The following is an interview with analyst Sh.Gantulga about Mongolia’s economy and independence.

What do you think about Mongolia’s status in the international world?

The decision to invest in Mongolia depends solely on the conditions for investment in other countries. Our authorities have always maintained that foreign investments will just pour in to a democratic country. In real life, foreign investors only care about profitability. They are cautious of the possibility of their money disappearing due to political conditions. The stability of our economic and political conditions are worrying foreign investors.

How would you define Mongolia’s economic conditions?

Our economy is unstable. Legislation is always changing. This is because we have a parliamentary system. Parliament consists of political party members. Political parties being funded by wealthy persons are one of the causes of instability because investors want an increased income. That’s the market law. So they make and change laws that fit their interests. Although we never had a civil war, there’s always a war in the court front. We change our laws more than African countries do. You can see from previous incidents where foreign investors get scared and don’t come back for a while. For example, we know that foreign investors left us due to a lot of changes in laws concerning natural resources. It’s important to follow the law regardless of its quality once we adopt it. Foreign investors don’t care if the laws are good or bad. Their main concern is to increase their wealth without losing anything. In other words, fear and greed follow them around. They invest because of greed and pull back due to fear. We Mongolians don’t understand the biological aspect of humans. We only give emphasis to economic laws when in fact, you can’t go further without understanding the core.

The president signed to make Mongolia an economic corridor at the meeting in Ufa. How do you view this?

The Ufa meeting showed us that China was in the lead with a dominant position. In other words, only one issue was discussed at BRICS and Shanghai meetings. President of China Xi Jinping accentuated the construction of the Silk Road Project and Asian Infrastructure Investment Bank. Although it seems like two things, it’s one by nature. In other words, China wants to head Eurasia. They want to build a trade zone that spans from Far East Asia to Western Europe. Our country is undoubtedly in this region. Two-thousand years ago, our country played a significant role in building the Silk Road. This time, it’s no different. The president of China says there will be an economic line going through Mongolian borders. This brings us a possibility of economic growth and a threat to our sovereignty.

The meeting was between Russian, Chinese and Mongolian leaders. How do you view the results?

This meeting was not beneficial to us. When Mongolia, China and Russia meet up, the issues are solved in favor of China as it’s the most powerful of the three. This was like the Treaty of Kyakhta of 1915 on repeat. The reason Mongolia exists today is because Mongolian diplomats from the Bogd Khan era united Mongolia with Russia against China. Now when these three unite to talk, we can’t do anything on our land without the permission of the president of China. So due to this meeting, our country is integrating into China’s economic conditions. Our economy and independence is in danger. Our economy is fully dependent on our southern neighbor. We moved apart from our northern neighbor and got closer to our southern neighbor as we adopted democracy. One percent of Mongolia’s total exports rely on Russia, while 80 percent relies on China. So our economy fully relies on the Chinese economy. If China’s economy grows, the price of our mineral resources increases. Originally we were supposed to develop industries. Instead, we developed an economy fully reliant on another country. The main danger is that they won’t let us build our own independent factory.

Do you suppose that this will give Mongolia a negative outlook?

Of course. We can’t make big investments or implement projects without the permission of the president of China.

In the beginning of this month, a big Chinese firm was to invest in the petroleum industry. How should we deal with this?

To gain profits from Chinese investments, our government should be strong. If we’re weak, we’ll be the feast of foreign investors. Our government, by being strong and fair, can exhort foreign investments as well as gain from it. But of course, if we lose our sovereignty, we will not get any investments.

Does this mean we’re in danger? We were seeing this as an economic opportunity.

It could be economically profitable but we won’t gain anything without keeping our independence. In other words, if we lose our freedom the money originally intended for the people will go to the owners. Therefore, we must protect our independence. We should have been active in the meeting, but not in the three-countries’ leaders’ meeting. The reason we exists is because of the united power of Russia and us. To simplify, if the leaders of the three countries met together, Mongolia and Russia can no longer do anything independently.

What are your opinions about our foreign debt?

The reason our foreign debt is increasing is correlated with the modern democratic system. It’s like Greece. Political parties give lots of social care promises to survive. The promises get bigger between elections. That’s the result of competition before election. The figures exceed the country’s incomes. We’re getting loans trying to patch up budget deficits that are bigger than GDP. Greece was exactly on this road. Once you know it, the loans exceed GDP, leading to economic default, and failure of government. As for our country, we’re at the end of this road. A few years ago, we were happy we paid all our foreign debts. But now, we’re viewed as a country that might potentially default on its debts. They say our government might borrow one million USD in 2015. That’s why I see it as the same path as Greece’s. Greece was in economic recession for six years. One-fourth of their economy or GDP disappeared.  One-fourth of the population became unemployed, 51 percent of 17-35 year olds lost their jobs. Their banks didn’t work last week. Generally, Greece is in a very tough situation. We have to understand that this is close to us. Every country has economic recessions every 25 years.

What should we do?

After this kind of recession, the economy grows. It’s like spring after winter. To amplify the currency rate, the country decreases its product and service prices, making it more competitive in the global market. This is how an industrial field grows. In our country’s case, only the natural resources field developed, not industries. This means that we won’t have economic development. Increases in natural resources prices that are reliant on China is not going to be much. This is why I’m saying we have lots of possibility to be in Greece’s shoes soon. Although foreign investments are important, it’s inappropriate if it is given to a China-dependent natural resources field. We need foreign investments in industries. But to do that, we have to fight corruption and revive the education system. We have to stabilize and improve the legislative environment.


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Posted by on Jul 24 2015. Filed under Prime Interview. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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