Mongolia at a crossroads: opportunities for enhanced engagement?

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Mongolia at a crossroads: opportunities for enhanced engagement?

Posted 21/11/2012 by Nina Markovic

This year marks the 40th anniversary of diplomatic relations between Australia and Mongolia. On 13 November 2012, the Australian National University hosted (in collaboration with partner institutions) the inaugural Mongolia Update conference. It followed the official visit to Australia by Lieutenant General Tserendejidiin Byambajav, Chief of the General Staff of Mongolian Armed Forces on 8–10 November 2012 as part of the 15th Annual Chiefs of Defence Conference in Sydney.


Mongolia is currently at a crossroads in its economic development. Australia’s relationship with Mongolia, a resource-rich transition economy that has experienced a mining boom in recent years, is expanding. World Bank data indicates that as the fastest growing economy in Asia in 2011, Mongolia’s GDP growth accelerated to an unprecedented 17.3 per cent in 2011 from 6.4 per cent in 2010, and its unemployment rate fell from 13 per cent in 2010 to 9 per cent in 2011. 

According to the Department of Foreign Affairs and Trade, the Austrade-managed Consulate-General opened in Mongolia’s capital Ulaanbaatar in March 2012 ‘to service a rapidly developing trade and investment relationship’. Furthermore, the Australian embassy in Seoul serves as a diplomatic liaison point between Australia and Mongolia as Australia assists Mongolia to develop a foreign investment regime. Cultural relations between the two nations are also developing

Australia’s assistance to Mongolia’s mining sector reform has attracted some criticism domestically. Mongolia is seen by some commentators as a potential competitor for Australia in Asia’s natural resource markets. Australian mining companies are also present in Mongolia. The Oyu Tolgoi mine is Mongolia’s largest economic undertaking in the country’s history, and a project which by 2020 is likely to become one of the world’s largest copper mines. It is currently being developed by Canadian miner, Turquoise Hill Resources, and Anglo-Australian mining giant, Rio Tinto at a cost of around A$12 billion

Despite Mongolia’s richness in natural resources, low population density and booming economy, over 35 per cent of the total Mongolian population of 3.2 million still lives below the poverty line. Maternal health and mortality also remain a major health issue in Mongolia, where women are nine times more likely than in Australia to die at birth, according to the recently released World Population Report 2012 (pp. 105–106). According to AusAID, in terms of the Millennium Development Goals (MDGs), Mongolia is struggling to meet the 7th MDG target, which is aimed at ensuring environmental sustainability. Desertification remains a major environmental problem, with over 70 per cent of Mongolia’s land mass affected. More on Mongolia’s progress towards achieving the MDGs is discussed here

Australia’s assistance is being actively sought, despite some challenges in bilateral relations, like the recent detention of a 32-year old Australian lawyer, Sarah Armstrong, who is currently being questioned in relation to a corruption case in Mongolia and unable to leave the country. Radio Australia reported on 14 November 2012 claims by the Mongolian Ambassador to Australia, Ravdan Bold, that foreign investor confidence in Mongolia has been rattled by uncertainty over foreign investment legislation and the corruption investigation involving an Australian lawyer. 

Mongolia, which has land borders with Russia and China, also has a growing strategic relationship with the United States and other Western countries. 

High-level bilateral visits 

In February 2011, the then Mongolian Prime Minister, Sukhbaatar Batbold, was the first Mongolian head of government to visit Australia since the two countries established diplomatic relations in 1972. This delegation included several Mongolian ministers, parliamentarians and businesspeople. Following the meeting with Prime Minister Julia Gillard on 23 February 2011, the two countries signed four Memoranda of Understanding. Mongolia’s role in the Asian Century White Paper is discussed here and in an economic factsheet on Mongolia is available on DFAT’s website. Furthermore, in the 2011 Census of Population and Housing, 607 people listed Mongolia as their place of birth, and 1 235 claimed Mongolian ancestry. 

Australia’s foreign aid to Mongolia has expanded substantially, as per the graph below, and has also diversified to include the mining sector. Australia’s total overseas development assistance to Mongolia in 2012–13 is A$15.6 million

Mongolia Update conference 2012 

As an exercise in second-track diplomacy, which has gained prominence with Australia’s lesser-known international partners in recent years, the Mongolia Update conference brought to Canberra former Mongolian cabinet members, (including the ex-Deputy Prime Minister, the former Minister of Environment, and the former State Secretary of Mongolia's Ministry of Foreign Affairs and Trade), the Director of the Mongolian Defence Policy Institute, economists and academics. 

The purpose of the conference was to foster further collaborative links between Australia and Mongolia in business and academia, as well as to encourage the development of a broader dialogue between the two countries on environment, mining and political affairs. Mongolia’s former Minister of Environment, Mr Damdin Tsogtbaatar, highlighted the many environmental challenges facing the Mongolian Government today, such as desertification and post mining clearance which was not a common practice during Mongolia’s socialist era. In this regard, Australia was singled out as a country that could assist Mongolia to meet its environmental targets through both government-to-government and private sector cooperation. 

One issue which was largely missing from the conference presentations was that of Parliament-to-Parliament cooperation and exchanges. The Mongolian embassy in Canberra lists major cooperation areas between the two countries, which reflects those outlined during Prime Minister Batbold’s visit to Australia in February 2011. In November 2011, Mongolian Deputy Prime Minister Enkhbold visited Australia to study Australia’s social welfare system. 

Opportunities for Australia in the Mongolian education sector 

The former Deputy Prime Minister of Mongolia and current Deputy Mayor of the capital, Ulaanbaatar City, said at the Mongolia Update conference that Mongolia would welcome technical expertise from Australia, and possibly preliminary talks towards establishing Australian vocational training and technical colleges in Mongolia. These would require a long-term investment and effort but would have a big impact on development. Australia currently maintains an Austrade office in Mongolia, which is specifically tasked with providing services to Australian exporters and education institutions wanting to invest in Mongolia. However, the Austrade country profile page for Mongolia appears to provide only basic information about investing in Mongolia. 

One of the main obstacles mentioned by several speakers to conducting business with Mongolia, is the language barrier. This is an area identified at the conference in which Australian colleges could play a bigger role in the future, building on Australia’s previous experience in exporting education services and training to other countries, such as India and South Korea. Whilst Mongolia has many graduates in the humanities sector, what seems in particular to be missing is a skilled local base of graduates with technical, scientific and vocational backgrounds. English language training is highlighted in the Australia-Mongolia Memorandum of Understanding on Development Co-operation

In 2012, Australia will provide 38 long-term scholarships to Mongolian students. Student intake between 2007 and 2011 is shown in the graph below from the AusAID website. The Mongolian-Australian Scholarship Program has a dedicated website, which is available here. Australian volunteers are also present in Mongolia.

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