Resource Nationalism?

Posted on March 31, 2016 by JDierkes

By Julian Dierkes

One of the dominant foreign views of Mongolian politics is that they’re rife with “resource nationalism”. This perspective is reproduced in many conversations with people in the mining or financial industry and is often repeated by visiting journalists who parachute into Ulaanbaatar for a couple of days.

Just recently, this meme has come up again in reports, probably inspired/organized by “Jenko” Battulga, of protests in Ulaanbaatar in March 2015. Note that this definitely falls within the context of Spring being a season for demonstrations in Mongolia, as I discussed with CoverMongolia’s Mogi just some weeks ago.


I have argued for some years against the portrayals of anything in Mongolia as suggesting “resource nationalism”. Our standard riposte has been: there’s no coherent ideology, there’s no movement, there are no leaders. In fact, it continues to be surprising that there are no organized, vocal pro- or anti-mining movements that are recognizable as such, nor are there pro- or anti-foreign investment movements. That is not to say, of course, that individual Mongolians or even individual Mongolian politicians and policy-makers do not hold views that might be “resource nationalist”, but simply that there is no movement and that the impact of such views is thus limited. But maybe, we’ve just misunderstood this perspective on Mongolia all along and have been to imprecise in our understanding? So, let’s try to be more specific.

Defining Resource Nationalism

The term itself is somwhat common in the economics, political economy and general political science literature. It is applied in areas that I am not overly focused on, so let’s pick some workable definition to apply to Mongolia.

Let’s go with a very recent scholarly publication in a high quality political science journal:

Jeffrey D. Wilson (Asia Research Centre, Murdoch University) “Understanding resource nationalism: economic dynamics and political institutions” Contemporary Politics, 2015, DOI: 10.1080/13569775.2015.1013293

Not only is this recent, but it applies the concepts developed in the article to a number of resource economies, something that we are hoping to do here with the case of contemporary Mongolia.

Wilson writes that,

“Resource nationalism is a strategy where governments use economic nationalist policies to improve local returns from resource industries. […] It involves governments exercising control over resource industries through selective and discretionary resource policies, which are designed to achieve some set of political and/or economic benefits that would otherwise not obtain (Wilson, 2011).”

Hm… it seems to me that this applies to a wide variety of contexts outside of the mining industry. Isn’t all industrial policy pursued by OECD countries, for example, nationalist in this way? The Canadian government certainly tries to structure policies in such a way as to support the Canadian auto industry?

Let’s see if more specific descriptions of policies associated with resource nationalism can clarify matters.

Again, Wilson (2015):

[Resource nationalism] is typically characterised by a core set of policies:

  • Policies targeting the ownership of resource industries, which mandate some form of local or state ownership, or in exceptional cases, the nationalisation of mining and energy enterprises (Mares, 2010).
  • Policies constraining the operations of resource firms – through industrial policy requirements and distortionary trade regimes – that encourage certain behaviours such as minerals processing or the provision of subsidised energy to local consumers (Ward, 2009).
  • Policies designed to capture economic rents for public purposes, through changes to resource taxation and fiscal collection systems that increase the share of the profits from resource production accruing to the state (Walde, 2008).

It seems that the most common example that people have in mind with references to resource nationalism is Hugo Chavez and the “re-nationalization” of the Venezuelan oil industry. This is largely the first of the types of policies described by Wilson in the above, i.e. the threat that a national government might nationalize or confiscate private and/or foreign-invested mining projects. Clearly, this is the ultimate political risk for all foreign investment, including Rio Tinto’s participation in the Oyu Tolgoi project, for example.

“Policies targeting the ownership of resource industries”

Let’s look at the first type of policy in the Mongolian context then. It seems quite clear that the definition of strategic deposits and the mandatory state participation in the development of such deposits is clearly a policy that targets the ownership of mining projects. This applies to such mega-projects as Oyu Tologi and Tavan Tolgoi as much as to smaller, as-of-yet-undeveloped projects like various rare earth projects.

The regulations around strategic deposits thus seem to qualify under this definition of resource nationalism, but again, most developed resource jurisdictions also pursue restrictions on foreign ownership (certainly true of Canada), and no one labels these as “resource nationalist”, reinforcing the sense that this label is more generally applied to developing “investment destinations”, and by investors and observes who adopt the standpoint of investors.

This perception of a largely foreign-applied label is consistent with the analysis present by Orhon Maydar (Univ of Arizona) at the recent Berkeley conference on “Deadly Modernity”.

“Policies constraining the operations of resource firms”

Criteria here make it sound like this is a concern with trade distortion primarily. I don’t think that this concern has been raised in the Mongolian context very much, though there are significant worries (and many foreign warnings) about the need to diversify the Mongolian economy which spark discussions of smelters and other processing facilities that would be included among industrial policies.

But again, short of full trade liberalization, these are certainly policies of a nature that are very common in most developed countries.

“Policies designed to capture economic rents for public purposes”

Clearly a very tricky business. The fundamental fact holds that resources are owned by “the people” in almost all national contexts, and the Mongolian constitution also specifies such ownership.

The difficulty (and the accusations of “resource nationalism”) arises when that ownership right is translated into licenses, concessions, etc. for industrial exploitation. From my perspective, there is no magic formula by which to balance royalties, taxes, ownership stakes or all the other forms that have been used to ensure benefits accrue to the nation and people that hold resources.

Obviously, “rent-seeking behaviour” is identified as one of the great risks to resource-rich developing countries and a prime potential cause for the “resource curse” especially when coupled with corruption.

Yet, it is also clear that unless significant net benefits accrue to the population (net of financial, social, environmental, etc. costs), no government should decide to develop mineral resources given their responsibility for the well-being of the population. That is especially the case in a democracy where the pressure on governments to act in the interest of the people should be even greater.

Next to the remote (in the case of Mongolia) threat of complete nationalization, trepidation about finding a fair level of revenue that accrues to the public from mega-projects like OT has been the main struggle in Mongolia. This is also the issue where no answer exists, and that is most easily exploited by politicians (especially in times of lead-up to elections, like right now) by making claims about excessive (whatever that means) shares of revenue being claimed by “foreigners”.

Conclusion

I don’t think the “resource nationalism” label or concept is useful in understanding Mongolia even though investors and financial journalists (and their headline editors) like to trot it out every time someone dares to question the nature of arrangements with foreign investors. Note that the label is rarely applied to developed economies, reinforcing the view that it is primarily used as a pressure tactic against developing countries like Mongolia.

I will continue to refer to “resource nationalism” in quotes, and make my case against this concept.

Posted in Foreign Investment, JD Mining Governance, Mining, Mongolia and ..., Nationalism, Policy, Politics, Populism, Social Movements | Tagged | 4 Comments

Fundraiser for Veloo Foundation’s Children of the Peak Sanctuary Project

Posted on March 29, 2016 by JDierkes

Postponed to Later in 2016!!!

The Veloo Foundation is hosting a fundraiser in Vancouver on April 23 to benefit its Children of the Peak Sanctuary.

Traditional Mongolian music, food and dance will be on offer.

For more information see Veloo Foundation’s website.

 

Posted in Social Issues | Leave a comment

Guest Post: The Construction of Mining Image in Socialist Mongolia

Posted on March 26, 2016 by mendee

By Enkhbat Avirmed

Although Mongolians were relying on the pastoral economy up through the early 20th century, there were about 20 coal and gold mines operating in Mongolia by 1911. However, after the 1921 revolution, Mongolian leaders came under pressure by the Soviets to follow the communist ideology exclusively. From a communist ideological perspectives, Mongolian herders were potentially considered as a part of the capitalist class because herders own livestock.  Therefore, it became imperative for the newly-declared communist state to establish a working class. This pointed to the mining sector as a possible path for “creating” workers.

There were no obstacles to developing the mining under the communist regime for following reasons:

  • Mongolia was sparsely populated. The population was 845,500 in 1956 and increased to 1,017,100 by 1963.
  • Livestock and pastureland were under the state authority.
  • Religion was prohibited; therefore, it was impossible for the public to advocate their tradition of worshiping the nature, especially, mountains and rivers.
  •  Mining was considered as a priority for developing the industry.

Because of these positive factors, there was no room for mining-related social conflicts in Mongolia. At the same time, the state was publicizing (advocating) the public benefits of developing the mining sector and reliance on natural resources through the arts and cultural policies.

Mining in the Arts and Media

Under the state policies, poems, songs, stories, and novels about rich mineral resources, mining and geological works, prosperity and development from mining, and successes of miners were reflected in Mongolian language and Literature curricula for secondary and high schools. Also, many documentary films, movies and dramas were created for this purpose. This contributed to create a positive image of mining and geological activities.

Many of these movies are still on “favourite movie lists” of Mongolians.  For instance, in 1961, the movie, Алтан өргөө [Golden Palace], was co-produced in collaboration with East German producers.  This movie contributed to public knowledge about subsoil mineral resources and efficient usage of water.

Altan Urguu Movie

Altan Urguu Movie

The geological exploration process was depicted in the 1962 movie – Түмний нэг [One of the Thousand]. The movie showed how mineral resources were discovered with the foreign assistance. Lately, one of the scenes, the snow storm, is widely circulated among Mongolian tweeters and facebookers. In this scene, two German geologists were arguing their tents during the snow storm while Mongolian guides wondering about their heated debate since guides didn’t speak German.

Rudolf: [it is] nice to have abundant natural resources, but they are far away from the prosperity.  To make this state as a real state and people as real people, it would need 100 years of hard work.

Max: Once they succeeded, this country would go more further.

Rudolf: But, they need nationalism and raise their national spirits.

Listening to this conversation, a Mongolian fellow suspected them belittling about Mongolia.

The other movie came around in 1981.  J Buntar’s “Гэрлэж амжаагүй явна” [Not Yet Married] film featured the image of mining engineer Gansukh while presenting the mining construction and managerial challenges of young engineer. This movie clearly aimed to attract youth into the mining sector as newly emerging industry.

The newly-established mining sector, at some point, led Mongolians into modernity [many new aspects were introduced into Mongolians’ livelihood].  The new lifestyle of miners, mining towns, and mining labor forces were created. Evidence of these mining-related social influences include many monuments for miners and even naming secondary schools after famous miners. In addition, the state created special medals, awards, and merit-decorations for miners and set up new social protection mechanisms for them.

First Labour Hero, Miner Davaajav Monument

First Labour Hero, Miner Davaajav Monument

In sum, Mongolian communist leaders used propaganda to actively create a positive image for mining during the communist regime.

About Enkhbat A

Dr. Enkhbat is associate professor in the Department of Humanities of the School of Business Administration and Humanities of the Mongolian University of Science and Technology. His special areas of interests are history of Mongolian mining and comparative examination of mining history of Mongolia and Inner Mongolia.

Posted in Cinema, CIRDI, Enkhbat Avirmed, Media and Press, Mining, Mining Governance, Pop Culture, Society and Culture | Tagged | 1 Comment

Berkeley Conference “Deadly Modernity”

Posted on March 25, 2016 by JDierkes

By Julian Dierkes

The Mongolia Initiative at UC Berkeley’s Institute of East Asian Studies hosted a conference entitled “Deadly Modernity: The Environmental Crisis Behind Mongolia’s Swift Development” March 10-12, 2016.

I don’t think anyone was tweeting from the conference, but just in case there was interest, I used the hashtag “#MongoliaConfCal“. Even when no one else joined in the tweeting conversation, use of the tag in the tweets I sent allowed me to storify these notes (see below).

Observations

The conference was focused on discussing environmental impacts of development in and around Mongolia. Most of the presentations took an ecosystems approach and examined specific elements in systems, but there were a number of social science presentations as well.

As is the case so often, it is one of the great privileges of being active in an area of research with a very specific geographic focus (Mongolia) that many might consider “obscure”. What this means that I have more interactions with eco-systems research focused on Mongolia, than I ever would in my other geographic area of focus, Japan.

Given the wide variety of topics, I was surprised that I actually came away with a bit of an overarching conclusion, vague as it may seem and limited to some of the presentations as it is. This lessons is “scale!”. To understand adaptations to change (climate change, economic development, etc.) it is essential to consider scale carefully and to adjust the lens with which we look at phenomena to the appropriate scale.

The most explicit pointers to this came in the presentations by Sneath, Jensen, and Dales.

D Sneath: Herding Economy as Socio-Technical Systems

I have heard David Sneath speak on this topic twice now and it’s always interesting and I learn a lot. In my understanding, he compares the pre-revolutionary/neo-feudal, collectivized, and individualistic market-based herding economy as socio-technical systems to ask the question at what geographic scale grasslands have been managed in the past. This comparison seems to imply an argument that the houselhold level management under the market economy is not well-suited to adapt to always-present challenges of grasslands management, but especially to respond to climate change.  Prominent elements in the analysis are winter fodder (how it is provided in monastic units under neo-feudal systems, or by collective, but not provided to household herding), and (over)grazing (again, neo-feudal and collectivized management has enough space available to assign herds to less-stressed locations; households are more restricted.

To me, the message is clear (though Sneath doesn’t make it explicit as a policy recommendation): household-level management has some very serious implications for grasslands, some kind of collective is necessary as a level of administration/coordination.

K Dales: Watershed Management

Kirsten Dales focused specifically on cross-boundary conflict around water management. Most recently, this issue has received some attention with the (transparently self-serving) Russian complains about the hydro-dam that has been proposed for the Eg River. She spoke most explicitly about scale, noting that natural science approaches to water are typically focused on very specific, small sites, but that the governance issues clearly unfold at a much larger scale, even across national boundaries.

O Jensen: Fish Management

In comparing the impact that a recreational catch-and-release fishery has on taimen populations to the impact that a commercial sport fishery divided into concessions that cover specific areas of a river, Jensen finds that the taimen are much more mobile throughout the river to allow for management by segment. Instead the population needs to be managed to preserve its viability, and the recreational catch-and-release fishery seems to be effective in this management.

Scale

Taken together, these projects seem to imply that environmental management in Mongolia needs to not only keep scale in mind, but focus on collective organization, not on the individual incentives and market-based mechanisms that are typically advocated by many development approaches, particularly those of the World Bank or also of US AID (yes, guilt of broad generalization here).

My Presentation: Environmental Movement

In my presentation, I asked why there is no environmental movement in Mongolia. Obviously this was meant as a deliberate provocation (it worked), as there are many environmental movements but these haven’t coalesced into a national movement. I tried to point out why it is not unreasonable to expect the emergence of a political and united environmental movements, but also some of the blockages that I see to such mobilization. I pointed to patterns of individualistic social organization, and the vertical organization of civil society as possible explanations.

 

Storified Tweets

Obviously, these are very incomplete notes that I took for my own interest, so they are sparse and unbalanced. Whenever I have not commented at length about any specific presentation, that was likely due to my ignorance on a given topic, not intended as a comment on the quality of that presentation.

Posted in Air Pollution, Conferences, Countryside, Environment, Environment, Environmental Movements, Grassland, Health, Mining, Nationalism, Policy, Politics, Research on Mongolia, River Movements, Social Movements, Water | Tagged | 1 Comment

Training about the Extractives Sector

Posted on March 22, 2016 by JDierkes

By Julian Dierkes

One of the specific focus areas in CIRDI’s “IMAGinE Mongolia” activities is to draft a training curriculum to provide an introduction and overview, but also specialized training to the public and to officials in four aimags, Selenge, Uvurkhangai, Bayankhongor, and Uvs.

We are very pleased to currently collaborate with three colleagues from Шинжлэх Ухаан, Технологийн Их Сургууль (ШУТИС, Mongolian University of Science and Technology, MUST), historian Enkhbat A, political scientist Myagmarsuren D, and political scientist Tuguldur Y. They are visiting Vancouver to work with us on the structure of what a modular training curriculum will look like as well as the identification of existing training materials (Mongolian and Canadian (French & English)) that might fit into such a curriculum.

Some of the elements of their preparatory work to develop a catalogue of training materials is quite striking. For example, when they classified training materials as being basic and aimed at the general public, as opposed to intermediate and expert levels, they found that only 3% of all training materials are of such an introductory nature.

When we compare the Mongolian materials to the Canadian resources that Claire Vivier and Petrina Torgerson have found as RAs for this project, it’s also striking that the vast majority of materials target industry. There are few training materials that are focused on government officials, especially at the local level, and there are also very few materials that address communities.

As “free and prior informed consent” is an element in community relations and the desire to obtain “social license to operate” it appears that the information asymmetry that exists between international mining companies and national governments (Rio Tinto and Mongolia, for example) is replicated at the provincial and local level. As the Mongolian government is devolving some decision-making and regulation of the extractive sector to the aimag and soum level, capacity to first understand mining projects and how they unfold and then to ensure sustainable development through effective regulation, appears to be needed in a significant way.

Posted in CIRDI, Countryside, Development, Education, Environment, Higher Education, JD Mining Governance, Mining, Mining Governance | Tagged | 2 Comments

Digital Diplomacy tied to ASEM

Posted on March 21, 2016 by JDierkes

By Julian Dierkes

Some weeks ago I wrote about the potential for a Mongolian digital diplomacy. That post generated a lot of interest (over 500 readers in less than 2 months). The tweet about this post was my most-viewed tweet ever (over 21,000 impressions), in part because it received over 130 re-tweets, including by many Mongolian embassies and consulates. The popularity of this tweet may have been in part due to the fabulous graphic that came with it, but hopefully also suggests that I struck a chord among social media savvy Mongolians and a desire for more strategic activities by their government.

It seems like officials at the Mongolian Ministry of Foreign Affairs were thinking along similar lines.

ASEM as a Digital Diplomacy Opportunity

In my January post, I had pointed to themes that seemed like candidates for building blocks of a Mongolian digital diplomacy:

  • democratization;
  • impact of climate change;
  • resources and experiences with global investment from vantage point of developing country/resource economy;
  • Northeast Asia, including Ulaanbaatar Forum
  • Mongolian leadership
    • ASEM 2016 (Twitter account exists, but very much in broadcast mode, not engagement)
    • UN Security Council candidacy for 2022: making a case for presentation of land-locked developing countries, democratized countries, small countries, etc.

I had already received some responses to that post from the ASEM organizing office over the past several weeks, but they reminded me of their efforts recently, prompting me to take another look at their website, asem11.mn. And what a good example of strategic digital diplomacy engagement this has become!

ASEM is the Asia Europe Meeting which Mongolia will host this July. It is the biggest formal summit between European and Asian countries and will meet for the 11th time in Mongolia. While ASEM doesn’t have any legislative or regulatory ambitions, it is a significant foreign policy event and of great significance to Mongolia in fitting with its foreign policy. At the same time, the Meeting will be fairly disruptive to many Mongolians living in Ulaanbaatar, so an outreach strategy to Mongolians and abroad seems especially useful.

The post on “4 Things We Can Expect from Mongolia Hosting ASEM” (Mongolian) illustrates this nicely.

First, I would note that this is very much a blog post in its style. Blogs have generally been underused as digital diplomacy tools (my sense), but this is a nice example. It is somewhat informal (though not casual) in the approach it takes, even going for a moderate version of a “listicle” with its “4 Things” title and organization of the post into four main messages.

Secondly, the post responds to popular concerns that have been voiced on social media in Mongolia, i.e. why is scarce state funding to hosting a large-scale summit. These concerns have been echoed by PM Saikhanbileg who recently urged austerity, at least when it comes to furnishings for the ASEM press centre.

Thirdly, the post addresses some of the fundamental precepts of Mongolian foreign policy in an approachable fashion, for example the notion that visibility is desirable, or that trade agreements are an element in Mongolia’s international strategy and how both of these goals might be supported by hosting ASEM.

I’m a little less sure that ASEM is likely to generate in-bound FDI, I rather suspect that any new wave of FDI will come only with a sharp increase in commodity prices over coming years, but the post makes a plausible case for this as well.

Other posts at the ASEM website follow in this vein. The Chef’s Skills Challenge post demonstrates lighter side that nevertheless might be very important in shaping visitors’ impression of Mongolia. It also makes the event somewhat more approachable to Mongolians, but possibly to some of the civil society visitors.

The ASEM website thus builds nicely on the greater visibility of the MFA and of the ASEM in particular via social media.

Transparency, but Where to Next?

Overall, I’m thus quite impressed with some of the steps the ASEM website has taken. What it does not to (and many other MFA’s including Canada’s Global Affairs don’t either) is open itself to substantive engagement that might have an impact on policy as it is being formulated.

There are no comments to this site and I don’t see any pages that actually open up policy for discussion.

Notably there also isn’t very much discussion/information on the substantive aims for ASEM. Are there specific issues between Asia and Europe to be addressed? What might these be? What role would Mongolia play in addressing these issues, etc.

But perhaps that will be a step for future summits or foreign policy initiatives.

Posted in Digital Diplomacy, Foreign Policy, International Relations, Mongolia and ..., Social Media | Tagged | Leave a comment

Mongolia Doubleheader March 18 “Rinks of Hope” & Amb. Ed Jager

Posted on March 14, 2016 by JDierkes

On March 18, the Program on Inner Asia at UBC will host an afternoon of Mongolia events.

Conference Room (Room 120)
CK Choi Bldg for the Institute of Asian Research
1855 West Mall

16-17h Film Screening

“Rinks of Hope”

When two Canadian coaches volunteer to help kick-start youth hockey in Mongolia, they discover that even on the world’s most frigid outdoor rinks where obstacles to playing are many, the love of hockey reigns supreme.

Rinks of Hope: Project Mongolia chronicles the five day road trip of brothers Nate and Boe Leslie as they coach children and teach coaches in the big cities and small towns of northern Mongolia.
Nate Leslie and film-maker Karin Larsen will be present for the screening.

Open to the public by donation.

17-18:30h Public Presentation

Ed Jager, Canadian Ambassador to Mongolia

“Canada in Mongolia, Advancing and Promoting our Partnership”

Ambassador Jager worked as a lawyer and sales representative in the private sector before joining the Department of Foreign Affairs and International Trade as a trade policy officer in the Investment Trade Policy Division in 1999. His previous postings have included that of trade commissioner in Jakarta from 2000 to 2003, senior trade commissioner in Lima from 2005 to 2007 and political adviser in Kandahar from 2007 to 2008. His most recent posting, from 2008 to 2011, was as Canada’s senior trade commissioner in Brazil, based in Saõ Paulo. In Ottawa, Mr. Jager represented Canada’s interests at APEC from 2003 to 2005 and helped to negotiate Canada’s air transport agreements from 2011 to 2014.
Ambassador Jager and his wife Cathy have five children and seven grandchildren.

Amb. Jager’s presentation is free and open to the public.

Posted in UBC Mongolia Lecture Series | 2 Comments

Mining Governance: In the Eyes of 2016 Graduates

Posted on February 18, 2016 by mendee

Let’s put ourselves in the shoes of 2016 graduates from universities and postgraduate schools either abroad or domestic alike.  All graduates have invested their energy, time, and money to attempt to learn everything that would equip them to become good professionals and public servants. Here I would like to talk about the ones who are dreaming to become the best public servant in Mongolia’s mining governance.  These are the ones who disliked the naming of their homeland as Minegolia, are irritated with the prevailing corruption, and saddened with irresponsible mining activities.  They departed for learning at the beginning  of the ‘mining bust’ but they made their choices as a result of the ‘mining boom’ when almost all Mongolians became mining policy makers and professionals.

Although excited for upcoming graduation ceremonies, they are much more concerned with the fear of being unable to pursue their dreams of making the country’s mining governance better. All they hear are unpromising, negative news and rumours about economic decline, crisis, loss of investors, drawdown of personnel, mothballing operations, likelihood of bankruptcy, and political instability.  Reaching to organizations like the Ministry of Mining and its agencies (mineral resources and petroluem), where they would love to contribute their newly attained knowledge, are difficult unless you know somebody – the insider.  What can the graduate do?

For one, the graduate can follow the formal path of following the ads of the Civil Service Council and taking the annual exam for public servants.  But, you will probably not hear back from them; even if you hear back from them – the news is always discouraging. Even if fortune smiles on you because of your merit, you will have to crawl through the minefield since you have no connections.

The second path is investing into the political party. Your options are very limited since there are two major parties and three minor ones that are competing for a share of the ministries and agencies. Also, there are already so many previous graduates who have  taken this path and are still fighting their battles. Once inside the party, you need to make your bet carefully depending on factions and charismatic leaders.  If you’re lucky, you can get appointed to some junior entry jobs or senior political posts – but it is likely that you will be branded with that political party.

The third option is joining your ‘homeland’ councils – these are becoming important political organizations in contemporary Mongolian politics.  As the trust declines in the society, informal institutions like this one provides more certainty.  You need to establish your ties with the homeland organization and influential people within those organizations.  You do not necessarily have to be born in that locality, but you can pursue either of your parents’ lineages. Then you need to make some investment into the homeland councils, ranging from fund-raising to organizing/attending any of their activities.

The final option is to invest into the public service with actual money.  If you’re the princeling of new capitalists, you do not need to worry so much about getting public service jobs. Or if you are in the horse-racing associations, you can probably get a helping hand from the wealthy horse-racing politicians.  But, if you are not either, then you better look for connections – then ask them to pull the strings for you to land the public service job – where you can devote your time and energy to implement things you’ve learned at the undergraduate and graduate schools.

A smart graduate will probably check out all these options or employ them simultaneously. If you are already on the inside through one of these methods, you need to help to put the system back on track by reducing the other non-merit based paths.  Because non-merit options will never provide certainty for you and the country and it will never help you fix mining governance. Otherwise, you will be contributing to this decaying system. Hopefully, you and the majority of political and economic elites could put back the first option as the entry for all new graduates.

 

Posted in Mining, Mining Governance, Public Service, Uncategorized, Youth | Tagged | Leave a comment

Mining Governance: Learning from Erdenet

Posted on February 6, 2016 by mendee
"By the Erdenet Principle," on the MPP protest ger near the Government House, December 2015

“By the Erdenet Principle,” on the MPP protest ger near the Government House, December 2015

By Mendee J

As Mongolia struggles to make deals over giant mining projects like Oyu Tolgoi and Tavan Tolgoi, the country’s politicians, economists, mining professionals, and the public refer to Erdenet, the Mongolian-Russian joint copper and molybdenum factory, arguing whether or not lessons of  Erdenet would apply to these projects.  Some demand investors to build a city like Erdenet near these projects while others pressure for more management involvement from the Mongolian government as well as senior positions for Mongolian citizens. From the initial PR campaign of foreign investors and Mongolian politicians, people believed in major economic development as well as spill-over benefits from these mining projects.  In reality, it is very unlikely that today’s foreign investors will build cities for Mongolia and pouring money into large-scale shared value projects like the power plant, the smelter factory, or even a railroad as the Erdenet project did.  If we’re taking Erdenet as a model for these reasons, we are wrong.  However, the Erdenet mining project offers many other valuable lessons for Mongolian politicians and foreign investors even if the factory was built in 70s and 80s.  For this blog post, I would like to highlight three lessons regarding the elite unity, the resource nationalism, and the state-ownership.

Absence of Rent & Fame Seeking Elites

The most important lesson that Erdenet offers for today’s politicians is elite unity for making, implementing, and honoring their decisions. In 1960s and 70s, Mongolian elites were united under the goal of national development as the country was regarded as the least developed and most aid-dependent among the communist bloc. Just like in 1990s, when experts of international financial institutions (e.g., IMF, WB, ADB) were advising  Mongolia to use its natural resources to develop its economy, the Soviets and COMECOM in the 1960s were advising the same and invested into extensive joint geological explorations. Although Erdenet was found by Czechoslovakian geologists, the Czechoslovakian government was unable to respond to the Mongolian request for a joint venture because of the 1968 Prague Spring and the large-scale of the Erdenet project.  So then, Mongolian political elites successfully lobbied Moscow (esp., Brezhnev and Premier Kosygin) to secure the Soviet investment into this large scale project.  Initially Russians were reluctant, but there were other factors also played role in the Russian decision-making process.  It had lost the potential copper supplier, Chile, following the coup d’etat in 1973, civil war had prevented Soviet investment in the copper deposit in Afghanistan, and its own deposit in Udokan was technically costly to operate.  Mongolian political elites made the quick decision to attract the Soviet investment and provided political support for its professionals to implement the project.  Of course, the decision-making process was easier in the authoritarian regime; however, we could not neglect the existence of the formal political institutions and procedures.  Furthermore, it would be mistake if we neglect the political elites’ unity and their support for professionals – who implemented the project along with their Soviet counterparts.  The most important lesson for today’s politicians is to withhold their rent and fame–seeking interests in regards with large-scale projects.  Unity, timing and commitment for their decisions are the most critical factors for a landlocked country to attract foreign investors; otherwise the landlocked country is always unattractive due to  the lack and cost of infrastructure (i.e., rails, energy, and water).

Coping with the Resource Nationalization

Another lesson that Erdenet offers is experience dealing with the resource nationalization issues without interrupting the factory’s operation.  There appear to be two main causes for Mongolia’s call for resource nationalization at the Erdenet.  For one, as Mongolian high-ranking politicians and especially economists provided evidence of unequal trading patterns and inefficiency of the Erdenet factory due to the low export price and royalty exempt.  After the issue was raised in 1983, two governments stopped the state subsidy for the Erdenet in 1985 and the royalty exempt was ended in 1991 [as agreed in the long-process of negotiations of 1980s].  The other issue was the rising discontent of Mongolian mining professionals and the public in Erdenet.  As Mongolian mining professionals were educated and trained at the same schools in the USSR, their counterparts (i.e., Soviet expats) at Erdenet were paid two-three times higher and their promotions, as Mongolian professionals considered, did not follow the professional merit principles.  The Soviet expats living in Erdenet had the privileges of separate housing, stores, hospitals, schools, kindergarten, and recreational facilities.  In addition to public sentiments over “segregation”, crimes and violations of Soviet military personnel in Erdenet were rumored, but not officially disclosed to the public; this also contributed to the public discontent and even the sudden rise of anti-Soviet attitudes in Erdenet in 1989-1990s. Unlike pro-democratization protests in Khovd province and Ulaanbaatar, Mongolian workers at Erdenet were actually protesting for the nationalization of the Erdenet factory, including demands for increasing Mongolia’s share of the factory, positions at the senior management, and salary/benefits for Mongolian workers.  For example, in 1988, 75 percent of employees were Mongolians, but all senior management posts were filled by the Soviet expats. As a result of Mongolia’s discontent at the senior national government level, mining professionals, and the public, a number of compromises were made by 1991 through a long process of negotiations.  Erdenet demonstrates that resource nationalization issues always remain on the table as the host state’s institutional and particularly professional capacity increases; therefore, both sides must have a stable, transparent process that will solve problems based on facts, evidence, and reasonable justification.  This process must be insulated from the short-term political, economic, and social pressures.

Dealing with Political (Entrepreuners) Rentseekers

The other lesson we must learn from the Erdenet is why, how to protect the management of the State Owned Enterprise (SOE) from the rent-seeking political entrepreneurs, parties, and politico-business factions.  Following Mongolia’s steadfast demand, the first Mongolian director was appointed in 1989 and Mongolia increased its equity share up to the 51 percent in 1991. Under the charismatic, highly-professional, and skillful manager, Sh Otgonbileg, the Erdenet factory survived the toughest periods of political and economic transitions of 1990s and was almost the only contributor for the country’s GDP.  However, being the state-owned enterprise, it was considered as the honey pot for politicians, political parties, factions and for the others.  For political parties, the Erdenet factory provides  an administrative and logistical support to consolidate their party base in the second largest city of Erdenet as well as surrounding provinces.  In order to do that, political parties need to have their supporters at all echelons of the state owned enterprises and launch campaigns among all 6000 employees.  For entrepreneurial (i.e., opportunistic and rent-seeking) politicians and factions, the Erdenet is a place to win any contracts, ranging from heavy equipment to diary products.  For this reason, they need to establish political and business connections with managers of the Erdenet or keep them in their political and business sphere of influence.  For others, the Erdenet became the most “philanthropic organization” and also a supporter of the Mongolia’s leading athletes.  In the absence of the ‘rule of law’, the Erdenet sets a bad example of the state ownership.  All senior managerial posts of the Mongolian side became political.  As a result, the top managerial posts became political posts, which changed after every parliamentary election, and these party-affiliated managers owe their support for respective political party, faction, and even individuals.  A numerous allegations about non-transparent tenders and contracts will be surged during pre-election periods, but silenced after the election.  In the absence of impartial, proper, and complete investigations and monitoring, Erdenet would still remain a honey pot for political and business rent-seekers.

As portrayed in the photo of the opposition party protest in December 2015, politicians still believe there are lessons to be learned from the Erdenet mine; in the belief that it will trigger popular support.  This is a reasonable strategy for the political party, but the parties need to be clear on what lessons we should learn from Erdenet – since this is the first largest copper factory not only in Mongolia, but in Asia, a pillar for the bilateral relations with Russia, and a catalyst and shaper of  Mongolia’s mining governance from 1970s. In all, I stressed three main lessons we can draw from Erdenet: the importance of the unity of ruling elites for time-sensitive, major mining projects in a landlocked state, having the process to deal with the inevitable nationalization push, and insulating the state owned enterprises from the rent-seeking politicians, parties, and factions (unlike Erdenet).

Posted in CIRDI, Erdenet, Governance, Mining, Mining Governance | Tagged | 4 Comments

UBC Outreach Event: CIRDI’s IMAGinE Mongolia Activities

Posted on February 4, 2016 by JDierkes

Thursday, February 4, 2016, 15-16:30h
Institute of Asian Research, University of British Columbia
1855 West Mall, Room 120
Vancouver

IMAGinE Mongolia Outreach

You are invited to learn about the “Integrated Management and Governance in Extractives (IMAGinE) Mongolia” project from the Canadian International Resources and Development Institute (CIRDI).

Project lead, Dr. Julian Dierkes (Institute of Asian Research, UBC), will introduce the planned activities and invite collaboration from graduate students and colleagues who are focused on governance, policy and education related to mining; landlockedness; and Mongolia.

IMAGinE Mongolia is a multi-year project that supports provincial and local administrations in Mongolia with increased information so they can fully participate in the sustainable management of Mongolia’s extractive resources.

CIRDI’s mission: To improve, in a measurable way, the ability of developing countries to manage and benefit from their extractive sectors in order to catalyze sustainable economic growth and reduce poverty.

Posted in Aimags, Canada, CIRDI, Development, Environment, Governance, Inequality, Mining, Mining Governance, Research on Mongolia | 1 Comment

Mining Governance: Tavan Tolgoi

Posted on January 22, 2016 by mendee

Tavan Tolgoi was a costly test for the Mongolia’s mining governance.  It tested the resilience of the revised mining governance under the 2006 Minerals Law, checked the unity of political elites, especially of two major parties, and examined the resolve of the state bureaucracy to implement new mining policies.  Apparently, all didn’t pass the test an even failed to capitalize the favorable momentum of the global commodity market.  But, most importantly, did we learn from our mistakes?  Did we take measures to enhance the institutional resilience of the mining governance, to unite political forces on a major (mega) project, and to insulate bureaucrats from political, economic, and social pressures? In this blog post, I will lay out the government intentions during the favorable period for mining  governance (esp., 2008-2012) and then discuss some factors that complicated the decision-making process over the Tavan Tolgoi coking coal deposit.

Intentions were clear during the coalition government of 2008 – 2012.  Under the revised 2006 mining law, licenses of the Tavan Tolgoi deposit were taken back to the state from private license holders because the deposit was discovered with state funds in the 1960s. Then the government also delegated its authority to the state-owned enterprise (SOE), Erdenes Mongol, to manage the tender process for permitting foreign mining operators while also allowing it to establish its sister SOE, Erdenes Tavan Tolgoi, to mine and export the coal.  Furthermore, the government decided to issue stock shares to its citizens (1072 shares per person) and to allow Mongolian companies to operate some parts of the deposit.  Moreover, the government hinted its ‘mining diplomacy’ by rewarding the operating licenses of Tavan Tolgoi to US Peabody Energy, China’s Shenhua and a Russian-Mongolian consortium.

In retrospect, politicians and bureaucrats in power complied to the mining governance rules. First, Tavan Tolgoi was included in the list of mineral deposits with strategic importance. Second, the SOE was established to govern the process of operating on the largest coking coal deposit.  Third, it created ways to allocate the mining benefits to the public.  Finally, it attempted to balance interests of Russia, China as well as newly found third neighbors. These decisions were approved and endorsed by the parliament, the coalition cabinet, bureaucracies, political parties, and the public.  But, these decisions were not implemented. If these intentions were formulated as a result of the formal politics, the implementation process became blurry for all actors – maybe except those in power.  The role of the informal politics has dominated the formal rules, procedures, and mechanisms; thus makes everything suspicious and non-transparent.

Seemingly, three factors, (1) competitive interests of transnational corporations, (2) dynamics of the competitive elections, and (3) interests of domestic business entrepreneurs and groups, have overwhelmed the Mongolia’s weak mining governance.

First, Mongolia now interacts with influential, experienced, and wealthy transnational corporations, including Western multinationals, Chinese state-owned enterprises, and Russian state-affiliated magnates. All are experienced negotiators and lobbyists at their respective capitals and financial centers.  The result of the first Tavan Tolgoi tendering process left Japanese and South Korean corporations unhappy while the latest made Americans and Russians disappointed.  These players have different interests and leverages over Mongolia.  Russia, a traditional ally, wants to keep its influence in mining and infrastructure, especially, the railroad. It is the only source of Mongolia’s fuel.  China, a new strategic partner, desires to secure the closest resource deposit and to link Mongolia into its regional rail network.  China is Mongolia’s only market and its infrastructure offers the closest link to the East Asian market.  Japan, the most proximate third neighbor, longs to get access into Mongolia’s mineral resources.  The US companies also make attempts to operate in new economic frontiers.  Both Japan and the US are vital partners for Mongolia’s sovereignty and international visibility. As all these Great Powers began to back up their corporations, Mongolia fails to impose its rules for foreign investors.

Second, the election logic presented another major challenge for politicians and bureaucrats because political parties in power need to win hearts and minds of their supporters and the population.  Prior to the parliamentary election of 2012, Prime Minister Batbold’s cabinet loaned 350M USD from the Chinese SOE Chalco and distributed it as cash-transfers to the public fulfilling the party’s campaign promise of mining revenue benefits.  A new cabinet of Prime Minister Altankhuyag cancelled the loan contract with the Chalco, but his action resulted in a debt because of the falling coal price.  The 2012 government revoked all major decisions in regards with Tavan Tolgoi mostly in order to discredit previous politicians who were in power, its opponent party (i.e., Mongolian People’s Party), and the coalition cabinet of 2008-2012.  Also, the newly-established SOEs, Erdenes Mongol and Erdenes Tavan Tolgoi, now follow the examples of former SOEs such as the Erdenet copper and molybdenum factory in generating funds for politicians and political parties in power as well as serving as an administration to post party officials and affiliated supporters. In 2013-2014, executives of these SOEs were investigated and fired mostly because of their political party affiliations. As a result, bureaucrats, especially at the senior level, have a little courage and autonomy to implement new policies, to uphold business principles, and even to take initiatives.  Therefore, structurally, all politicians come under pressure of safeguarding the party’s interests in winning elections and feeding its clientelistic network.

The domestic business groups and entrepreneurs appeared to be a major challenge for  effective mining governance. The railroad is a good example.  With the mining boom in Mongolia, the railroad became the most attractive business as it generates funds to do multiple feasibility studies, especially in Mongolia’s case (mainly for money-laundering), to construct the railroads, and later to own the infrastructure as well as to operate the trains.  To win these funds, domestic business entrepreneurs, corporations, and political-business factions successfully geo-politicized the railroad projects because Mongolia falls into the Russian broad gauge 1520mm infrastructure while Chinese narrow gauge sits next to its major mineral deposits.  Despite costly feasibility studies and alleged corruption investigations against these interest groups, factions, and individuals, the Tavan Tolgoi deposit remains unlinked to any rail networks. While the railroad decisions were politicized, there are a number of Mongolian companies still making fortunes from their small mining operations at some parts of Tavan Tolgoi.  These companies also have strong political representations at key political institutions, for example, the parliament.  Also, Tavan Tolgoi presents the case of the labor union’s interests.  For instance, a self-immolation of the union leader of Erdenes Tavan Tolgoi truckers at the press conference in November, 2015 caused quick action from the SOE Erdenes Mongol to revisit its contracts with foreign operators. Mongolian truckers opposed the Chinese company’s take-over of the coal trucking business because it will leave them unemployed. Clearly, the transportation of coal by either by Mongolian or Chinese trucks have been causing substantial negative impacts on the environment, health and livelihood of locals, but the government is still unable to enforce its decisions of efficient, environmentally sound mining governance.

Tavan Tolgoi is going to remain a failed case of Mongolian mining governance unless the parliamentary election of 2016 or the next commodity boom changes conditions.  It may continue to fail unless politicians unite to provide autonomy for bureaucrats and professionals and to increase the institutional resilience of Mongolian mining governance.  Because none of the political parties could solve this deep-seated institutional problem alone and enforce the decisions, political parties must insulate major projects like Tavan Tolgoi from the election timeline and business interests.  The populist type of pleasing all – external actors, domestic business groups, and the population – politics could not be a solution, but ‘making sacrifices for a long-term benefits’ seems to be the right solution for a small state in complicated geopolitical and economic scenario. Therefore, all players, especially politicians, must make a sound, timely decision and then provide an environment for the decision to live at all cost.

Posted in CIRDI, Mining, Mining Governance, Politics | Tagged | Leave a comment

The Many Habits of Successful Mongolian Digital Diplomats

Posted on January 20, 2016 by JDierkes

I wrote “The Way Forward for Canadian Digital Diplomacy” for Canada’s The Embassy on November 18, 2015. I followed this up with a list of more specific about steps that Global Affairs Canada might take in developing Twiplomacy if this direction were to be embraced. Another version of this came as “Five Rules to Guide the Future of Canadian Digital Diplomacy“, and then I mused about criteria by which the Canadian government might decide which digital diplomacy strategies to go ahead with. Below is a revision of my list of “Many Habits of Successful Digital Diplomats” for Mongolia.

What is Digital Diplomacy?

Much has been written about Digital Diplomacy (or Twiplomacy, or Diplomacy 2.0), but at its most basic level such a strategy aims to harness the power of new electronic and information technology tools to further the interests of a country. Most prominent in the Twiplomacy toolbox are networked social media, but various big data-driven initiatives are also included in this overall category. While notions of Digital Diplomacy originated in North America, it has spread much beyond, including to Northeast Asia.

Design by Cameron Tulk

Why Mongolian Digital Diplomacy?

It’s worth mentioning why Digital Diplomacy might be of particular interest to the Mongolian government.

  1. Mongolians have become active and natural digital communicators;
  2. the 3rd neighbour policy (I’m trying to establish #3NP) targets virtual neighbours already;
  3. Mongolia’s strongest case for its relevance is its status as Asia’s post-state socialist democracy, a claim that can be reinforced through a concerted Digital Diplomacy strategy and leverages the democratic instincts of online communication;
  4. digital diplomacy can be relatively cost-effective at a time of state budgets under pressure;
  5. Mongolians in general and Mongolian diplomats in particular are polyglot, so they are able to address audiences in many different languages.

In his analysis of the network of Twitter links between ministries of foreign affairs, Oxford University’s Ilan Manor has found the Twitter account of Mongolia’s MFA to be somewhat isolated.

Network Analysis of MFA Twitter Accounts by Ilan Manor. [Graph appears by Permission]

Note that Mongolia appears in the bottom left corner here. As you can see all the links at the time of Manor’s analysis were in-bound, i.e. other MFAs linked to Mongolia’s, but the Mongolian MFA didn’t link to other MFAs.

As Mongolia’s missions have recently made a big push to create Twitter accounts, this lack of strategic linking by the HQ account is certainly a missed opportunity.

So, here is my revisions of the “The Many Habits of Successful Canadian Digital Diplomats” for Mongolia’s Ministry of Foreign Affairs.

The Many Habits of Successful Mongolian Digital Diplomats

Process and Management

  • firmly distinguish broadcast use from engagement, identify channels by use;
  • select areas of engagement strategically, building on overall foreign policy;
  • think, write, engage, review, repeat;
  • learn qualitatively and quantitatively from communicating;
  • remain platform agnostic, but include different formats. Current standard formats would include micro-blogging and blogging.

People

  • embrace facility with vernacular languages as engagement is more likely (though not exclusive to) vernacular languages;
  • digital diplomacy should be run by diplomats not social media specialists;
  • emphasize work-life balance, engagement cannot lead to expectation of 24/7 communications;
  • recognize distinctions between individuals’ and institutional presence (e.g, ambassadors vs. embassies), as they can mutually reinforce visibility, but also detract from strategic objectives;
  • engagement requires passion;
  • diplomacy has always been social and always involved networks! Actively engage foreign diplomats, most active stakeholders;
  • integrate Digital Diplomacy into job descriptions, hiring decisions, evaluations, and promotions, but not in a punitive way. Not all positions require Digital Diplomacy skills and lots of contributions will continue to be made by analog diplomats;
  • empower, support and coordinate the efforts of experimenters and pioneers.

Substance

  • all digital diplomacy activities are rooted in substance, no communication/engagement for communication’s sake;
  • obvious choices for engagement: overarching thematic priorities for foreign policy; aspects of foreign policies aimed squarely at digital matters, e.g. membership in Freedom Online Coalition, Community of Democracies, Land-Locked Developing Countries, etc.;
  • embrace the reflective nature of communication and the opportunities this offers;
  • not all countries are equally well-suited for engagement, nor is it needed or likely to be beneficial everywhere;
  • lots of subject matter is neither suited for engagement, nor should it be. The weighing of foreign policy options is sometimes conducted in private and that is how it should be;
  • stakeholders’ expectations have to be managed through forthright statements on their impact. Some engagement will not change policy, some policy decisions will contradict a consensus among stakeholders.

Mongolian

  • build on Mongolian foreign policy by developing a strategy built around democratization;
  • seek, use, nurture Mongolian format innovations, perhaps through the International Cooperation Fund of the Min of Foreign Affairs;
  • seek, use, nurture Mongolian technology/business innovations through an office/division that focuses on tech adoption. Given the vibrancy of the social media scene in Mongolia, there’s no reason why one of the next innovations might not come from here;
  • embrace polyglot talents of Mongolian(s) diplomats;
  • Digital Diplomacy is appropriate to a small power, particularly when resources at Mongolian ministries are tight.

Suggestions for Possible Themes to Build Digital Diplomacy Around

  • democratization;
  • impact of climate change;
  • resources and experiences with global investment from vantage point of developing country/resource economy;
  • Northeast Asia, including Ulaanbaatar Forum
  • Mongolian leadership
    • ASEM 2016 (Twitter account exists, but very much in broadcast mode, not engagement)
    • UN Security Council candidacy for 2022: making a case for presentation of land-locked developing countries, democratized countries, small countries, etc.
Posted in Digital Diplomacy, Foreign Policy, International Relations, Mongolia and ..., Social Media | Tagged | 1 Comment

Mining Governance: Weak Institutions and Greedy Politicians

Posted on January 18, 2016 by mendee

Despite seemingly clear codified decision-making procedures that exist on the paper, the majority of the mining governance related decisions has been non-transparent and becoming more difficult to understand the politics behind them. Laws, standards, and regulations are passed today, but will be changed tomorrow.  Some of them never enforced while others are selectively enforced.  Then, politicians, bureaucrats, and private sectors blame each other before the election. Ministries, agencies, local governments sign ceremonial documents to implement these laws, standards, and regulations afterwards.  Even though the constitution stipulates the powers and responsibilities of the president, speaker, prime minister, and parliament members, all launch destructive campaigns (through media, and through their personal twitters) renouncing and denouncing mining governance related decisions.

So, for a small, landlocked state, these public relations competitions of the 100 individuals in power as well as the hundreds of others who are planning to compete for power will lead to turmoil by weakening the state institutions – which would ensure the implementation of wonderful ideas of entrepreneurial, competitive politicians. Without strong institutions, politicians can not restrain their greed for mining rents, including bonds, loans, kickbacks, royalties. They continue to use currencies (i.e., money and populism) for the political power and then use their political power to enrich their clientelistic network, to marginalize their opponents, and to hide their wrongdoings.  These politicians just  want to keep the state institutions (i.e., the bureaucratic and administrative power) as weak as possible; otherwise, the strong state institutions could constrain their parochial interests and greedy behaviors.  As a result of the instability, state institutions become vulnerable to pressures of domestic groups, external actors, and/or combination.

This is becoming the case of Mongolia.  The political power is well-dispersed and hard to pinpoint, especially, if we follow the mining-related decisions.  Who has political power? Maybe the power is too well dispersed among these actors; therefore, state institutions are weak and agents are not-willing to enforce decisions.

(1) President, Parliament Members, Ministers, Governors, Citizens’ Khural Members;

(2) Political parties, factions, individual politicians;

(3) Homeland Associations, horse-racers’ associations, business associations; ninja miners;

(4) Activists, environmental and social movements; and,

(5) External actors.

Inargueably, the power is not in the state – administrative and bureaucratic institutions; therefore, any institutions of Mongolia are weak and dependent from the political atmosphere.  Provincial administrations are vulnerable to local and also national politics.  Public servants at ministries and agencies feel insecure because of frequent changes of ministers, secretaries, and departmental chiefs.  For their job security, public servants either remain silent, inactive or seek protections from prominent figures, political parties or provincial homeland associations (e.g., prominent ones are Uvs and Khovd). Because of apparent political mingling by politicians, wealthy businesspeople, and political parties, people seem to lost their trust in judicial and law-enforcement agencies.  As the state institutions began to lose the faith of their own employees and public, they also lose their institutional capacity and coherence to enforce laws, standards, and regulations – even if they have assisted with various international institutional capacity building projects and instructed with many new directives of their newly-elected politicians.  At the end, these weak institutions would turn into simple tools for greedy politicians, factions, and groups to fulfill their parochial interests.  Therefore, the most apparent way of fixing the messy field of mining governance is to strengthen state institutions – by insulating them from the dirty politics of politicians and factions.  Only a strong state institution could enforce good ideas (i.e., laws, standards, regulations) and constrain greedy politicians.  The strong institution provides stability and certainty for investors rather than individual politicians, parties, and factions.

 

 

 

Posted in CIRDI, Mining, Mining Governance, Otgonbaayar Byambaa | Tagged | Leave a comment

Mining Governance in Mongolia: A Messy Field

Posted on January 13, 2016 by mendee

This is a brief, possibly too simple title of my field research in Mongolia.  The mining governance is an interesting subject for anyone studying Mongolian politics because it links Mongolia with the world, triggers rent-seeking competition among politicians, and upsets the local community, who are affected by irresponsible mining activities.  But, the interesting question for a political science grad student is how to simplify this messy field in order to understand the politics, as Harold Lasswell puts it, “who gets what, when, and how” in Mongolia.  With this ‘mining governance’ series, I would like to share my reflections of the mining governance in Mongolia – a small (not from territorial or historical perspectives) and landlocked democracy.

A few concepts need to be clarified because there are many definitions for different purposes as well as perspectives.  For the purpose of this blog series, ‘mining governance’ means a governing process, which includes decision-making and implementing, concerning the usage of the mineral resource.  The ‘institution’ is defined as a rule, but institutionalization means to create structures and to provide resources (e.g., political will, human and material resources) to enforce the rule.  The institution has two faces – formal (codified ones) as well as informal (non-codified ones).

So, how we can examine the mining governance of Mongolia? Here are three caveats that should be highlighted before discussing the present mining governance.

Firstly, the mining governance is not entirely new to Mongolia. Since 1911, Mongolian political elites have been longing to use its mineral resources while foreigners were also exploring mining opportunities in Mongolia.  The governance could be divided roughly into three periods: pre-1960s, 1960s-80s, and post-1990.  Despite substantial differences, each period has experienced the challenges of landlockedness, dealing with Great Powers, and influential transnational players.

Secondly, the Soviet-style mining governance still has a strong influence on the current mining governance.  Its institutional structure serves as a foundation for all aspects of mining, ranging from ministries to schools and to operations.  People from the Soviet-style mining period still dominate most senior and mid-level management posts in politics, bureaucracy, and industry.  Furthermore, the majority of the public view the mining through Soviet-style mining lenses because all operational mines were built and run by Soviet-style.

Thirdly, Mongolia, like many other small, democratic, developing, and resource-based economies, face three major factors: the dynamics of the commodity market, the geopolitics of Great Powers, and the results of domestic elections.  All these factors are beyond the control of foreign investors, state officials, and the public.

With these factors (i.e., landlockedness, geopolitics, commodity markets, domestic elections, and legacy of the Soviet mining) in mind, I would like to identify the key actors – WHO are fighting over the mining rents (WHAT) and trying to change the institutions (HOW).

External actors are the transnational (multinational) corporations trying to extract natural resources, following the simple business principle ‘the maximum benefit at minimum cost’.  However, they are powerful players with support from their respective governments, international financial institutions, and investors.  Then, there are the opportunity seekers – who are mostly junior companies and mining/mining supply entrepreuners.

Domestic actors are the most-complicated to categorize.  However, they could be divided into three major groups.  One is the political/bureaucratic actors, including those affilliated to political parties and state bureaucracies. The second group is the business community, those who are engaged in mining-related business activities.  The last group is the public, or civil society; this includes people who are directly-affected by the mining activities and those unaffected by the mining.

Even though all these actors involved in the mining governance process (i.e., the decision-making and implementing process of using mining resources), the political and bureaucratic actors have the political power to set the rule (institution) and to enforce (to institutionalize) the rule.  If all other actors are fighting to get the ‘rents’ of mining, the political and bureaucratic actors are given the mandate to regulate this competition in fair, transparent, and sustainable ways.  This generates trust among all actors and reduces the uncertainty.  But, if political and bureaucratic actors themselves engage in the rentseeking game, it creates a messy field for all.  Therefore, ‘WHEN’ becomes the most important factor for these actors to change the rule and to disrupt the institutionalization process.

This framework will be used in the next blog posts – to examine Mongolian mining governance from a political perspective – to grasp the dynamics of power politics.

 

 

Posted in CIRDI, Governance, Mining, Mining Governance | Tagged | Leave a comment

Bloggin’ 2015

Posted on January 1, 2016 by JDierkes

Happy new year!

This has been the fifth year of our blogging (we started in July 2011). Most of the writing has passed to Mendee and I, though Byamba and Brandon have continued to chip in. We’ve managed to post at least once for every month of the existence of the blog.

We wrote 39 posts this year, roughly three per month.

Over the year we’ve had 14,000+ readers looking at over 36,000 pages. On average, readers stay 1′:45″ to read 1.7 pages which has been fairly consistent over the years (2′ and 1.8 over existence of the blog. Over the existence of the blog, we’ve had 68,000 users.

The most-read post (at 560+ times) was the March 2 post about the arbitration award to Khan Resources, followed by the Jan 30 post about PM Saikhabileg’s SMS poll, and the June 2 post about policy failures (both still with 500+ readers).

Cumulatively the most-read post has been an attempt to understand Mongolia’s Transparency International ranking in 2012 with nearly 1,500 reads.

No 2015 post was read less than 40 times.

The most popular page has consistently been our listing of non-Mongolian mining companies (viewed nearly 5,000 times), though this remains in some need of updating given the departure of numerous companies over the past several years.

The greatest number of sessions originated in Mongolia (21%), followed by the U.S. (20%), and Canada (13%). The most surprising among the top 10 source countries (to me at least) is Denmark with 2% of users. Somewhat surprisingly, China doesn’t crack the top 10 users coming in at 15th. The visit of Prime Minister Modi may have catapulted India into the top 10 (8th with over 2% of users), but two India-focused posts mat have also contributed to that interest. Only single sessions originated from Rwanda, Uruguay and Samoa (among others).

Roughly half of all sessions started via an organic search, 9% via Twitter. Twitter referrals account for nearly 70% of all social network-sourced users. According to Twitter Analytics my monthly “top tweet” that directly linked to a blog post in 2015 was an October 2015 tweet about Pres. Elbegdorj’s proposal of seeking permanent neutrality for Mongolia. This post received over 2,500 impressions, was re-tweeted 11 times, and the link to the blog post was clicked on 15 times.

Mobile users are creeping up on nearly 20% of readers.

Posted in Social Media | Tagged | 1 Comment