Mongolia’s Shrinking Foreign Policy Space

More than a quarter of a century has passed since Mongolia broke free of Soviet tutelage and set out to chart an independent course in foreign policy. Given the country’s staggering geopolitical handicap—the inescapable embrace of Russia to the north and China to the south—Mongolia has done remarkably well. Playing China against Russia and the other way around, Ulaanbaatar has so far defied predictions of falling prey to one or the other of its voracious neighbors. Whether this is a result of Mongolia’s skilful diplomacy or simply because the neighbors turned out to be less voracious than one is apt to assume is another matter. Russia’s post-Cold War retrenchment and China’s low key foreign policy under Jiang Zemin and Hu Jintao gave the Mongolians considerable flexibility.

Yet, this favourable foreign policy environment has shown signs of unravelling as a more assertive China casts an ever longer shadow over Mongolia’s shrinking policy space. On the one hand, the promise of economic bonanza from the still amorphous One Belt One Road (OBOR)—President Xi Jinping’s ambitious hub-and-spokes initiative to increase China’s connectivity with broader Eurasia—looms large in Ulaanbaatar’s foreign policy calculations. On the other, the country’s growing economic dependence on its giant neighbor severely constrains options for maneuver. If Asia has to choose sides in any number of polarizing rifts between Beijing on the one hand and Tokyo, New Delhi, or, indeed, Washington, on the other, will Mongolia’s economic overreliance on China mean that it will simply fall into Beijing’s orbit? Will Russia, itself constrained by the dynamic of close relations with China, acquiesce to this eventuality?

This article explores the evolution of Mongolia’s foreign relations during the electoral 2016-17 cycle. The period under review witnessed the transfer of political power from the Democratic Party (DP) to the Mongolian People’s Party (MPP), which won the June 2016 parliamentary elections by a landslide. Yet, the MPP’s dominance was corrected by the unexpected triumph of the DP-backed candidate in the presidential elections, Khaltmaagiin Battulga. Battulga’s nationalistic—indeed, anti-Chinese—rhetoric, while not unusual in the Mongolian political context, has engendered a degree of uncertainty about Ulaanbaatar’s foreign policy direction, both in terms of its consistency (given that the president and foreign minister represent rival political forces), and adherence to the traditional “three neighbor” framework, whereby Mongolia balances its equidistance from China and Russia through proactive engagement with the West. These uncertainties, viewed against tectonic shifts in the international environment and continued economic travails, place Mongolia before its greatest foreign policy challenge in a generation.

The State of Disrepair

It was not that long ago that Mongolia boasted the world’s fastest-growing economy. In 2011, the country’s GDP growth reached an astounding 17.3%, fueling eager visions of a second Dubai. Much of that growth was a consequence of the development of a major copper and gold mine, Oyu Tolgoi, by the multinational giant Rio Tinto. Given China’s insatiable appetite for Mongolia’s resources—which, in addition to copper and gold, include coal—Mongolia seemed on course to unprecedented affluence. The bonanza, however, did not last. GDP growth declined to a paltry 1% in 2016. Levels of foreign direct investment collapsed. Unemployment soared, and inflation reached double digits. In a bid to restart economic growth, the government resorted to heavy borrowing: $3.2 billion was raised in this fashion between 2012 and 2016, including $1.5 billion from the issue of the Chinggis Bond in 2012.

Wasteful government spending contributed to the worsening outlook. Megaprojects, like the massive industrial center at Sainshand and a multi-million dollar railroad link between the copper mine of Tavan Tolgoi and the Chinese border, were just the tip of the iceberg in the construction frenzy that, in the space of a few years, turned the capital city of Ulaanbaatar into a glittering metropolis of empty office and apartment blocks, and covered the entire country with a fine network of paved roads leading from nowhere to nowhere. The public debt-to-GDP ratio went up from 32.7% in 2011 to 86.5% in 2016. With over $1.2 billion due in 2017-2018, Mongolia would have defaulted on its debts but for a $5.5 billion bailout package put together in early 2017 by the IMF and other international financial institutions. With the prospects of an imminent meltdown held back, Mongolia seems to have turned the corner, and the economy is projected to rebound to modest growth rates in 2017.¹

The crumbling of the rosy economic outlook led to finger-pointing. Foreign investors tended to blame “resource nationalism,” evidenced in the Mongolian parliament’s efforts to impose restrictions on foreign capital in the mining sector. Irresponsible fiscal policies and pervasive corruption clearly did not help. But ultimately, it was probably the external environment that ended Mongolia’s short-lived miracle. The decline of world commodity prices dealt a heavy blow to a country that relies on mineral resources earnings for one fifth of its GDP, while the slowdown of the Chinese economy—the destination of over 80% of Mongolia’s exports—led to decline in export earnings. Even the most capable of technocratic governments would have a hard time dealing with such challenges, never mind a government that is highly sensitive to populist pressures, which make it difficult to impose austerity measures, except by the iron hand of the IMF.

Mongolia’s Foreign Affairs and the 2017 Presidential Election

Mongolia’s unstable economic situation not only resulted in two political earthquakes—the MPP’s landslide in June 2016 and their remarkable defeat at the polls in June 2017—but also imposed severe constraints on its foreign policy. The key issues of the presidential election were, unsurprisingly, Mongolia’s continued economic malaise and rampant corruption. Foreign affairs, by contrast, played only an auxiliary role in the political debates, which suggests a high degree of cross-party consensus on foreign policy. To the extent that the issue was discussed at all, the discussion focused on two overlapping aspects: first, Mongolia’s relationship with foreign investors and, second, China.

The foreign investor narrative developed along the following lines. The nominee of the ruling MPP Miegombyn Enkhbold sought to project an image of friendliness towards investors as part of a broader MPP platform of “responsible” governance. Restoring foreign investors’ “trust” in Mongolia was a feature of Enkhbold’s election program, something, he emphasized, that was squandered by the Democrats in their years in power.² But it would be a stretch to argue that the MPP is more investor-friendly than its main rival. Both parties are attuned to populist pressures and cannot be seen making concessions to foreigners. The most recent demonstration of this was the parliament’s decision, on April 14, 2017, to force large-scale foreign investors to bank with Mongolian (as opposed to foreign) banks.³

This ill-fated decision is a textbook example of how Mongolian politics works. It was the brainchild of an MPP deputy Tserenpiliin Davaasuren, whose ostensible purpose was to force the likes of Rio Tinto to keep more of their money in Mongolia, thereby increasing Mongolia’s foreign currency reserves. But the controversial resolution, approved by the MPP majority, was clearly not to Rio Tinto’s liking. The company complained to the IMF, which in turn threatened the Mongolian government to suspend the previously agreed bailout unless the idea was dropped. The subject came up for discussion in an exchange at the parliament on May 4. Originally a proponent, Davaasuren made a passionate defense of the resolution, pointing out that Mongolia did not become independent from Moscow just to find itself enslaved to the IMF: “If we maintain our position,” he argued, “it will be a big blow to foreigners. It will be a lesson.”⁴

But if there was a lesson, it was that Mongolia had no real choice but to yield to foreign donors. For all its passion and appeals to independence, the banking provision was cancelled. The political capital gained from delivering an economic bailout proved more important than that gained from being seen tough on foreign investors. But the ultimate decision depended less on the MPP ideology (there is none) and more on the party’s pragmatic calculation of costs and benefits. At another level, the fiasco showed the interconnectedness of Mongolia’s domestic politics and foreign economic policy, and the government’s inability to pursue a chosen course of action due to external constraints.

Whatever his party’s actual position or positions with regard to foreign investors (for it is not uncommon for two Mongolian politicians, even of the same party, to hold widely divergent views on key questions of policy), Enkhbold, as the establishment candidate with a long record of government service, clearly stood for continuity in all things, not least foreign policy. Not so his rivals, Khaltmaagiin Battulga and Sainkhuugiin Ganbaatar.

Ganbaatar posed the greatest challenge to Enkhbold’s business-as-usual narrative by questioning the framework of the government’s relationship with foreign investors. A former MP and a trade union leader, Ganbaatar was rather well known as a populist politician but his debut as a presidential candidate was still completely unexpected. He was nominated by the Mongolian People’s Revolutionary Party (MPRP), an offshoot of the MPP, led by former prime minister and president Nambaryn Enkhbayar. Like the MPP, the MPRP sees itself, in theory, as a social democratic party but when it comes to relations with foreign investors, it stands far to the left of its establishment rival, calling for fairer distribution of mining profits if not outright nationalization. Enkhbayar, who had been imprisoned for corruption, has been trying to make a political comeback by campaigning on an anti-corruption platform. He has alleged that Mongolia is controlled by a handful of oligarchs who have conspired with foreign companies to loot the country of its resources. Whatever the truth of this statement, it certainly resonates with a considerable section of the Mongolian public. But Enkhbayar was unable to get his presidential candidacy approved by the authorities, and consequently turned to fellow populist Ganbaatar.

Ganbaatar was generally reviled by foreign investors in Mongolia on account of his long-standing record of opposition to the Rio Tinto investment agreement on the ground that it is a rip-off for the country. Calling himself a “resource patriot” (as opposed to a “resource nationalist”), Ganbaatar argued that he was not against developing the Oyu Tolgoi mine but that he simply wanted to make foreign contracts, like the one concluded with Rio Tinto, more profitable for Mongolia. “When we concluded the Oyu Tolgoi agreement,” he proclaimed, “we lost our economic independence.”⁵ His entire campaign centered on the idea of reclaiming Mongolia’s natural resources for the “people,” though his statements were relatively short on the specifics of how this was to be done. As Enkhbayar put it at one of Ganbaatar’s rallies, “The people are asking whether there is a way out other than selling out [the coal and copper deposits] Tavan Tolgoi and Oyu Tolgoi to foreigners. Our response is: ‘there is another way.’”⁶ None of that was really taken seriously until Ganbaatar nearly knocked the MPP’s Enkhbold off the second place in the first round of voting. Had Ganbaatar come through to the second round, all bets were off: there would have been only one person between him and the presidency: the Democratic Party’s nominee Battulga.

Battulga was hardly any less of a populist than Ganbaatar but he had a different focus: China. A prominent businessman and politician who had served as an MP and government minister, Battulga is one of Mongolia’s most well-known proponents of the China threat thesis. Battulga had been a vocal voice of opposition to the idea of adopting the Chinese (also, international) gauge for a new rail track laid in Mongolia (on the ostensible ground that such connectivity would make the country an easy prey in case of a Chinese invasion). He had also argued against attracting Chinese capital and Chinese workers, seeing here Beijing’s scheme for Mongolia’s gradual assimilation. Hero Entertainment, a film studio that is widely deemed to be affiliated with Battulga, produced several films of strongly anti-Chinese emphasis, for which he was even once severely scolded by President Tsakhiaagiin Elbegdorj.

The DP-affiliated media presented Battulga as the only true defender of Mongolia’s independence. His campaign message—“Mongolia will win”—stressed the same message. Battulga did not even have to make any comments about China: his reputation made him the rallying point for nationalists. There was an effort to discredit Enkhbold on account of him being a Chinese half-blood (his mother was rumored to have been ethnically Chinese). The MPP campaign was so concerned by the impact of these allegations that it tried, in turn, to accuse Battulga of links to the Chinese. The connection was through one Billy Lim, an entrepreneur and Battulga’s business partner. Never mind that Lim was a Singaporean, not a Chinese – for the purposes of public discourse, he was deemed Chinese enough. Ironically, both establishment parties in the end had to appeal to anti-Chinese sentiments to court favor with voters.

Battulga won the presidential race in the second round, held on July 7. Almost immediately after his inauguration, he received the Chinese ambassador, presumably to emphasize that Mongolia’s policy towards China would not change. His public statements have so far fallen far short of the sort of nationalist rhetoric Battulga’s detractors (and some international media) had expected.⁷

The Mongolian presidential campaign suggests three broad observations. The first is that anti-foreign and especially anti-Chinese rhetoric is a key feature of the Mongolian political discourse. It has a dynamic of its own that may or may not have any basis in fact. This is not unique to Mongolia: many democratic polities grapple with similar issues. The Mongolians easily fall for populist rhetoric, but they did not invent populism. The second—and related—point is that not all that can be seen and heard in Mongolian political circles needs to be taken literally. Reality is the best cure for populism, and the constraints on Mongolian foreign policy remain in place whoever takes the helm. The MPP learned that much through its failed effort to impose new conditions on Rio Tinto. There is also a certain cross-party policy consensus in place, especially with regard to foreign policy. Battulga’s cooptation into this consensus is another indication of its resilience. And the final point: for all the drama of the presidential election, Battulga’s presidency does not have the significance that it might have carried if Mongolia was a presidential republic. As things stand (and the projected constitutional revision may change that), the new president shares responsibility for foreign policy with the government and its foreign minister, who happens to be from a rival party. Therefore, the most obvious consequence of his election is that Mongolia’s foreign policy will become more amorphous, making radical departures from the status quo even less likely than in the past. The one thing that may change this equation is a change in Mongolia’s external environment, where so much depends on decisions made in Beijing and Moscow.

Mongolia in Russia’s Calculations

Russia’s economic influence and interest in Mongolia are a lot less today than almost at any point in the last hundred or so years. Mongolia had been a key strategic asset for the Soviet Union in the 1930s and 40s—as a bulwark against Japan’s penetration—and in the 1960s and 70s—as a platform for containing the perceived Chinese threat. Mongolia was never particularly important to the Soviets in economic terms but it was still closely connected to its northern neighbor, which purchased Mongolia’s ores at below-the-market prices and in turn provided generous development aid. The economic relationship shrank to almost nothing post-1991 as the Russians turned inwards. Moscow has attempted to make a comeback under Vladimir Putin who wrote off Soviet-era debts and tried to wrestle his way into Mongolia’s booming mining market. The latter effort ended in a flop, however: Moscow’s bid for the most promising concession—the massive coal deposit at Tavan Tolgoi—ended in frustration over Mongolian indecisiveness. Russia was thus unable to extend its economic clout. Still, it boasted a number of Soviet-era assets that suggested a certain willingness to remain economically engaged in the country. The most important of these was Russia’s stake in the joint copper processing plant Erdenet.

But in June 2016 Russia unexpectedly sold its 49% stake in the enterprise and also in another joint-stock company, Mongolrostsvetmet, for a total of $400 million. Why it did so is still a mystery. The Russian Foreign Ministry was reportedly against the deal. It is true that the owner of the Russian stake—the state company Rostec—was unhappy with its very limited leverage and paltry profits ($4.8 million in 2015, Erdenet and Mongolrostsvetmet combined). But Putin does not always follow the money: Russia’s stake in one of Mongolia’s largest economic enterprises was much more a political than an economic issue. Whatever the case, Russia’s exit leaves it with only one remaining asset: the joint Russo-Mongolian railroad that crosses the country from north to south. Ulaanbaatar has repeatedly tried to change the ownership ratio of the strategic railroad in its favor but so far to no avail. Nevertheless, Moscow’s long-term prospects for holding on to this asset remain clouded, as the Mongolians ponder the possibilities for building alternative rail links. The overall picture, then, is that of gradual but inexorable decline in the Russian economic influence. The picture is partially corrected by the trade patterns. Over 26% of Mongolia’s imports come from Russia, including, crucially, fuel. The entire country could come to a standstill if the Russians, figuratively speaking, turned off the taps. But this dependence has failed to register in the minds of the Mongolian policymakers to the same extent as China’s growing clout.

If one’s influence in the country is measured solely by one’s economic presence, then Russia long ago lost the competition to China. Yet in most ways, Russo-Mongolian relations are at their best in a generation. A May 2017 public opinion poll conducted by the International Republican Institute shows than an astounding 90% of respondents have a favorable or a highly favorable view of their northern neighbor.⁸ For a country that had suffered decades of Russian political and economic domination, these are unexpected figures. They are even more surprising given that Russia’s policy towards Mongolia has not been particularly nuanced or proactive. Moscow’s disastrous handling of the incident entailing the beating of a Mongolian singer by a Russian diplomat, the bickering over Ulaanbaatar’s attempt to build an ecologically problematic hydropower plant in the north of the country without consulting Moscow, and other such frictions have hardly made a dent in Mongolia’s positive perception of Russia. It may well be that the decline in Russia’s economic influence has helped boost Russia’s political influence: the nationalist crowd now has less of a reason to see Moscow as an overlord it once appeared to be. Meanwhile, Russia’s agreement to scrap visas with Mongolia has boosted cross-border tourism while adding to Mongolia’s sense of dignity and self-worth.

Russia, then, has done remarkably well without actually doing that much. Battulga’s election as president will also give the relationship an unexpected boost. Battulga is widely known as a Russophile. He speaks fluent Russian, and is (or at least was) married to a Russian. Battulga, in fact, was one of the few Mongolian politicians who supported Russia’s annexation of Crimea, and he has consistently argued for closer relations with Moscow. Battulga’s presidential campaign ads highlighted his (largely imagined) closeness to Putin, and their shared interests (in judo). Putin will also be the first foreign leader Battulga will meet as president. By contrast, Battulga did not make comparable gestures towards China (god forbid) or even towards the West. Indeed, until his election, the Americans had only a very vague idea of what Battulga actually stood for, and that was despite the US embassy’s traditionally close links with Mongolia’s Democratic Party.

Battulga’s victory, then, was an unexpected boon for Russia’s standing. Ironically, a delegation of Russian parliamentarians, who visited Mongolia during the presidential campaign, made the blunder of offering tacit support to Battulga’s rival Enkhbold, repeating Putin’s mistake, when he had wrongly backed Enkhbayar against the ultimate winner of the 2009 presidential election Elbegdorj. This was a result of simple ignorance more than strategic calculation. That said, there was some concern among Russian policymakers that Battulga—for all his Russophilia—would actually hurt Russia’s interests inasmuch as his election would paralyze Mongolian politics, making it impossible to get anything done. Whether such fears were justified remains to be seen.

Mongolia in China’s Calculations

Ever since Xi Jinping announced his plans for building a new Silk Road across Eurasia (later rebranded as a part of the broader OBOR), Mongolian leaders have kept their minds squarely focused on finding a way to profit from these plans. Superficially, it made sense. Here is China. Here is Russia. Here is Mongolia, “sandwiched” between the two. Just by being there, Mongolia stood to benefit from various “corridors” and pipelines connecting China with Russia and the world beyond. It was with an eye to getting their two neighbors to endorse these pipe dreams that Elbegdorj came up with the idea of trilateral summits between himself, Xi Jinping, and Putin. The first of these took place in Dushanbe in 2014, the second in Ufa in 2015, and most recently the trio met in Tashkent in 2016. It was there, in June 2016, that Elbegdorj at long last had his two partners approve a “program” for the creation of economic corridors.

This long-awaited “program” comes with a list of some 32 projects. Even a cursory look reveals that the corridors are a massive oversell. True, some of Ulaanbaatar’s most coveted projects, such as construction of oil and gas pipelines, did not make the list. But there are plans for massive railroads, crisscrossing Mongolia north to south and east to west; plans to lay an additional track along the existing trans-Mongolian line; a plan to build a high-speed rail link between Beijing and Moscow, passing through Mongolia; and plans for a network of paved roads, among many other infrastructural, economic, and scientific cooperation projects. Unfortunately for Mongolia, most of these projects are merely expressions of intent to conduct feasibility studies, and are worth not much more than the paper they are written on, especially since the Chinese government proved to be less eager to spend cash on grandiose projects than Xi first made it sound. Even the Russians are learning that attracting substantial financing from Beijing for projects of uncertain profitability is not as easy as it once seemed.⁹

Having finally delivered the grand list of empty promises, Xi and Putin seem to have lost interest in their Mongolian counterpart. Elbegdorj failed in his bid to organize another trilateral summit in May 2017 in Ulaanbaatar. Nor did he manage to have another meeting in Astana, on the sidelines of the June 2017 summit of the Shanghai Cooperation Organization. There may be a number of reasons for this neglect. There are indications that both Beijing and Moscow had been frustrated with Elbegdorj’s resistance to the prospect of joining the SCO as a full-fledged member (Mongolia is an observer), and also by his now derailed effort to obtain for Mongolia the status of permanent neutrality (which was of course precisely a way to stay out of the SCO). The more pedestrian explanation is that Elbegdorj was a lame duck. The Chinese and the Russians wanted to see who would win the presidential race.

The trilateral approach to regional integration was Elbegdorj’s brainchild. Battulga will find it even more difficult to bring Xi and Putin back to the table without making concessions that Elbegorj was unwilling to make. But sitting at one table with the powers that be does not address the underlying problems of regional economic integration: the absence of economic feasibility and, crucially, money. Visions aside, Mongolia’s relations with its neighbors will develop along bilateral channels.

In bilateral terms, Sino-Mongolian relations are on an upswing. For instance, bilateral trade increased by 44.2% in the first six months of 2017.¹⁰ It is not clear whether these gains will last. The trade relationship between the two countries has been something of a rollercoaster, registering double-digit swings in either direction, depending on external factors, such as commodity prices. Beijing and Ulaanbaatar are sufficiently optimistic to be exploring proposals for a free trade area, and will hold the second Sino-Mongolian Expo (a biennial event) in September.¹¹ As long as China’s economic growth does not slow to a crawl, and copper and coal prices show a tendency towards recovery (which is not yet a given), there is every reason to remain optimistic about the strength of the Sino-Mongolian trade relationship. Except for one aspect: the political consequences of economic overreliance. For years, this was mainly a theoretical threat: something armchair experts and populist politicians never tired of pointing out. But a recent incident served to highlight the reality of the interlinkage between politics and economics. Enter the Dalai Lama.

The Tibetan spiritual leader is revered in Mongolia, which, like Tibet itself, follows the Gelug school of Buddhism. The Dalai Lama visited Mongolia nine times over the years, most recently in November 2016. The visit drew the ire of the Chinese government, which promised retaliation in case the “anti-Chinese separatist” were allowed on Mongolia’s soil. To no avail: the Dalai Lama was allowed to come, to preach to thousands of admiring worshippers, and even to appear at a press conference, where he slammed Beijing for trying to interfere with his travels. For a time it seemed that Mongolia would stand firm in the face of China’s escalating rhetoric, including the threat to put all bilateral economic discussions on ice. Alas, Ulaanbaatar’s resolve did not last. Soon after the Dalai Lama’s departure, the MPP-appointed foreign minister Tsendiin Munkh-Orgil made a remarkable apology, saying that the Mongolian government “felt sorry” for the visit, and would not invite the Dalai Lama again during the current administration. China’s Foreign Ministry spokesman followed up with a typically insulting comment to the effect that Mongolia should “truly learn” from the experience and henceforth respect China’s “core interests.”¹²

It was humiliation, pure and simple. Some observers have suggested that by acting in this manner, Munkh-Orgil secured badly-needed economic aid for the (relatively insignificant) concession of not inviting the Dalai Lama during the current administration, i.e. at most, four years. Another line of argument highlights that it would have been irresponsible to resist China’s demands if the cost of doing so was to deepen Mongolia’s economic crisis. The difficulty with the first argument is that Munkh-Orgil’s apology is not at all a minor concession. It goes to the heart of Mongolia’s sovereignty. It emboldens China to act in an even more brazen manner in its neighborhood. It sets a dangerous precedent for Mongolia’s future when, never mind the Dalai Lama, any foreign policy that Ulaanbaatar pursues will potentially be subject to Chinese sanction. The second argument—about the costs of noncompliance—is just a poignant reminder of the stark choices Mongolia faces today, when  economic prosperity translates into the loss of independence in foreign policy. So far, thanks no doubt to the fact that Beijing’s definition of its “core interests” has remained relatively limited, Mongolia has managed to maintain relative freedom of movement, with only occasional humiliation. But as a more assertive China throws its weight around, Ulaanbaatar’s scope for maneuver will narrow further.

The most interesting aspect of the Dalai Lama’s visit is what it tells us about Chinese foreign policy. It makes a joke of Xi’s insistence that China does not attach political conditions to economic relations, and that it does not interfere in other countries’ internal affairs. One could argue, perhaps, that punishing Mongolia was a way to show China’s credibility or, to use the Chinese phrase, to kill the chicken in order to scare the monkey, the monkeys in this case being China’s other neighbors and economic partners. But the result of this exercise will only be these neighbors’ growing suspicion of China’s intentions. In short, Beijing’s humiliation of Mongolia may well be a case of shooting oneself in the foot. At the very least, it displays staggering inability to comprehend the historically and culturally conditioned mistrust of China among many of its neighbors. In Mongolia’s case, the episode naturally contributed to growing anti-Chinese sentiments, helping Battulga’s victory in the presidential election. Battulga, in a recent interview, restated the basic problem: “We said: invite the Dalai Lama – they are saying we can’t do it. It’s a manifestation of our dependence. I will speak about it with the southern neighbor. I will demand that they do not interfere in our affairs, as we will not interfere in theirs.”¹³ Given recent trends, it is difficult to imagine this conversation will go particularly well.

Conclusion

For over twenty five years Mongolia has maintained a degree of balance in its foreign policy, developing relations with China and Russia but also raising its profile internationally by actively pursuing engagement with the West, Mongolia’s collective “third neighbor.” The balancing act has come under growing strain. Russia, as even Battulga is likely to find out soon, is not much of a balance when it comes to relations with China. Moscow lacks the interest and wherewithal to bail out its neighbor in the hour of need, as was proven again most recently, when Russia refused Munkh-Orgil’s request to step in with credits to keep Mongolia’s finances afloat. Putin’s “pivot to the East” has so far failed to live up to even modest expectations, and inasmuch as it has, Russia has focused on China to the exclusion of other players, especially the bit players like Mongolia. Even so, Russia at least continues to occupy a place of high esteem in the eyes of the Mongolian public, which cannot be said of China. Beijing’s assertiveness has irked Ulaanbaatar, having become an important factor in the domestic political discourse. Long-term mitigation of the anti-Chinese sentiment in Mongolia is unthinkable without Beijing’s adoption of politically wiser policies. There is no indication that Xi is getting the message.

Meanwhile, Mongolia should continue to make an effort to develop relations with third countries. Given the chaotic state of American foreign policy, this means mainly South Korea and Japan. Both have offered badly needed economic aid. But their political involvement with Ulaanbaatar leaves considerable scope for improvement. South Korea has been so singularly focused on the nuclear crisis, it is questionable to what extent it even has a foreign policy that is not somehow connected to mitigating Pyongyang’s nuclear threat. Meanwhile, Prime Minister Abe Shinzo, who had previously boasted a dynamic relationship with the Mongolian policymakers, has not been as active in recent years due to political difficulties back at home. Mongolia would do well to reach out to both Abe and the new South Korean president Moon Jae-in, but much will depend on whether Tokyo and Seoul have enough long-term vision and political wisdom to reciprocate. And then, there is India, whose willingness to fulfill promises has fallen far short of the propensity to make them. The optimism born of Prime Minister Narendra Modi’s historic visit to Mongolia in May 2015 has fizzled away in empty talk.
The important thing that all regional players must realize is that Mongolia, for all its so-called “resource nationalism,” for the fecklessness of its politicians, and for its economic woes, still represents an important correction to two prevailing and disturbing narratives: political authoritarianism and China’s regional hegemony.

Sergey Radchenko is Professor of International Relations at Cardiff University. Follow him on Twitter: @DrRadchenko.