Mongolia: Love thy third neighbour

Mongolia: Love thy third neighbour
The eighth Jebtsundamba (1870-1924). This religious figure serves as the spiritual leader of Tibetan Buddhism in Mongolia. In March, the Dalai Lama, whom the Chinese Communist Party considers to be a dangerous revolutionary, recognised the 10th reincarnation of the Jebtsundamba. / Marzan Sharav (1869–1939), public domain
By Antonio Graceffo in Ulaanbaatar November 17, 2023

“I am not a minister of [the Russian province of] Buryatia. I am a minister of sovereign Mongolia,” Enkh-Amgalan Luvsantseren, Mongolia’s education minister, defiantly told a former Russian ambassador, Iskander Azizov, who was attempting to meddle in the selection of a new school principal in Ulaanbaatar. Not a huge diplomatic incident for sure, but a telling moment that serves as an example of how Mongolia strives to assert its independence and sovereignty while navigating the influences of both China and Russia, the two huge nations that envelop it at all points of the compass.

Mongolia, note, is not a member of the Moscow-led defence bloc, the Collective Security Treaty Organization (CSTO). And while Mongolia has sent troops abroad to support the US in the past, the country has resisted Russian pressure to tolerate Mongolians fighting in Ukraine. On the other hand, striking a compromise, Mongolian diplomats at the UN abstained from the vote to condemn Russia’s early 2022 invasion of its neighbour. Though at the same time, Mongolia has welcomed draft dodgers and other Russians fleeing the war, granting them long-term visas.

China, meanwhile, challenges not only Mongolia’s external and internal policies, but also core beliefs of the Mongolian people. On March 8 this year, the 14th Dalai Lama publicly recognised the 10th reincarnation of the Jebtsundamba Khutughtu, also known as the Jebtsundamba Rinpoche or the Jebtsundamba. This title is associated with the highest-ranking religious figure in Mongolia, who serves as the spiritual leader of Tibetan Buddhism, the predominant religion in the country.

The Chinese Communist Party (CCP) considers the 88-year-old Dalai Lama to be a dangerous revolutionary and an enemy of the state. The CCP exerts strict control over Tibetan Buddhism, even deciding on the reincarnation of monks.

In 1995, the CCP abducted a boy whom the Dalai Lama had recognised as the Panchen Lama, the second-highest position in Tibetan Buddhism. When the Dalai Lama visited Ulaanbaatar in 2016, China responded by imposing punitive measures on Mongolia, including levying tariffs on Mongolian exports and sealing the border. Caving to economic pressure, Ulaanbaatar promised not to allow the Dalai Lama to return to Mongolia.

Freedom of religion is guaranteed by Articles 15 and 16 of the Constitution of Mongolia. But even in granting basic rights to its 3.35mn people, the country must without fail consider potential reactions from Beijing and consequences that might follow.

Since Russia’s invasion of Ukraine, and particularly since the October 7 Hamas attack on Israel, Russia and China have actively worked to form a coalition that challenges Western interests. They have engaged with controversial actors like the Taliban, Hamas, Iran, the PLO and Serbia, while also attempting to forge alliances with Muslim-majority nations, as well as countries that are heavily indebted or economically dependent on China.

The recent Belt and Road Initiative (BRI) summit was an opportunity for Xi Jinping to pressure other countries, like Mongolia, to join this alliance. Xi told Mongolian President Ukhnaa Khurelsukh that Mongolia was already a crucial partner in the BRI’s China-Mongolia-Russia Economic Corridor, and that he hoped Mongolia would play an even greater role in the future. Xi then offered incentives, saying that China was prepared to help Mongolia revitalise its economy and construct new border posts and increase connectivity between the two nations.

Amid the ongoing global competition for partnerships and resources, Mongolia’s mineral deposits have become an important tool in Ulaanbaatar’s efforts to attract foreign investment and build connections with countries other than Russia and China, the markets of which take more than 90% of Mongolia’s exports. Mongolian leaders lately completed a three-month campaign to foster closer ties with various nations, particularly the US.

Mongolian PM Luvsannamsrain Oyun-Erdene met US Vice President Kamala Harris on a visit to the US in August (Credit: Mongolian government).

In August, Mongolian Prime Minister Luvsannamsrain Oyun-Erdene met with US Vice President Kamala Harris in Washington, upgrading their strategic partnership and signing a memorandum of understanding on rare earths.

The prime minister also had a meeting at the Pentagon, where he referred to the US as a “third neighbour,” a term Mongolians use for allies, particularly major allies, beyond next-door neighbours Russia and China. He met with US Defense Secretary Lloyd Austin and discussed military-to-military relations as well as augmented defence cooperation. Mongolian troops have in fact served admirably alongside American soldiers in Afghanistan and Iraq, and the two countries hold an annual joint military training exercise called Khan Quest.

In October, the US and Mongolia agreed to launch the $13mn Asia Resilient Cities (ARC) programme in Ulaanbaatar, funded by the US Agency for International Development (USAID).

Mongolia has also participated in reciprocal presidential visits with France this year. It recently finalised a lithium trade contract as well as a $1.7bn uranium mining deal with Paris.

Earlier this year, South Korea signed a memorandum of understanding (MoU) with Mongolia related to the rare metals supply chain.

In October, Mongolia signed a civil aviation agreement with Singapore. And India and Mongolia agreed to start building Mongolia’s first oil refinery. This should help reduce Mongolia’s dependence on Russia, which supplies 95% of Mongolia’s fuel. However, Russia would still own roughly 50% of the railroads that cross the country, north to south.

Simultaneously with Mongolia’s outreach to other nations, China and Russia are making efforts to strengthen their influence, creating a complex diplomatic scenario for Mongolia as it navigates shifting alliances. During a visit to Beijing in early July, Russian Prosecutor General Igor Krasnov and his Chinese counterparts discussed the necessity of countering the growing Western influence in Mongolia.

In September, a high-level trilateral security summit took place, marking the third such meeting between China, Mongolia and Russia. Xi Jinping has called for the development of the comprehensive strategic partnership between China and Mongolia, which includes the construction of the Mongolian segment of the Russia-to-China Power of Siberia-2 gas pipeline.

The pipeline is described as important by China—though there are substantial doubts over what gas volumes Beijing will end up signing for on the dotted line and at what price—which is energy import-dependent. For Russia, the high importance of the pipeline is not at all in doubt, given how Moscow has been forced by sanctions to divert gas exports away from Europe’s markets towards China. But while this project is essential to Russia and of some importance to China, Mongolia will only receive transit fees.

If Mongolia and the US manage to establish a path that would enable Mongolia to reduce its dependence on China and Russia, Mongolia could wholeheartedly align itself with the Western world. Additionally, Ulaanbaatar would have the liberty to enact domestic and foreign policy without external influence. Moreover, Mongolia could serve as a model for the Central Asian republics aspiring to do the same

Antonio Graceffo, PhD, China-MBA, is an economist and China analyst. He has spent over 20 years living in Asia, including seven years in China, two and a half in Taiwan and four in Mongolia. He conducted post-doctoral studies in international trade at the School of Economics, Shanghai University, and holds a PhD from Shanghai University of Sport, and a China-MBA from Shanghai Jiaotong University. Antonio has authored seven books on Asia, with a focus on the Chinese economy.