Euronews interview with Mr. Gombojav ZANDANSHATAR: Mongolia-one of the most robust democracies and a reliable partner
-What are the priorities of Mongolia foreign policy?
-It has been more than 20 years since Mongolia adopted democracy and a market economy. During this transition we had been pursuing open and non-aligned foreign policy. Priority was given to development of bilateral and multilateral relations as many countries and organizations as possible. It was linked, on the one hand, to our aspiration to build a multi-pillared framework of security; on the other hand, to recover our economy with donors’ assistance.
As statistics show, 4.3 billion USD have been given to Mongolia from donor countries and international organizations in form of official development assistance since 1991.
As a result of that kind of foreign policy and of course thanks to generous support of international community, we have achieved certain success in our political and economic life.
But many things have changed over the last 20 years.
Last year taking into account of internal and external factors, we revised our Foreign Policy Concept, which was originally approved in 1994.
Now Mongolia is pursuing a peace-loving, open, independent and multi-pillar foreign policy. Priorities of our foreign policy have been broadened. Mongolia as a member of the international community strives to make its contribution to the cause of resolving global pressing issues. We actively participate in the activities aimed at strengthening democracy and ensuring human rights and freedom.
Development of balanced relations with our two neighbors - Russia and China- remains as one of the priorities of Mongolian foreign policy. The stability, progress and lasting development of China and Russia are essential factors that will create the conditions for development and security of Mongolia. We are developing strategic partnership with both Russia and China.
Another priority of our foreign policy is to develop partnership relations with ‘third neighbors’, developed and democratic countries and coalitions of the West and East. As you are aware, Mongolian economy is on the edge of rapid development. While per capita GDP was less than 300 USD in 1990s, it reached 2250 USD in 2010. But we have to do more to provide sustained economic development. And expanding and strengthening relations with ‘third neighbors’ serves as one of instruments to reach this goal.
Beside these we also place importance in following foreign policy areas: to strengthen Mongolia’s position in Asia and to provide proactive support to the policies and activities aimed at strengthening the strategic stability and security cooperation in the region; to advance the cooperation with the United Nations, other international finance, trade and economic organizations; to develop bilateral and multilateral relations with the developing nations through other international frameworks.
-Could you please explain the terms of the strategic partnership Mongolia established with China last year and consolidated with your visit of last January?
-The decision to upgrade bilateral relations to strategic partnership based on several factors. Those factors include the strategic importance of geographical condition of both countries that share a staggering 4700 km long border, the rapid expansion of bilateral cooperation in all fields over the last two decades and the huge potential and possibilities to further strengthen the bilateral ties.
In our view strategic partnership relations mean enlarged, lasting and stable bilateral cooperation in all fields, but also an active interaction on regional and global affairs. The two sides reached a common understanding that further increasing political communication and mutual trust, continuously expanding economic cooperation, deepening people-to-people exchanges, and strengthening cooperation in international multilateral arena are the main contents of the strategic partnership. Among these all important cooperation areas, we attach utmost importance to economic cooperation, which in our common view is the long-lasting driving force for the development of the strategic partnership.
Strategic partnership is a very high level of cooperation that countries may enjoy; it is however, premature to say that the development of relations between Mongolia and China has reached its peak. We will continue to work by paying attention to questions on how are we going to enrich our strategic partnership and what realistic and measurable results are we going to offer to our citizens as outcome of our cooperation.
-The recent official visit in Japan lead to the agreement on the Mongolia-Japan economic partnership, what are the benefits of your government is expecting to get from this partnership?
-Mongolia announced Japan as our Third neighbor and two countries are successfully developing the Strategic partnership relationship since 2010.
Last week, the Prime Minister of Mongolia S. Bat.bold paid an official visit to Japan by the invitation of Japanese Prime Minister Mr. Noda. During the visit, the prime ministers of two countries launched official talks on establishing the Economic Partnership Agreement (EPA) in framework of the economic cooperation.
In my view, by concluding the EPA with Japan, Mongolia is seeking to have the increased Japanese private investment in Mongolia, especially in developmental projects and keen to negotiate the simplified market access of Mongolian goods and services for the Japanese market, particularly the agricultural and consumer goods, and IT and out sourcing businesses.
In addition, Mongolia’s intention is to cooperate with Japan in introducing Japanese environmentally-friendly, high tech- technology in Mongolian developmental projects and manufacturing of value-added products using the Japanese latest technology.
In conclusion, let me say that the Economic Partnership Agreement will be the first Free Trade Agreement for Mongolia, and it will not only contribute to strengthening the existing political and economic ties between the two countries, but also become one of the significant steps in building Mongolia-Japan “Strategic Partnership”.
-What would be the involvement of Japan in the Tavan Tolgoi project?
-No doubt that the mining sector is one of the main growing sectors of our economy. The Government of Mongolia wants an environmentally compatible use of natural resources, with a view of creating a sound foundation and contributing to the development of other sectors. The economic value creation should be carried out by new and modern technology. In this manner we want to cooperate with our Japanese counterparts, on the basis of developing mutually beneficial and complementary relations by combining our natural resources with the Japanese environmentally friendly, high technology and knowhow.
The key partnership matter to be implemented in the near future is the Tavan Tolgoi project. An international open bidding has been announced and the Government of Mongolia will firmly pursue a policy upon including Japan in the project.
The Government of Mongolia considers that Japan could provide useful investment capital not only for developing of the said project, but also for the infrastructure development, as well as creating a processing industry that will lead to the production of value-added high end products. In addition, we would like to cooperate with the Japanese side in exporting those products to the world market.
-How does the newly strengthened relationship with Japan balance with China, Mongolia most important trading partner?
-We pursue the policy of developing the relations and cooperation with Japan, our “third neighbour” and significant partner in Asia, under the Strategic partnership principles. The core aim of this policy resides in attracting the investment from Japan in mining, mineral resources, infrastructure, energy, agriculture sectors, introducing modern techniques and technology, creating the interests of Japan in Mongolia, developing mutually beneficial, mutually complementary and concrete cooperation.
We envisage that further expansion of the share and participation of the “third neighbour” countries, including Japan, in the trade and economic relations, will proceed in accordance with market laws, complying with the principles of our foreign policy, interests of related partners, development pace and economic growth of our country.
Certainly, developing friendly relations with our immediate neighboring countries, the Russian Federation and the People’s Republic of China are the utmost priority of the Foreign Policy of Mongolia. To this effect we are pursuing the policy of developing balanced relations and cooperation with the two countries.
-Mongolia is known for its commitment to peace-keeping, having sent peace-keepers in several countries among which Afghanistan. Is this part of your foreign policy strategy to increase your responsibility and visibility in the international community? And how does this affect your relationship with the United States?
-I am pleased that you stated about Mongolia’s commitment to peacekeeping. As stipulated in Mongolia’s Foreign policy concept, Mongolia strives to provide its modest contributions to the common cause of resolving pressing issues of regional and global nature through participation in the UN and other international peace support efforts.
Mongolian military personnel have served in the UN peace-keeping and international peace support operations in Afghanistan, Chad, Darfur, Iraq, Kosovo, and Sierra Leone.
Sending troops to bring peace and stability to war-torn countries have always been goodwill decision. And Mongolia’s willingness to contribute to the international peace support operations has positive effects on our relationship with the US.
-Mongolia is an Asian partner for co-operation for OSCE since 2004. Are you planning to become a member and what is your strategy with respect to Mongolia’s engagement in the organization?
-Mongolia has been in the Organization of Security and Cooperation in Europe (OSCE) since 2004 as the Asian partner for cooperation and fully supports its three dimensional security notion which is being prevailing in Euro-Asian region.
Furthermore, Mongolia has been enjoying the friendly relations and multifaceted cooperation with the European countries and training its national personnel for decades. My Government has set forth a task to adapt the basic principles, norms and standards those followed by the EU and its members countries in particular the Cambridge education system in Mongolia by 2014 to 2017.
We are giving a particular significance to the fact that this year is the 50th anniversary of the membership of Mongolia in the United Nations, whence we applied for the full membership of the OSCE.
Today, when interdependence of the politics, economy and social affairs of the countries of the world is increasing by day, having an active foreign policy on the international stage is the basis of strengthening our development of economy and security. Becoming a participating state of the OSCE is in full conformity of the third neighbor policy.
The determination of the Mongolian Government to become a participating state is driven by the fact the OSCE has demonstrated itself as an important inclusive regional security organization united by a vision of a free, democratic and indivisible Euro-Atlantic and Eurasian community and based on voluntarily agreed principles, shared commitments and common goals. Mongolia is not a party to any regional security organization. She is bordering with one of the participating states of the Organization and has no territorial dispute or border problem with her neighbors and is enjoying excellent relations with them.
-Mongolian exports are mainly minerals and in the near future mineral share to exports is expected to increase. How is your government planning to diversify the base of its economy to avoid overreliance on the mineral sector and prices?
-Mongolia is leading the world in its economic growth and stunned the world with its 17.3 percent growth in its growth domestic products. Mongolia’s resource-based economy is forecast to be one of the fastest growing in the world over the next two decades. The two big stories of 2011 were Tavan Tolgoi, a coal mine now ramping up its production, and Oyu Tolgoi, a copper and gold mine that should begin operations in 2013. The IMF expects investment in these projects, and growth in spinoff industries, to drive GDP growth to 12% in 2012, and the government projects even higher growth, at 25%. However, the mineral exports are dominated in the structure of exports indeed. In this regard, the Government pursues policies targeted to diversify the exports and develop non-mining sectors. Firstly, the policies including national programmes aim to build up industrial parks as soon as possible in order to process and add some value to minerals. On the other hand, Mongolia has a huge potential in agriculture and animal husbandry so that manufacturing and export products can be developed through putting more capital and technology investment into these fields. In addition, the Government promotes more knowledge-based sectors and products such as communication, banking and financial services and electronics e.g. In overall, the Government plans to run a national export programme focusing on the non-mining sectors development in the near future.
-There are justified environmental concerns resulting from mineral extraction, how is your government planning to tackle this issue that inevitably touches the image of Mongolia as a nature wonder destination?
-The economic growth often occurred in spite of the environment. We are determined to act against this in a timely and engaged manner. The rapid increase of the mining industry led to economic and social improvements but also posed risks for the environment. Apart from corporations with adequate technology, there are also those with outdated technology, no sense of responsibility, or even criminal consciences, who are willing to illegally use certain chemical substances for the unlicensed mining gold and coal. The parliament has now laid forth a draft for a Law in which conservation procedures and methods are to be newly determined. Furthermore we wish to define and develop the determinations concerning emissions, the use of alternative energies, and energy efficient measures. In order to protect the forest areas, a state administrative authority has been created, and the budget for sustainability measures in forestry has been doubled in the last three years.
-What is the state of the art of the IPO of Erdenes Tolgoi?
-Mining sector produces over 70 percent of industrial output and accounts for 65 percent of export earnings today in Mongolia. In fact, foreign investors’ interest in Mongolia is being increased dramatically due to the exploration of one the world’s largest copper and coal deposits recently. Mongolia ranks as one of the richest countries in Asia as well as in the world in terms of variety and value of its mineral resources. More than 8000 deposits of 440 different minerals including copper, gold, silver, uranium, flourspar, zinc, phosphate, iron ore and metallurgical and thermal coal are discovered, of which around 600 deposits are being exploited. We are aiming at having an access to the world stock and financial markets and raise funds pledging the natural wealth. For your information, the Deutsche Bank has recently awarded as one of the banks who will cooperate in the IPO issuing process of the TT coking coal deposit.
The IPO is a key step for impoverished Mongolia to raise funds and develop its massive mining resources, with fast-growing nations such as China, India and Korea clamoring for more minerals. The Mongolian government could announce the listing venue for the IPO by as early as June. The IPO is estimated by bankers to be in a range of $1.5-5 billion. The deal would also be a boon for Goldman Sachs Group Inc , Deutsche Bank AG , BNP Paribas SA and Macquarie Group Ltd , which have been short-listed to manage the offering.
Erdenes, the state-owned company in charge of the eastern block of Tavan Tolgoi, plans to keep 50 percent of the project, and will distribute 10 percent of the shares to local residents, 10 percent to Mongolian companies and 30 percent in the form of the IPO. The west Tsankhi block of the mine has 1.2 billion tonnes of coal reserves and could produce 15 million tonnes annually for more than 30 years.
Mongolia has short-listed ArcelorMittal SA , Vale SA and Xstrata Plc among six bidders to develop Tavan Tolgoi. U.S. coal miner Peabody Energy Corp , a consortium of China"s Shenhua Group and Japan"s Mitsui & Co Ltd , and a separate consortium of Japanese, South Korean and Russian companies were the other preferred bidders.
-What are the most interesting investment opportunities in the non-mineral sector?
-There are wide opportunities to invest in non-mineral sectors in Mongolia. The Government of Mongolia aims to make structural reform in economy and develop high technology based industrial sector consistently in the long run instead of relying upon mineral sector alone. The Government of Mongolia intends to extend number of non-mineral priority sectors in the field of modernization of agricultural sector, establishment and utilization of environmental friendly, clean power technologies, development of steady long term tourism policy, and promotion of small and medium enterprises. In other words, Mongolia pursues to produce more economic driven, high technology based, value added products apart from exploration and export of unprocessed mineral products.
For instance, the Government of Mongolia has adopted 26 top priority projects with total amount of 20.19 billion USD. And I would like to remark some of them.
- In mining, energy and heavy industry: Besides "Oyutolgoi" and "Tavantolgoi", we have projects like "Black metallurgical complex", "Copper smelting plant", "Coking coal plant", "Construction materials plant" with total amount of 10.2 billion USD.
- In agriculture and light industry: "Supporting the development of irrigation fields", “High-tech industrial complex and science parks" and others for a total of 650 million USD.
- In infrastructure sector: Projects to build houses, roads, railways and to construct power station and factory for generating power from biomass for a total of 240 million USD.
-In tourism, environment and Information technology sector, projects with total amount of 1.1 billion USD.
Foreign investors are most welcome to expand their business in Mongolia through investing in above mentioned government projects as well as other non-mineral sector private projects.
-Where do you see Mongolia in 5 years from now?
-Things are changing so fast in Mongolia. So it is very difficult to predict what would happen in 5 months not speaking about 5 years.
However, I do expect that Mongolia would become one of Asia’s most robust democracies and a reliable partner at the international arena.
-Compared to your two neighbouring giants Russia and China, Europe (EU) is not strategic equal with priority, nonetheless given its economic and political size it represents an important counterpart. What is your Government doing boost the relationship the EU and specifically to any of its member countries?
-Strengthening of relations and cooperation with the European Union and its member states is one of the priorities of Mongolia’s foreign policy. In the foreign policy concept of Mongolia, the European Union is regarded as Mongolia’s third neighbour. Trade and investment cooperation with the EU ranks just after our two neighbours.
Last year, we have celebrated 20 years of EU’s active involvement in Mongolia. We are grateful to the European countries for their contribution and support to Mongolia during its transitional period.
Mongolia and the EU are about to sign the Partnership and Cooperation Agreement. This agreement will renew the legal basis of our relations and open new horizons for future cooperation. Therefore, Mongolia is keen to conclude this document in the nearest future.
The Government of Mongolia has set a goal to introduce European standards, norms and principles, which will shall help us to bring our relations even closer. Mongolia is keen to cooperate with EU and share experience in developing export oriented, value added and knowledge based economy.
Mongolia’s main partner in Europe is Federal Republic of Germany. The Comprehensive Partnership between Mongolia and Germany is developing successfully in recent years. Federal Chancellor Angela Merkel paid a historical visit to Mongolia in October, 2011. During this visit both sides signed the Agreement between the Government of Mongolia and the Government of the Federal Republic of Germany on cooperation in the fields of raw materials, industry and technology. Germany is the very first country that Mongolia concludes such an agreement. This is a clear sign of mutually trusted and close relations of our two countries. We are keen to establish German investment in mining, infrastructure and industrial sectors of Mongolia particularly in the fields of coal gasification and renewable energy. Another important event is that President of Mongolia Mr. Ts.Elbegdorj is going to pay a state visit to Germany this week. The President will meet German President, Chancellor, Vice Chancellor and Bundestag President; and exchange views on our two countries’ bilateral issues, particularly economic cooperation issues.
Bilateral relations and cooperation with France in the field of health, culture, archeology, and humanitarian aid are excellent examples. Furthermore, we pursue the policy to upgrade the trade and economic relations between two countries, to attract French economic interests to Mongolia and to increase investments from France. For instance, French state owned group AREVA is already present in Mongolia and we hope that its activities will help to promote business opportunities to other French companies.
Mongolia is interested in expanding bilateral relations and cooperation in all fields with the United Kingdom. The United Kingdom as a permanent member of the UN Security Council and an influential EU member is significantly important for Mongolia. World’s biggest mining company Rio Tinto became strategic investor in the first stage of the development of Oyu Tolgoi project. Also in 2011, London Stock Exchange won the management tender of Mongolian Stock Exchange.
-Mongolia has signed a trade and economic development program with Russia in 2010, in light of the recent intergovernmental meeting you had what can you tell us about the development of this program and relationship with Russia?
-Program of development of Mongolian-Russian Trade and Economic Cooperation for 2011-2015 was signed in 2010 during Prime Minister S.Batbold’s official visit to Russia. As the two sides both agreed that the current level of economic cooperation, including the volume of trade turnover and investment were much lower if compared with the huge potential we possess, it was agreed to draw up a comprehensive plan to intensify economic cooperation. The main goal we set in the Program is to bring the bilateral trade turnover to 3 billion US$ by 2015. The specific measures to be taken to further strengthen economic cooperation are also stated in the Program. Those measures include conducting of feasibility study for signing a FTA, renovating Mongolian railway infrastructure, modernizing the “Ulaanbaatar Railways” – one of the Mongolian-Russian joint companies, creating possibilities to increase the volume of Mongolian meat exports to Russia. As cooperation between the bordering regions constitutes a significant part of bilateral cooperation, the two sides are also implementing a Joint Action Plan to intensify cross border and interregional cooperation for the period 2011-2012. During the recently held Working Group Meeting of the Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation, the two sides expressed satisfaction with the implementation of the Program and the Plan.
We will continue working to make sure that the economic cooperation with Russia will be gradually increased, and develop in parallel with political cooperation.
