Guest post: Mongolia doesn’t have resource nationalism – for now

With the increased level of interest the world has taken in Mongolia given its blistering economic growth rate, resource nationalism is mentioned more and more often as a threat. But what exactly is this resource nationalism?

In Mongolia there is a parade of ideologies and slogans that are being lumped into the category of resource nationalism. They range from the obscure fringes of blood-line focused nationalism to the concerns of dedicated and serious politicians who are genuinely grappling with the challenges that rapid, almost instant, economic growth on the basis of a resource boom is bringing with it. Lumping these different streams together into a single category suggests that there is a coherent ideology that unites them. This is not the case.

Mineral resources in Mongolia are afforded constitutional protection. Anyone would agree that benefits from these mineral resources should primarily accrue to Mongolians. Mongolia is far from unique in this respect. Alberta’s oil sands and the controversy about the rights of other Canadians to share in revenues is an example of a well-established mining jurisdiction where claims to ownership of resources by the people are common.

Yet, any discussion of governance structures and taxation regimes in Mongolia’s mineral boom is often portrayed abroad as a Hugo Chavez-like nationalism that ignores the important role that foreign investors can play and should play in maximising benefits to local populations. At present, there is no political movement or anti-mining party that espouses a coherent ideology of autarky on the basis of the exploitation of natural resources in Mongolia.

A massive flow of in-bound investment and more on the doorstep gives Mongolian decision makers very little time and opportunity for reasoned and careful choices.

Mongolia was hurt in the 1990s by the shock therapy policies advised by international institutions. Amplified by the effects of calamitous winters that followed, most Mongolians concluded that following international advice provided them with few benefits.

After 2005, the prospect of development on the basis of mineral wealth suddenly emerged as tantalising possibility. Mongolians are now clamouring for immediate benefits, partly rooted in promises that politicians echoed on the basis of foreign investor claims. For most, mired in poverty and disappointed by past economic performance, expectations of future wealth are exceedingly high. This puts them on a collision course with large corporate foreign investors who are entering Mongolia with a significant advantage of lessons from similar projects elsewhere and expectations of their own for high returns.

Mongolian decision makers, by contrast, have neither the information nor the experience on which to base crucial decisions. They are operating in a vibrant democracy that offers citizens free elections and growing opportunities to participate in the political process. Democracy also forces decision makers into a level of accountability that expects detailed deliberations.

Not surprisingly, neither of the two dominant parties (the Democratic Party of the current president, prime minister, speaker of parliament and the mayor of Ulaanbaatar; and the Mongolian People’s Party that grew out of the governing state-socialist monopoly party) wanted to make decisions about the Oyu Tolgoi project. The investment agreement for the project with Rio Tinto could only be signed in 2009 by a grand coalition offering assurance to both parties that they would not be blamed for any of its failings.

It is easy for opposition politicians and even members of the government to claim that this agreement benefits foreign investors more than Mongolians. These voices do not offer specific alternative arrangements other than to demand a greater share in ownership, but their claims are not rooted in any kind of consistent resource nationalism.

President Tsakhia Elbegdorj expressed his intention to be a more active advocate on behalf of Mongolians in dealings with Rio Tinto in a speech to parliament on February 1. This speech came in the same week as an announcement from Rio Tinto that the first copper concentrate had been produced at the mine in the Gobi Desert, but also precedes a round of discussions between Rio Tinto and the Mongolian government amidst rumours of a Rio Tinto threat to suspend production at Oyu Tolgoi.

One of the issues Elbegdorj addressed specifically is the perception of employment discrimination against Mongolian professionals. This perception was reinforced recently by the case of S Gantuuya, the sister of S Ganbaatar who was elected to the Ikh Khural last June and is very prominent as president of the board of the Confederation of Mongolian Trade Unions. Ganbaatar faced off with Deputy Speaker S Bayartsogt on November 23, 2012 in a highly publicised and much-discussed televised debate about Oyu Tolgoi.

Gantuuya has alleged discriminatory payment practices at Oyu Tolgoi because she was paid significantly less than expats doing similar work with similar qualifications. Her allegations have been widely circulated because of the prominence of her brother, but also because she represents the aspirations of many younger Mongolians who are looking to the mining boom as an opportunity to apply professional skills and build a larger Mongolian middle class. Gantuuya claims that she was dismissed from Oyu Tolgoi after posting a letter demanding equal payment for Mongolian employees.

Whether or not these allegations about employment practices are valid, they have received wide circulation in Mongolia and are seen as confirming the impression of Rio Tinto as a foreign investor who has remained aloof from engaging Mongolians beyond the immediate community surrounding the mine site.

Threats by foreign investors, including the currently rumoured threat by Rio Tinto to suspend operations, are more likely to give rise to a true resource nationalism than to force populist politicians to abandon their ad hoc positions and statements. In the face of such threats, Mongolians may rally behind President Elbegdorj in this election year.

Julian Dierkes is an associate professor at the University of British Columbia’s Institute of Asian Research.

Comments

Popular posts from this blog