.