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We are a group of young Mongolians who want to report on everything related to Mongolia. We are not affiliated with any political party or business groups. We welcome any stories from contributors and readers. Please feel free to drop us an e-mail. Our e-mail is mongol.setguulch@gmail.com Thank you Mongolianviews-news team

Propane tank explodes in Darkhan apartment, residents evacuated

Propane tank explodes in Darkhan apartment, residents evacuated

On the evening of January 21, a propane tank exploded in an apartment on the 7th floor in Darkhan city, causing three people to suffer injuries and two of them seriously injured. From the explosion, 62 windows of the apartment block and all windows of the post office located 40 meters away from the apartment were broken. Fortunately, windows on 2nd floor of the apartment were not broken. The fire-fighting department of Darkhan-Uul Aimag received the emergency call at 9:25 pm and extinguished the fire by 10 pm. In the process of extinguishing the fire, residents of the 7th floor fled their homes. Presently, Darkhan Soum administration is taking immediate measures to shelter the residents in the preschool #22 building which is located near the apartment.
Mr. Oyunsuren, Deputy Head of the Emergency Commission of Darkhan-Uul Aimag said that a parent of the family where the propane tank exploded bought 5 liters of gas from Dashvanjil Company that day. The new propane tank exploded when he was using the old one to prepare foods.
Three people of the family suffered injuries from the explosion and the host is currently under treatment at central hospital of the aimag. The hostess and another woman were urgently transferred to the Burn Hospital in Ulaanbaatar. Burns covered 48 percent of 48-year old woman’s body and she was diagnosed to have probability to have kidney failure. A 22-year old woman suffered burns to 30 percent of her body and her current health state is very bad.
After extinguishing the fire, the Emergency Commission of the aimag called an urgent meeting at which an ordinance of the aimag’s Governor was issued and a working group responsible for eliminating the disastrous condition was set up. Regarding the accident, State Emergency Commission head M.Enkhbold called a meeting and gave relevant instructions. Professional teams from the General Agency of Specialized Inspections and National Emergency Management Agency were dispatched to Darkhan-Uul Aimag. Also, relevant  organizations were instructed to eliminate the consequence of the accident and make a professional conclusion.
The apartment block has a total of 220 citizens of 72 families. Due to the explosion, ceilings and walls of two apartments fell in, 63 windows were broken, walls of 10 families were cracked, 11 doors were broken and furniture and possessions of the family that suffered the explosion were entirely burnt to ash. 
Emergency workers satisfied security of the 6-8th floors of the apartment and took measures against freezing. According to recommendations and resolutions of the working group, 113 people of 32 families were evacuated. 
The aimag’s Specialized Inspections Department, Emergency Department and Police Office are working to determine cause and losses.

Source: THE MONGOL MESSENGER

IMF Rep blames fiscal policy for Mongolia’s inflation

IMF Rep blames fiscal policy for Mongolia’s inflation
Mongol Bank’s actions defended
Mr. Steven Barnett, the IMF Representative for Mongolia, shared his views on the recent developments around the exchange rate.
-On January 2, 2012 petroleum importers raised retail prices by Tog 300 per liter, relating their decision to the exchange rate depreciation. Have you looked at this issue and would you agree to the petroleum importers’ explanation?
-We have not looked specifically at the petroleum market in Mongolia, so I would rather not comment on that.
However, I would like to make a general point. The cost of petroleum in a country depends on the international price of oil—typically quoted in US$—and the country’s exchange rate. So, it is natural for the price, which of course should be linked to the cost, to move with changes in global oil prices and the exchange rate.
-Many businessmen and economists believe that the BOM should be held responsible for the increase in petroleum prices. What do you think? 
-I disagree completely. In fact, we have consistently applauded the BOM—and continue to do so—for their management of the flexible exchange rate regime. Indeed, the tightly managed exchange rate in 2008 was a key factor behind the last economic crisis. Therefore, we see the continuation of the flexible exchange rate regime as a critical line of defense for preventing another crisis.
This is especially important because of the irresponsible fiscal policy that has been put in place by the government. The extraordinary growth in spending is overheating the economy, leading to  high inflation, rapid growth in imports due to excessive domestic demand, and macroeconomic uncertainty—and these factors are influencing the exchange rate. The BOM is doing the right thing by allowing the exchange rate to move in line with the evolving market conditions.
-The Bank of Mongolia has informed that it is doing intervention on the FX market to reverse the recent depreciation. Is it sufficient?
-We support intervention to smooth excess volatility in the foreign exchange market but not to resist depreciation (or appreciation) pressure. Smoothing excess volatility is fundamentally different than intervention aimed at targeting a specific exchange rate or preventing depreciation. In particular, under a flexible exchange rate regime the market guides the exchange rate up or down based on evolving conditions.
Intervention takes place only to smooth out the impact of say a particularly large transaction or other short- term disturbance in the market.
-Mongolia’s international reserves now stand at over US$ 2 billion. How sufficient are they by international standards?
-The level of reserves is adequate to comfortably support the existing flexible exchange rate regime. Indeed,
that is one of the big benefits of the current flexible exchange rate system. In this regard, it is worth recalling how the fixed exchange rate policy in place previously was a key contributor to the last crisis. Specifically, the BOM was running out of international reserves in a destined-to-fail attempt to defend the exchange rate and the crisis came to a head as the BOM came close to running out of reserves.
The bottom-line, therefore, is that the flexible exchange rate regime in place now is critical for avoiding a repeat of that crisis. Especially critical given that fiscal policy has returned to the boom-bust ways of 2006-8.
-What are the reasons for the US$ appreciation in Mongolia? In contrast, globally, the US$ and Euro are depreciating. Is this related to a crisis?
-As a general rule, economists are not very good at forecasting shortrun (less than a year) changes in the 
exchange rate. Or, put differently, short-run fluctuations in the exchange rate are inherently difficult to understand, as they reflect evolving market conditions and sentiment. Having said that, many factors could be behind the recent moves, including external considerations (such as an increase in global risk aversion which has tended to cause the U.S. dollar to appreciate and the euro to depreciate in 2011) and domestic factors (such as concerns over macroeconomic stability related to the government’s fiscal policy which has tended to put downward pressure on Mongolia’s currency).
-Down the road, what policies and measures are needed to appreciate the exchange rate and thereby bring down prices of goods?
-No policies are needed, as the
BOM should not try to appreciate the exchange rate. The flexible exchange rate regime currently in place is the best policy for Mongolia. And, a flexible exchange rate regime means that the central bank does not try to appreciate nor depreciate the rate. The best way to control inflation is to have a more responsible fiscal
policy. The extraordinary increase in government spending in 2011 and planned for under the 2012 budget are the key drivers of rising prices of goods. The public’s well-placed concern about rising cost of living should be addressed, therefore, towards fiscal policy and not the BOM.

Source: THE MONGOL MESSENGER

President Ts.Elbegdorj visits South Gobi mine sites and soums

President Ts.Elbegdorj visits South Gobi mine sites and soums
President Ts.Elbegdorj meets with soum citizens to answer questions of local concern
On January 19-21, President Ts.Elbegdorj made a working trip to Omnogobi Aimag. First, the President saw operations of the ‘Tavant Tolgoi’ Company located in Tsogttsetsii Soum. The company is locally owned with 51 percent of shares owned by Mongolia and 49 percent by about 170 shareholders. Later, the President went to the ‘Erdenes Tavantolgoi’ company that was established on December 23, 2010. It employs a total of 262 workers. According to the company’s director L.Enebish, greater constructional works are planned to construct a concentrating plant, water system, paved road and residential town for 1,000 people. He added that the company started exporting coal on August 4, 2011 and has extracted one million tonnes of coal so far. “The main difficulty is the transportation issue. It necessitates starting railway construction and urgently laying a paved road. Also the border checkpoint should have many gates because loaded coal truck waste much time in a long queue at the border check-point. In collaboration with other companies, we have made some efforts to make it have more gates,” he said.

Minerals and Energy Minister D. Zorigt said, “Even when more roads are constructed, there will still be problems of transportation. Therefore, we need to start construction of a railway as soon as possible.”

President Elbegdorj said that they need to resolve infrastructure issues quickly. In particular, construction of an auto road and railroad, along with intensifying operations of mining companies rely on the Tavan Tolgoi deposit. The transportation-related issue was touched upon most during the working trip to Tsogttsetsii and Khanbogd soums of Omnogobi Aimag. Last year, Energy Resource LLC constructed a 245km paved road from its mine to the Gashuun Sukhait border check-point. It contributed much to ease the transportation of coal. However, the road is unable to bear all capacity and they need to construct more paved roads and a railroad as soon as possible.

The president was critical about the construction process of the railroad. “When I asked about it in 2009, I was told that construction would be started after 2 years. However, there is no rail here. By using the reason of raising funds, it is taking too much time and causes economical and natural losses.” A passage way for animals should be planned while constructing both the railroad and auto road, said the President. The same day, President Elbegdorj got acquainted with activities of the Ukhaa Khudag mine of the ‘Energy Resource’ LLC. The mine started operations in 2009, put its coal processing plant into operation, made an IPO on the Hong Kong Stock Exchange, constructed an 18 megawatt electrical power plant, and  implemented many construction works. The coal processing plant is capable to process 5 million tonnes annually and has the technology to recycle 94 percent of its used water. Construction of the 18 megawatt electrical power plant not only ensures the supply of energy for the mining operations, but also for citizens of Tsogttsetsii Soum. The President was introduced to the coal processing plant, office buildings of the mine, the ‘Tsetsii’ apartment town and ‘Gallery’ town for workers.

So far, Energy Resource Company has invested about Tgs600 billion on auxiliary projects of the mine and infrastructure projects. It paid Tgs13 billion to the State Budget in 2009, and increased to Tgs120 billion in 2011.

Afterwards, the President held a meeting with local citizens of Tsogttsetsii Soum. To begin the meeting, the President briefly introduced five main directions of his activities as State Head.

On Friday, January 21 the President and accompanying officials came to the Oyu Tolgoi deposit. “At the coldest period of winter, great constructional works are underway here,” said G. Batsukh, Chairman of the Board of Directors of the Oyu Tolgoi Company. The Oyu Tolgoi Project is under the construction process. As a result of the project which is expected to be hugest mining construction in the world, Mongolia’s economy will grow by 36 percent in 2019. It is expected to invest Tgs7.7 trillion before the start of extraction. The concentrating plant will come into operation in the 3rd quarter of 2013 and it is now under the assembling process.

According to company authorities, the construction works attracted 65 companies from 38 countries as assistant executors; some 15 thousand workers are employed and 10 thousand of them are Mongolians.
Also, a contract was built for over 1,000 national suppliers, purchasing goods and services worth Tgs1.3 trillion. There are 12 infrastructure projects being implemented in the aimag and five of them are being executed by Mongolian companies. The Company made an investment worth Tgs110 billion in a training program that establishes vocational training and production centers and mining institutes in Dalanzadgad, Khanbogd, Darkhan and Ulaanbaatar. It also sponsors 200 students studying in domestic universities and 30
students studying abroad.

The authorities also introduced that natural rehabilitation will be made according to international standards. Its environmental policy completely conforms to the World Bank standard. The project is to introduce technology that demands the least amount of water consumption.
For infrastructure, 100km paved road to the southern border is being constructed and 220kwatt electrical lines are being erected. According to international standards, the airport and water pipe are being  constructed. Also, a sport hall and cultural complex worth Tgs2.6 billion are being built in the aimag center for citizens. A sport complex is being built in Bayan-Ovoo Soum with an investment of Tgs775 million.
The President highly spoke about the running construction and then asked the company to augment salaries of Mongolian workers and involve them in various trainings. Advising the Cabinet to pay attention to Mongolian workers, the President said the working schedule of Mongolians should consider providing them with comfortable living conditions. “It is important to erect an apartments’ campus for the workers,” he added.
The President also asked the company to study an opportunity to gather more national enterprisers who supply products to the OT Company.

The President and accompanying officials saw the construction process of a concentrating plant, the project field, open pit and shaft #2 from the observation stand, and a heavy load assembling workshop and settlement for workers.
Later, the President held a meeting with Khanbogd Soum citizens. Along with implementation of big mining projects and construction works, the population in the soum is increasing, which causes many problems to occur regarding mutual understanding between environment and infrastructure project implementers and local citizens. Therefore, citizens had words and queries for the President.

First, the focus of the discussion was the issue about the outlook for energy. As G. Batsukh, Chairman of the Board of Directors of the Oyu Tolgoi Project said, erection of electrical lines linking Oyu Tolgoi to Khanbogd Soum will be completed by next autumn and Tgs5.9 billion has been preliminarily budgeted. Minerals and Energy Minister D. Zorigt said, “A 220 Mega Watt electrical line is running from Mandalgobi to Tavan Tolgoi. From there, a line will be stretched to Oyu Tolgoi. A 300 megawatt electrical power station will be built in both Tavan Tolgoi and Oyu Tolgoi. The average term for building the station is 2 years. As it is needed to receive energy before the completion of the construction of power station, energy will be received from China.
The energy issue will be resolved this year if an electrical line is stretched here regardless of whether it comes from Ulaanbaatar or China.”

Citizen Batmonkh said, “I’m not saying that the Oyu Tolgoi project is wrong, but the state policy on mineral resources should be determined with a far-sight of 100 years at least. Rivers and streams are drying out and nature is deteriorating. With the current situation, it is very doubtful about the future existence of Khanbogd Soum. Pasturing and animal husbandry is devastated. There may be not any pasture area or even herders. There may be no one who herds animals 20 years from now. I can’t understand how mining is to be developed without resolving infrasture. The situation in Gobi is very hard. You looked at the soum center; it looks greenless. We need an auto road.

Senior citizen Tserenkhuu said, “Implementation of the Oyu Tolgoi Project is not fruitful for herders. State officials need to hear the words of herders and citizens. I think the meeting in the soum center will not give positive results. Look how life is there; livestock has become unhealthy and gold processing activities were made so close to our soum. I think you know how poisonous that is. Families living near the road can’t eat the meat of their livestock.”

Khanbogd citizens criticized and gave suggestions related to the Oyu Tolgoi project. They criticized that the Oyu Tolgoi project does not care about the health state of Mongolian workers, pays little to Mongolians, but higher to foreigners and apartments for workers are not built.
Officials gave relevant responses to the questions.

Source: THE MONGOL MESSENGER















The Mongolian Sandwich

The Mongolian Sandwich


Mongolia has two neighbours, China and Russia. Both of these countries are huge and have dominated Mongolia for several centuries, despite Mongolia being a sovereign republic. Mongolia is rich in natural resources such as copper, coal, gold and other minerals, which are providing new paths for success and prosperity. Its biggest market is China, while to the north, Russia forms an alternate route to other markets. However, many Mongolians believe that the possession of natural resources could lead to greater dependence rather than independence, as its commercial success may come to rely solely on either neighboring country’s economic stability.
Sandwiched Between Two Great Neighbours
Mongolian State Secretary Tsogtbaatar Damdin announced that his country has a good relationship with its giant neighbors. Sandwiched between China and Russia, Mongolia maintains peace like many other countries, though it now finds itself looking further outward. It might be said that this nation wishes to make further friendships with other parts of the world.
Mongolia’s Disenchantment with China
Mongolians are neither motivated nor ebullient about China or the Chinese. Even at a governmental level, Mongolia does not have basic human rights for Chinese workers in place. Some Chinese professionals pretend they are Koreans when doing business in Mongolia, as this is a more welcome ethnic group.
This seems to be a form of historical retribution. According to historical records, during the rule of ethnic-Manchu Qing dynasty, China ruled Mongolia rather inhumanly. One sixth of the population is Mongolian along the area of China bordering Mongolia, and there is continuous conflict there.
When the Dalai Lama visited Mongolia, China simply closed the border. This sort of behavior has led many Mongolians to fear for their future with China as a neighbor. Mongolia is a sparsely-populated vast and poor country, whereas the neighbouring countries are overly populated and economically booming. Eighty percent of the exports of Mongolia are bought by China and half of the imports are from China. To fulfill the demands of China, hundreds of small mines have been developed in Mongolia. Two big copper and gold mines have practically transformed this country.
The production of copper and gold in the mines at Oyu Tolgoi is expected to start in 2013 and at the same time, the coal production is expected to increase from 16 million tonnes a year to 240 million tonnes in 2014. Both these mines are in the province of South Gobi bordering China, which appears to be increasingly integrating into China. All necessary supplies have to pass across this border. To improve the marketing strategy and to have access to South Korea and Japan, plans are being laid out to build railways, not only to China but also into Russia and eastern Mongolia.
Mongolia’s relationship with Russia, on the other hand, has improved in the recent past. Russia has at least helped preserve Mongolian independence. Yet the relationship is not a perfect one. On a logistical note, Mongolia was importing diesel from Russia until the latter nation was unable to supply the required fuel amount. This led to a shortage of domestic supply in the summer.
For this and many other reasons, Mongolia needs to pursue a third neighbor policy and cannot afford to remain sandwiched between the two giants of China and Russia. Mongolia is a strong Western ally. It contributed troops to America during the war with Iraq and Afghanistan. Look for this nation to increasingly reach out to the world in the near future, perhaps starting with the West.

An American Capitalist in Mongolia - Part 2

We left off before the 4th of July holiday last Thursday with Chris and Carlos speaking to Harris Kupperman, a successful hedge fund manager and now CEO of a Mongolia-focused venture.  Today we’ll talk more about his company and his plans for investing in Mongolia.
Chris: Harris, you’ve said that you wanted to invest in Mongolia but couldn’t find a suitable vehicle to do so.  Like a true capitalist, you created your own!  For our readers benefit, please tell us more about Mongolia Growth Group(Editors note: Mongolia Growth Group is traded on the Canadian exchange under the ticker symbol “YAK“.  Investors in the US can find it listed over the counter as “MNGGF“).
Harris: We’re a company focused on real estate and financial services. Those are the two sectors that should be most leveraged to the growth of the economy and GDP. From a historical perspective, real estate in the downtown of the capital city of a country seeing a boom has always gone parabolic.
We think a similar thing will happen here. We were recently granted an insurance license and are now the best capitalized insurance company in Mongolia. Finally, we are actively investigating other sectors of the financial services market to enter.
Chris: Investing privately is one thing, but you went the public vehicle route, which is a bit more complex at best. How did you go about creating the company?
Harris: When I first visited Mongolia, I saw the opportunity, but like you say, I couldn’t find a way to get appropriate exposure. I also couldn’t get comfortable with corporate governance and the accounting at the various public companies. I figured that my only viable alternative was to build it myself.
I built MGG because I wanted to invest my own money in Mongolia, as did some friends. Management and the board have now invested over $7 million in the company and I’m about half of that amount. No matter what happens in our business we can be confident that our accounting is done right. I couldn’t invest the sort of money that I’ve invested without that knowledge.
Chris: Mongolia Growth Group is a bit different from most other public companies in terms of compensation. Can you explain?
Harris: The company started with me asking friends to invest alongside me in Mongolia. I wanted a diversified company that would have adequate exposure to the Mongolian economy. I simply didn’t have the resources to do that myself.  I felt funny asking my friends to invest in my company and then tell them that I was going to take a salary and dilute them through stock options or any other scheme like that. Instead, I have decided to take no salary, stock options, performance allocation, bonus or anything else. I’m here in Mongolia because I’ve invested my own money in the company.  My Co-Pilot in this venture, Jordan Calonego feels the same way.  Besides, we’ve been investors for over a decade now and have been disgusted to learn that the CEO always seems to do better than the shareholders. Now that our roles are reversed and we are management, it would be wrong of us to do what we have always criticized. Investors need to think of this company as a business created by a bunch of very successful hedge fund guys who want to invest their own money in Mongolia. Minority shareholders can come along for the ride if they want without any of the onerous fees normally associated with hedge funds. It is the only company that I know of like this. I hope we can use this as a template for the next time that I complain that some Management team is overpaid, but that’s a different story!
Chris: Investing in foreign emerging markets entails a certain amount of risk for us “foreign devils.” Tell me about your local partners in Mongolia and how you’re mitigating risk by partnering locally.
Harris: I think you have an inaccurate impression about Mongolia. People are very happy to have us investing in the country and helping the economy to grow. A stronger country means they can stand up to the Chinese better. Of course, our foreign partners help us navigate business relationships and that is critical. Think of it this way, I’m from New York. If I moved to Boston, I could do business just fine. Of course it helps if you have friends in Boston, but you’d do just fine without any relationships. That’s how Mongolia appears to me. That said, we have amazing partners and they have made everything significantly more successful for us at MGG. We couldn’t have gotten this far this fast without them.
Carlos: Even though you are focusing on the FIRE sectors (Finance, Insurance, & Real Estate), was this driven by a natural resource thesis?  [i.e. in the context of economic growth derived from the natural resource sectors?]
Harris: Yes. We want leverage to the growth of Mongolia. These three sectors are very closely tied to economic growth which we think is about to significantly accelerate as new mines come online.
Carlos: For our readers benefit can you tell us what minerals and resources are found in Mongolia?
Harris: We are learning that Mongolia has everything. Just a few months ago, we learned that Mongolia may also be a significant oil exporter. They’ve already found coal, copper, iron ore, gold, uranium, rare earth elements and pretty much everything else.
Carlos: We all remember the Levi Strauss story back from the California Gold Rush.  Along those lines have you thought of jumping into the mining camp support business?
Harris: We are looking at everything. However, for now at least, we see the biggest opportunities in real estate. There are hundreds of millions being raised for Mongolia focused real estate funds. Prices will go simply nutty as they try to put that capital to work, and we want to get positioned before that happens.
Chris: Regulations, taxes and other such government ‘ahem… initiatives can, and often do, make enormous differences to investments. Currently agriculture is favored and doesn’t pay VAT or import taxes on farming equipment and supplies. This is because the Mongolian government wants food costs low. Normally this would allow fatter margins for farmers. Is this something of interest, and do you see any other opportunities arising due to government mandates and tax incentives/breaks?
Harris: We have looked at agriculture and have a joint venture with a Mongolian to finance the expansion of his potato patch; however this is quite small in terms of our company. In general, we want to focus on businesses tied to the growth of the broader economy and agriculture doesn’t fit that bill, at least for now.
Chris: You and I have previously discussed infrastructure in Asia, and agreed as to why neither of us would invest in early stage infrastructure.  At the same time we both know that infrastructure is absolutely critical to growth. Where do you think Mongolia is at with the critical infrastructure that is being built now, and needs building to enable the sustainable growth we expect?
Harris: Infrastructure is the main thing holding back the economy. As soon as you build a railroad, all these stranded mineral assets suddenly become economic. The same goes for road infrastructure, power, and water transport. Really everything needs investment, that’s the reason that I feel so confident that the government won’t do anything to hurt foreign investors, it would simply derail growth.
Chris: Here’s a problem I’ve been thinking of lately. It’s fair to say that since listing its shares publicly, MGG has experienced periods where the market clearly overvalued the company. This should be obvious to any investor performing some back of the napkin math. When insiders of a company see the market value of their company trading below their best estimates of fair market value they buy back stock. When the opposite happens it’s natural to offload stock. This is easy for me as a pure capital provider, and one not involved in strategic decisions or management.  But, I wonder how I’d deal with this situation where it’s my own company I’m running. How do you deal with this conundrum, given that I think we’re likely to see some extreme over-valuations at some point as the Mongolia story begins to unfold and the world wakes up to the opportunities?
Harris: I’m a long term investor. I have absolutely no intention of selling any of my shares. NONE. If our shares are undervalued, it would be great to be able to buy back shares. If we are overvalued, we just ignore it. Remember, that when an economy grows as fast as Mongolia’s, it’s very easy for our company to simply grow into the valuation. For instance, in the past four months, real estate prices are up between 20 and 50%. It doesn’t take many more months like that for a business to grow into and then exceed a current valuation.
--------
Mark again… Harris is as sharp as they come in our opinion.  We believe in him so much in fact that we participated in all three rounds of the MGG private placements.  So for purposes of full disclosure, Chris and I own shares.  You can figure out what we paid by looking at the SEDAR filings.  We also encourage anyone that is interested to review the Company’s website at: http://www.MongoliaGrowthGroup.com.
We’ll have more from Mongolia over the coming weeks. Chris knows a few more intrepid capitalists that have made Mongolia an important part of their investment activities.  Stay tuned, and let us know if you have any comments or questions.  Just post ‘em below and we’ll respond asap.
“With Heaven’s aid I have conquered for you a huge empire. But my life was too short to achieve the conquest of the world. That task is left for you.”
- Genghis Khan, to his sons at the end of his life.

Canada's Man in Mongolia Has Fond Atlanta Memories

his story is part of an upcoming special report on Mongolia, the second country to be featured in our Emerging Market Series
It's been six years since he left Atlanta, but Greg Goldhawk still faithfully contributes to WABE, the local public radio affiliate.
He must really believe in the mission, since the Canadian diplomat is now posted far out of the station's range.
"I suspect I may be the contributor furthest away from the broadcast tower," said Mr. Goldhawk, who became Canada's ambassador to Mongolia in 2010.
Mr. Goldhawk was a senior commercial officer from 2002-06 at the Canadian Consulate General in Atlanta before heading off for a four-year stint at the embassy in Bangkok.
In August 2010, he left Thailand's tropical heat for Ulaanbaatar, the world's coldest capital.
Mongolia and Atlanta share few similarities, but lessons on diplomacy learned in Georgia have translated well to his first ambassadorial posting.
"It's about building networks of confidence and understanding between businesspeople and officials in two different locations, be it Canada and the U.S. or Canada and Mongolia," he said. "And the process about how you do that is kind of the same everywhere you go."
Atlanta also gave him a sense of what it's like to work in a dynamic economy.
"Being in Atlanta sort of prepared me for a place that is on the move and moving quickly," he said.
While friends back home often can't find it on the map, Mr. Goldhawk said Mongolia's reputation as a remote Asian backwater is quickly changing. 
With 3 million people (fewer than metro Atlanta) Mongolia's economy is tiny. In 2011, gross domestic product was up 6.4 percent to $6.2 billion, according to the World Bank. But more investment is coming, as anticipated by gleaming new buildings Mr. Goldhawk can see from the embassy's office. Various forecasters project growth this year of up to 15 percent as companies continue to invest in huge mining projects in the South Gobi province. Growth during the next decade could top 40 percent. 
Canada, with its strong natural resources sector, is a major contributor. Just the pre-production costs of the Oyu Tolgoi gold and copper mines, a joint project between Canadian mining firm Ivanhoe and global giant Rio Tinto, is bringing in more than $4 billion.
"I feel enormously privileged, honestly, to be here at this point in time because the place is evolving so fast, you feel like if you blink you're going miss something really important," Mr. Goldhawk said.
But Mr. Goldhawk is not just an observer. Especially in a small country like Mongolia, diplomats can open commercial and political doors, benefiting both their home and host countries, he said.
"You can actually go home and at the end of a day and say, 'I made something really good and useful and helpful happen today,'" he said. "That, as a personal feeling; it's enormously satisfying. I would say it's the same kind of feeling I had in Atlanta."
Mr. Goldhawk is flattered that Mongolia has looked to resource-rich Canada as an example of what it would like to become - a stable democracy where wealth is distributed equitably. Still, many worry that the country could catch "Dutch disease," a scenario played out in many African countries in which mineral wealth becomes a curse by broadening the gap between the rich and poor.
Policy makers understand this danger and are doing their best to address it, though governance remains one of the top challenges to Mongolia's sustained growth, Mr. Goldhawk said.
"If they don't get that stuff right, all the money in the world isn't going to make this country a better place, and they get that," he said.
On that point and on many others, Mr. Goldhawk echoes his American counterpart, Jonathan Addleton, who has family roots in middle Georgia.
They live in the same Ulaanbaatar neighborhood and often work side-by-side, whether it's pounding nails in a Habitat for Humanity home or ironing out commercial issues.
Though he represents Canada, it's common for Mr. Goldhawk to be working with Mongolian authorities to smooth the way for projects involving American firms.
"Those kinds of supply-chain collaborations are there even in a place as remote as Mongolia might seem," he said.
The podcast above features a Skype interview with Mr. Goldhawk conducted from Atlanta.  

Rio Tinto gains majority stake in Ivanhoe

The Anglo-Australian mining giant Rio Tinto says it now holds a majority stake in Ivanhoe Mines, further extending its control over immense Mongolian gold and copper deposits.
Rio Tinto raised its stake in the Canadian mining group to 51 per cent by purchasing an additional two per cent of its outstanding shares, before "a very important phase in the development of the Oly Tolgoi project" in Mongolia, a statement released on Tuesday said.
Construction of the mine - which currently employs 9,000 Mongolian workers - is about 70 per cent complete and production is expected to begin late next year, Rio Tinto noted.
The mining group said that in the last few days it had bought 15.1 million shares of Ivanhoe for a total of 302 million Canadian dollars ($A283.71 million).
Rio Tinto was able to raise its stake following mediation last month in its long running conflict with Ivanhoe, which had tried to block the Anglo-Australian giant from getting a majority of shares.
The multi-billion-dollar Oyu Tolgoi project has been billed as one of the biggest investments in Mongolia since the former Soviet satellite took a capitalist route more than two decades ago.
Ivanhoe owns two-thirds of the shares in Oyu Tolgoi while the Mongolian government holds a 32 per cent stake.
Sale of copper from the mine should begin in the first half of 2013, Rio Tinto said.

No exploration licenses to be issued in 2012

No exploration licenses to be issued in 2012
Veto on license issuance extended for third time

License administration is as much of a concern as environmental degradation
On January 12, the first discussion of a Bill to amend the law on banning the issuance of new exploration licenses was held in parliament. During the first discussion, the Bill was adopted with support of 80 percent of MPs who attended the plenary meeting. By doing so, the term of banning issuing new exploration licenses was extended to December 31, 2012.
The law on banning the issuance of new licenses for minerals exploration was initiated by the President and adopted by parliament in 2010. The issuing of exploration licenses ceased from May, 2010 to December 31, 2010. As proposed by the President, it was re-extended until April 30, 2011 and December 31, 2011.
License-related relations caused by the disorderly issuance of great number of minerals licenses became an issue connected to the common interest of Mongolia and national security. To arrest the situation, Ts. Elbegdorj held the position that exploration license issuance should be ceased until a new law is made to regulate relations in mining sector, however parliament set the term to effect the veto.
D. Battulga, head of the Presidential Office, said that a new Mining Bill will be submitted to parliament in the near future. During the discussion of the Bill to amend the law on banning issuance of new exploration licenses, MPs touched on the issue of how to eliminate illegal acts of selling existing mining and exploration licenses rather than extending the veto term. For instance, MP N. Ganbyamba said that it is necessary to ban on-selling of licenses, rather than banning the issuance of licenses.
MP D. Gankhuyag cited that the act of selling licenses was intensifying. MP R. Bud suggested selling exploration and mining licenses through the Stock Exchange in order to limit millions of US dollars worth trading of the licenses by individuals and companies. D. Zorigt, head of the Standing Committee on Economy, said “There are groups of people who want to profit by selling the licenses rather than doing exploration. Generally, primary explorations are carried-out by small companies. There is a common practice that conducting certain explorations require huge sums of money, the license is transferred to big companies. Compared to earlier periods, control is tightening for mining license holders. They are required to give complete reports of fiscal year explorations and thus many mining sites are being controlled.”
Some MPs had a proposal to include a clause on banning the transfer of licenses in the Bill; however, polling on this issue was not carried out at the meeting of the standing committee. Therefore, the proposal was not supported. D. Battulga, head of the Presidential Office, said that in the Bill on Mining Law currently being worked-out, there would not be an issue on transferring the license. If the new Bill on Mining law is adopted earlier than the expiry date of the veto in effect, the veto will immediately be annulled.

Source: THE MONGOL MESSENGER

MPP nominates six new ministers

MPP nominates six new ministers
President expresses concern over nominations

President Ts.Elbegdorj meets with Prime Minister S.Batbold and the ministerial nominees to assure government priorities are met
As reported, the DP decided to quit the joint government. This decision was discussed and supported at the NCC meeting. On January 12, six DP ministers who worked in the government presented Prime Minister S.Batbold with their request to be released from their present positions. MPP is the majority in parliament and faces the task of appointing new ministers to form the cabinet. In order to save time and proceed with work normally, the Prime Minister and leader of the MPP S.Batbold urgently introduced the question of appointing new cabinet ministers to the Governing Council of MPP.
The Governing Council of the MPP decided to appoint half of the ministers from parliament and the other half from outside. Under this circumstance, the MPP group in parliament met on January 16 to introduce the following three nominations for ministerial posts from within parliament. Ch.Ulaan, S.Byambatsogt and D.Hayanhyarvaa were nominated for the post of Finance Minister. With a majority voice, candidature D.Hayanhyarvaa was supported. Ts.Dashdorj, N.Ganbyamba, R.Bud, H.Badamsuren and H.Badelham were named for the post of Road, Transportation, Construction and Urban Development Minister. Ts. Dashdorj won the nomination. Competing for the post of Defense Minister were Ts.Batbayar and J.Enkhbayar. As they got equal votes in the MPP group in parliament, nomination to this post was reconsidered at the MPP Governing Council, with more support to J.Enkhbayar The PM’s proposal of candidates to the post of First Deputy Premier, Health Minister and Minister of Nature, Environment and Tourism was supported by the MPP Governing Council. Proposed for the First Deputy PM was MPP General Secretary, U.Hurelsukh; for Health Minister, state secretary N.Khurelbaatar; and for Minister of Nature, Environment and Tourism former state secretary the of foreign ministry, D.Tsogtbaatar.
On January 13, President Ts.Elbegdorj received the Prime Minister to express his position regarding the replacement of the six outgoing DP ministers in the cabinet and to give instructions on some urgent issues. “The posts of the First Deputy Prime Minister and deputy ministers are not necessary.
Cutting these posts will save money and staff. More than once we talked about the need to appoint ministers from outside Parliament rather than from among the MPs. We must hear and accept claims and criticism that the parliament’s mechanism on government responsibility is losing. The Constitution rejects the possibility for one subject enjoying double power – executive and legislative” declared President Ts.Elbejdorj.
On January 17, Prime Minister S.Batbold submitted his proposals on the new appointments to the President. Meeting with journalists, he also explained his position to keep the cabinet structure intact. The PM reassured his intention to fulfill the duties facing the MPP regardless of the Democratic Party leaving the joint
government. “From the beginning, Parliament approved the structure and the staff that was agreed to for implementing the targets forwarded in the program. These targets remained and the MPP will work to implement them. We are facing the most responsible period for implementation of our goals; and therefore, the cabinet structure should not be changed,” said the Prime Minister. “This time we decided not to touch staff reduction, this could be done after the election when new goals and new tasks are faced”, said the Prime Minister.
The Prime Minister was confident in the candidates who were promoted to the positions. He characterized them as experienced and best MPP personnel. He supported the naming of the MPP general secretary for the First Deputy Prime Minister because state and government activity is a keynote goal and MPP personnel must not be mobilized for party activity, but for state and government activities. “This was the reason for my choice”, said S.Batbold. “Appointing the party’s best personnel, including the MPP General Secretary into the government is very important. The people who were nominated to ministerial posts have served the state for 12-25 years; these are people experienced and skillful in administrative, political, professional fields”, he added.
On January 18, the President met with the six outgoing ministers, with the new candidates, and the Prime Minister. The outgoing ministers must report about their work and the question of releasing them from their posts must be resolved in parliament. Only then can the appointment of new ministers be discussed, said the President. 
President Elbegdorj said that everybody knows how the joint government was formed and this is why the ministers who are leaving the cabinet need to report to people about what they accomplished. The President requested the PM to explain the appointment of three ministers from parliament despite talks to not appoint MPs to the cabinet. He said it would be an important step to correct the supervising mechanism of parliament over government activity which is not perfectly working today.
“There is no more important power than legislating power, said the President. MPs must do their jobs drafting and passing laws and must not be mixed with the double executive duties of cabinet members. It is not banned by law, but it needs to be practiced in life, said President Ts.Elbegdorj.
The President ended the meeting saying that on January 19-23, he plans to have a working visit to the Oyu Tolgoi and Tavan Tolgoi mines and suggested Parliament to discuss and make its decission on the issue of releasing the six DP ministers while his absence. The President underlined that appointment of new ministers must be discussed after DP ministers’ release had finalized according to relevant laws.
On the evening of 19 January, Government submitted a draft resolution to Parliament on releasing the six ministers from their posts.

Source: THE MONGOL MESSENGER

Lunar New Year celebrations reflect Bay Area diversity

Lunar New Year celebrations reflect Bay Area diversity


Instructor Batzorig Dorj, top, leads a group of seven- and eight-year-old girls through an intricate choreography as they practice a traditional Mongolian folk dance, Thursday, Jan. 19, 2012 in Oakland, Calif., in preparation for Lunar New Year festivities next week. (D. Ross Cameron/Staff)
Amid the profusion of Lunar New Year celebrations signaled by Monday's new moon, Ariuntuul Avirmed thinks you might not have heard of her festival, Tsagaan Sar.
Mongolian families joyously celebrate the new year each winter with food, prayer, dancing, gifts and enough fermented horse milk to make everyone merry.
"If you have a good feast, a rich feast, your whole year will be good," Avirmed said.
Oakland Chinatown has its predominantly Chinese New Year's Bazaar this weekend, a precursor to San Francisco Chinatown's big parade Feb. 11.
Also this weekend is San Jose's Vietnamese Tet Festival, a destination event for Bay Area Vietnamese-Americans since it launched 30 years ago.
Instructor Batzorig Dorj, left, offers some words of encouragement to seven-year-old Helen Samba as they practice a traditional Mongolian folk dance, Thursday, Jan. 19, 2012 in Oakland, Calif., in preparation for Lunar New Year festivities next week. (D. Ross Cameron/Staff)
But as the Bay Area's Asian-American population approaches 2 million, its cultural diversity has grown.
Each coming of the Lunar New Year brings new festivities to homes, community centers and banquet halls across the region.
"It's the only time we have the chance to meet all the relatives, the chance to show our kids what we do, the food we eat," said Berkeley resident Gana Nasam, who moved to California from Mongolia a little more than a decade ago.
Tsagaan Sar, which means White Moon, won't actually begin until February, a month later than the Chinese New Year, but Nasam's family is getting ready.
Her 7-year-old daughter, Helen, was pirouetting to a throaty Mongolian tune Thursday night to prepare for a dance performance at the Oakland Asian Cultural Center.
Although the Bay Area will abound with New Year celebrations in the coming weeks and months, the center is one of the few organizations that tries to incorporate the disparate traditions into one event.
Mongolian youth dancers, Korean drummers, Japanese Butoh performers and others are participating in the Feb. 4 event in the heart of Oakland Chinatown.
"If we're pan-Asian, and we kind of collaborate, we have strength in that," said Herna Cruz-Louie, the event's organizer. "There's definitely been a greater mix of families moving into the downtown area."
The working-class district has bucked the trend of other urban American Chinatowns that are losing Chinese immigrants to the suburbs. At the same time, the city's Asian-majority districts have expanded and diversified.
The city's Korean-American population nearly doubled in the past decade, according to the census, and neighborhoods just southeast of Oakland Chinatown are home to large numbers of immigrant families from Vietnam, Laos, Cambodia and Myanmar, all with their own New Year traditions that begin between now and April.
While many holiday events cater to elder immigrants who miss the traditions they grew up with, Cruz-Louie said her event, now in its eighth year, tries to engage Asian-American teenagers and young adults who were born in the U.S.
"The kids realize they actually like doing it. It's a connection," she said. "The young people actually want to learn it, partly because they have such a separation from the homeland."
People of all faiths celebrate the New Year using a lunar calendar, but many of the traditions are rooted in Buddhism, said Jian Ying, abbot of Sunnyvale's Chung Tai Zen Center.
He said he has "invited everyone" and expects Buddhist adherents of Chinese, Vietnamese, Korean, Singaporean, Malaysian and non-Asian descent to attend a ceremony Monday morning.
"It's a spirit of sharing, to give what we have, to share what we have," he said. "That's the Buddhist way. It's not just within the cultural boundaries."
Another connection that the Bay Area's first round of Lunar New Year celebrations will share this weekend: They all can expect rain. Not to worry, say organizers of Oakland Chinatown's outdoor festival.
"Rain is a good sign," said Jennie Ong, director of the Oakland Chinatown Chamber of Commerce. "It means abundance for the year."

Mongolia Aims for Tavan Tolgoi IPO by June

Mongolia Aims for Tavan Tolgoi IPO by June

HONG KONG--The Mongolian government is looking to launch a multibillion dollar initial public offering of a mega coal deposit ahead of parliamentary elections in June, with plans to list state-owned Erdenes-Tavan Tolgoi Co. in London and Mongolia, people familiar with the situation said.
One of the people said that an eventual secondary Hong Kong listing of the company, which controls the world's largest coking-coal deposit in the South Gobi Desert near China's northern border, is also probable.
"We are trying to go for the IPO before the elections," a senior Mongolian government official said, adding that a ministerial reshuffle is likely next week, after which a task force would be set up to look into the IPO process.
Another person said that getting certain financial terms translated into Mongolian is taking a long time, and the fact that every Mongolian born before March 2010 stands to get shares in the IPO is tough to administer.
The plan to list Tavan Tolgoi in Hong Kong at the same time as in London and Ulan Bator was dropped because Mongolia isn't among the overseas markets from which Hong Kong approves listings, and Hong Kong isn't likely to give special dispensation to allow the Mongolian-incorporated company to list ahead of the elections, one of the people said. U.K. rules allow listings from any country.
The company plans to list in London by issuing global depositary receipts, which are easier to get approval for but tend to have lower liquidity than primary shares.
"The company is focused on listing in London, which is a resource hub and also has close links with the Mongolian exchange," one of the people familiar with the situation said. "What's difficult is getting a primary listing in London, which is only possible for U.K.-domiciled firms, but can't be done by the June time frame."
A company is able to raise funds by listing in the form of global depositary receipts, which would normally be issued by a depositary in a single location such as London or Luxembourg.
The government plans to sell as much as a 30% stake in Tavan Tolgoi to international investors as well as another 10% to local companies. It also plans to give 10% to Mongolian citizens and the government would hold about 50%.
A $2 billion-$3 billion fund raising could value Tavan Tolgoi at around $10 billion and double the market capitalization of Ulan Bator's stock exchange.
Goldman Sachs Group Inc., Deutsche Bank AG, BNP Paribas SA and Macquarie GroupLtd. are handling the Tavan TolgoiIPO.

Nomadism in Mongolia-The - best place - last

This piece was writing exactly 10 year and appeared in the Economist as Christmas Special. Quiet interesting read.





Nomadism in Mongolia

The - best place - last

As Mongolia shows, nomadic pastoralism and private land just don't mix

IT IS what is underfoot that counts. Very roughly, between the Ural mountains in the west and the Amur river on the Sino-Russian border, and between the latitudes of Lake Baikal in the north and the Chang Tang plateau of Tibet to the south, lies a land too arid usually for forest or even field. Some of it is mountain and much is desert, but most of it is steppe: the vast grasslands of Inner Asia.
The foot or so of soil below the steppe's deceptive surface holds tens of thousands of years' worth of fertility, the product of grasses' ability to turn to biomass the energy of the fierce but brief summer's sun. Squirrel-tail barley, needlegrass, a clutch of fescues, Tatary buckwheat, plains lovegrass and wild oats: the rooting networks of these grasses seek out and trap moisture and nutrients. Dead roots are broken down and added to the store of humus.
Above ground, some grasses of the steppe, like needlegrass, are sod-forming: they put out surface runners that trap moisture and smother bare ground. Forbs—the non-grasses such as herbs and wildflowers—bring up nutrients from deeper down, or, if they are leguminous, fix in the soil essential nitrogen from the air. An ungrazed summer pasture is no monotony: it is a riot of rippling grasses and flowering gentian, cinquefoil, yellow-rattle, motherwort and Syrian rue.
In his history of grass, Graham Harvey describes the prairie, America's equivalent of the Asian steppe, before settlers waged war on it by overgrazing or ploughing it up: it was a “biological powerhouse, rich in wildlife and with a productivity no modern farming system could match.” Inner Asia's steppes may never have boasted the 60m bison that white settlers on the prairies estimated there to be in the 1860s, quickly slaughtered to near-extinction. But rock-carved reliefs 11,000 feet (3,350 metres) up on one mountain pass in the Altai mountains, near to the modern Mongolian border with Russia and China, depict a presumably Turkic race following great herds of wild animals on their migration—gazelles, argalli sheep, reindeer, wild horses—much as American-Indians followed the bison.
Until as recently as the 1960s, Inner Mongolia, by then part of the People's Republic of China, still had the huge herds of gazelle and wild ass that so astounded European explorers-cum-hunters at the end of the 19th century. Even today, the rolling empty eastern steppe of Mongolia proper looks like the prairie ocean must have done when it caused American settlers, heading west in their prairie schooners, to gasp and wonder about carrying on. The range of gazelle has shrunk greatly in recent decades, but in this part of the country 1.5m of them still graze, in migratory herds that run right round the horizon. Such is the biological powerhouse of the steppe.
It is a powerhouse that humans have long tapped by raising livestock; indeed, it is on the steppe that the sheep, the goat, the camel and the horse were all first domesticated. The rest of the world soon got to hear about the horse-bound nomads' success at domestication, particularly after the invention of the compound bow made of horn, and of the stirrup, which allowed the mounted nomadic warrior to fire behind him and then escape—the deadly Parthian shot. Huns originating from modern-day Mongolia struck fear into the fifth-century Roman Empire. From the 13th century, the Mongols founded dynasties in China, Persia and India. Stirrings on the steppe sent ripples around the globe. Edward Gibbon, in his “Decline and Fall of the Roman Empire”, writes that:
In the year 1238 the inhabitants of Gothia (Sweden) and Frise were prevented by their fear of the Tartars from sending, as usual, their ships to the herring-fishery on the coast of England; and as there was no exportation, forty or fifty of these fish were sold for a shilling. It is whimsical enough that the orders of a Mogul khan, who reigned on the borders of China, should have lowered the price of herrings in the English market.
Genghis Khan's homeland is in modern-day Mongolia, a country the size of France and Spain combined that sits at the heart of Inner Asia, with perhaps the world's finest and most extensive remaining grasslands. Its pastoralists no longer strike fear near and far, but their household techniques for raising livestock would, in their essentials, be recognisable to a Mongol from the great conqueror's time. Pastoral nomads in Mongolia still use a felt tent with wooden frame, a ger, which keeps out the heat in summer and protects from the cold in winter—Mongolia's continental climate has the world's greatest extremes of temperature. Ager is perfectly round not only to create the greatest space out of the least material, but also to stand up to the fierce katabatic winds, which whistle round it rather than topple it over.
The social divisions of the ger—left as you enter for the guests, opposite the door for the family head, right for the rest of the family—are unchanged, and so are the divisions of labour. Men are responsible for the raising of livestock: their herding, castration and slaughter, and (a job that the younger men relish) the breaking-in of horses. Women oversee the household, the raising of children, the milking and the making of dairy products: yogurt, butter, hard cheese, milk-vodka and the noble airag, fermented mare's milk.
The 27m livestock in Mongolia—the cow has been added to the mix, with yaks on higher pastures—outnumber the population tenfold. Nomadic pastoralists care for the bulk of these animals. Indeed, nowhere is the economy so tied to nomadic pastoralism as in Mongolia. And never have so many Mongolians—a third of the population, nearly double the number a decade ago—practised it as today.
It is tempting to regard nomads as the medieval Europeans and Chinese did: fierce, free and independent of a constraining, higher authority. Such an impression is reinforced by the sight of any Mongolian herder at sunset galloping back to his camp, in full song; by the Mongolian marriage ceremony, which is a ritualised form of abduction; or by the sight of two young lovers' horses by a cave or concealing rock, the man's urgaa (his pole-lassoo) stuck in the ground to demand privacy but presumably also to boast of sexual conquest.
 A giant steppe for a man; a small steppe for a hordeAlamy
Mongolia's political history certainly seems to support a romantic notion of their independence. Mongolia owes its political existence to a struggle by a pastoral society against the encroachments of an agrarian one, as David Sneath, a pastoral specialist at Cambridge University, points out. In the late 19th century, pastoralists in Inner Mongolia failed to stop the appropriation of the best land by Chinese agriculturalists; that failure prompted an armed struggle—led by many who had fled from Inner Mongolia—for the independence of Outer Mongolia. After over two centuries of subjugation by China's Manchu rulers, and the collapse of the Qing dynasty in 1911, Outer Mongolia declared independence. A revolutionary Communist state, the second ever, was created in 1924, under Soviet tutelage; it set about the destruction of feudal and monastic seats of power.
With the collapse of the Soviet Union a decade ago, Mongolians embraced liberal democracy with gusto (albeit declaring the illiberal Genghis Khan as their refound hero). The Russians, whose stooges instigated genocidal purges in Mongolia of Buddhist lamas, intellectuals and rich herders in the 1930s, have largely been forgiven; the distrust of Chinese intentions remains as visceral as ever.
Today, the state and its citizens, even townspeople, still identify with nomadism and the horse. Witness the minister and the ambassador who, besuited, jumped up on horseback for a gallop after lunch with this correspondent just outside the capital, Ulan Bator, before heading back to the office. The official Mongolian tourism website, which lists ten reasons for visiting the country, says it all. Reason number six is “No fences”. You can still ride the 3,000 kilometres (1,900 miles) from west to east without encountering a single man-made impediment. Mongolia is a strange thing: a free-market economy with public ownership of land. But how long can the two continue to co-exist?

The call of the wild

To understand how land ownership touches nomadic life, however, it is important to unpack the exaggerated notion of the nomads' freedom from higher authority. For pastoralism has always depended upon a political authority to regulate access to pastures. As William of Rubreck, a 13th-century Franciscan monk, put it:
Every captain, according to whether he has more or fewer men under him, knows the limit of his pastorage and where to feed his flocks in winter, summer, spring and autumn.
Under the Manchus, Mongolia was split into 83 districts called hoshuu, (meaning banner), within which herdsmen were assigned to smaller units, sum (arrow), and sub-units, bag. As Mr Sneath says:
The territory of the hoshuu generally contained a number of different areas of pasture used in winter, spring, summer and autumn. These seasonal pastures were divided between various sums and bags, and within these areas the individual households had customary use-rights to particular pastures. In effect this meant that each family owned no land as such but had a recognised area of pasture that it used in the different seasons, and of these the rights to the exclusive use of winter pasture (ovoljoo) tended to be the most strictly enforced.
It was not such a great leap from the Manchu system to the pastoral collectives under socialism, called negdel, that were set up in the late 1940s and 1950s. In feudal days, most herders looked after animals belonging either to aristocratic or to monastic masters, while raising livestock for private consumption. Under collectivisation, the state was the master; a number of private livestock were still allowed. The shift from collectivisation to a market economy, Mr Sneath argues, was in many ways a far more wrenching change, one that undermined or destroyed institutions that had long sustained nomadic pastoralism, particularly ones that spread risk and reaped economies of scale.
With democracy, the 300-odd negdel were, at their members' insistence, disbanded and turned into marketing companies. Herds were privatised and the two-dozen huge state farms dissolved. Prices were freed. The western development specialists who flooded in predicted that market signals would allocate resources more efficiently, allowing dynamic enterprise—including in pastoralism—to break free from moribund old structures.
It did not happen that way. Real income per head in Mongolia fell by half between 1990 and 1992, according to the World Bank, and by another third the next year. By 1998, a third of Mongolians were living below the poverty line, compared with none, at least officially, in socialist days. In part, the decline was down to the collapse of trade with the Soviet block: new trade with China filled only part of the hole. It was also due to the loss of Soviet aid, which supplied perhaps a third of GDP. Western donors made up much of the aid gap (Mongolians get among the highest number of aid dollars per head in the world), but to dismayingly small effect.
In the pastoral sector, the services that the negdel provided for herders under socialism—the regulation of access to pastures, the upkeep of wells for watering animals, the provision of winter hay, a collective truck for transport to fresh seasonal pastures, and much more—collapsed, and little replaced them. Herding became more atomised. People increasingly took up subsistence herding to escape joblessness in the towns. Traditional rights of use to certain pastures were eroded, as Robin Mearns of the World Bank puts it, by a spirit of free-for-all.
Without decent transport on Mongolia's roadless steppe, a ready market for livestock and processed goods was no longer assured, particularly for remote herders. The result was great hardship. The herders' response was to fall back on small, uneconomic networks of family or friends, to breed ever more animals with less regard to their quality (numbers rose to a record 34m in 1999), and to move closer to towns. This concentration has caused pastures near to the towns to be overgrazed, and more distant ones to be under-used. There is a desperate need, says Mr Mearns, to restore mobility.
Between the summer of 1999 and early 2002, an unprecedented series of meteorological disasters took place: great swathes of Mongolia were hit by drought, and by different types of zud, winter phenomena that prevent animals feeding either because of ice crusts or heavy snow. Some 7m animals died, wiping out many families' entire herds and so their livelihood. Under collectivisation, with fewer beasts, greater mobility and the state delivery of supplementary feed, such a disaster would not have happened.
The pastoral disappointments of the 1990s have led to a couple of alarming responses. The first is to dismiss pastoralism as a backward pursuit, an embarrassment to notions of modernisation rather than a proven response to a harsh environment. The governor of Dornod, the easternmost province, says that herders “get in the way” of his ambitious plans for resource extraction. These include not just mining, but also inviting Chinese agriculturalists to farm great swathes of steppe.
The second response, more sympathetic to herding but as disturbing in its potential consequences, is promoted by, among others, the Asian Development Bank. This argues that market reforms in pastoralism cannot work without the private ownership of land. Who can argue with that? Without ownership, herders have no incentive to protect land from degradation and to invest in land improvements. The theory of the tragedy of the commons is well-known: it is in the interests of any individual to add to his stock of animals on common land, even if that leads to further degradation.

Enter the free-market fundamentalists

Already, a 1995 land law, only recently being implemented, allows herders to apply for the rights to use certain winter shelters. Many interpret this as entailing the rights to winter pastures around those shelters too. Rich herders have rushed to stake their claims, leaving poorer ones at a loss. A new land law, passed in mid-2002, sensibly gives Mongolians the right to own urban plots of land. But many see such ownership eventually being applied to pastures, and are laying claim now to the best ones. “Traditional unwritten law is not working any more,” says Batbuyan, a specialist in pastoralism at the Mongolian Academy of Sciences. “Younger herders don't really know the traditions. They want things written down.”
 Alamy
Yet privatisation, say pastoral experts (though not most economists), would be a disaster, undermining centuries of institutional best practice. Inner Mongolia offers a cautionary tale. From the 1980s, pasture was, in effect, privatised through contracting-out. One justification was the threat of a tragedy of the commons. Fencing has gone up to delineate the private land. As a result, Inner Mongolia and Mongolia are distinguishable from the air: up to 40% of Inner Mongolia's steppe is reckoned to be degraded; less than 10% is in Mongolia.
Pastoral households, or even small groups of connected households, called khotail, form too small a unit to cope with the unpredictable weather and pasture conditions that characterise nomadic life. Proper mobility (sometimes the ability to move over 100 kilometres to a new pasture), and flexible access, are crucial to avoiding livestock losses and ensuring healthy herds. Private herds might one day gain the scale of former collective or feudal herds, but that is a long way off. Of some 275,000 households that own livestock, fewer than 1,000 have more than 1,000 animals. In the meantime, ways need to be found to make herding more co-operative.
One priority is to improve access. Outside Choibalsan, Dornod's capital, one herder, Ovgii, said he moved a year ago from the better pastures around Sumber, 300 kilometres to the east, because he can get more for his livestock: 40,000 tugrugs ($39) for a cow in Choibalsan, compared with 26,000 tugrugs in Sumber. Improved roads would lessen the discrepancy, and encourage more of the private co-operatives that are only now starting to take off, with groups of herders pooling resources for marketing and transport. Better roads would also improve distant herders' terms of trade, by lowering the price of flour, tea and Chinese consumer goods. Already, better information about market prices of produce such as cashmere, broadcast by radio, improves herders' bargaining power when traders come to buy wool.
Meanwhile, says the World Bank's Mr Mearns, herders need to share better the risks that collectives used to bear. Partly, this involves organising fodder provision, water supplies and pasture management. It also means spreading financial risk. One idea being developed with World Bank support is livestock insurance, with pay-outs calculated from data on a district's livestock mortality, weather and (using satellite imagery) vegetation growth. If growth failed, pay-outs to herders would be based on their livestock holdings.
Gankhuayg, a young former soum governor from Khentii province, argues for sweeping administrative changes, reshaping the artificial boundaries of the 300 soum set up under socialism, or even doing away with many of them; in effect, recreating hoshuu, the banners of old. That, advocates say, would better reflect the way herding is more intensive nearer the towns. It would also allow for more traditional roaming in remoter areas, including reciprocal access, for something approaching the large herds of former times. “The people who remain in those remote places,” says a Mongolian specialist in pastoralism, “will be Mongolia's toughest.”

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