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Mongolia: Caught between democratization and Rio Tinto

  • Ratih Hardjono

Jakarta | Thu, May 31 2012 | 08:54 am

Not much is heard about Mongolia, a country north of Indonesia, so far north that when I was a child I thought it was the closest place on earth to the abode of the heavenly Gods and a place where nomadic herdsmen rode on horses at lightning speed conquering the vast empty steppes.

Mongolians have recently evoked the spirit of their founder, Genghis Khan, who built the Mongolian empire in 1206. Everywhere you go, he is omnipresent, and for good reason. Having had to face giants such as the Soviet Union and China in the last few hundred years, Mongolia is now embarking on a new journey and taking on one of the world’s mining giants, Rio Tinto.

Mongolia is now reinforcing its economic sovereignty by developing its mining industry. The vast Gobi desert in the southern part of Mongolia is home to some of the most valuable minerals in the world, but has only recently begun to be developed as the harsh environmental conditions had deterred many before. The Oyu Tolgoi copper mine is only 80 kilometers from the border of China, and when it begins production in 2013 it will become one of the largest copper mines in the world.

It is said that even during Genghis Khan’s time, the outcropping rocks in Oyu Tolgoi, or Turquoise Hill, were smelted for copper. The mine was originally explored by Canadian company Ivanhoe and is now being developed by Rio Tinto. The Mongolian Government owns 34 percent of the mine and once in operation it is estimated that the mine will account for more than 30 percent of Mongolia’s GDP.

When the Soviet Union left in 1991 after occupying the country for 70 years, all critical mining exploration data on the country was taken back to Moscow. The Russians refused to share any of this mineral mapping data with the Mongolians.

One senior Mongolian official jokingly said, “You know how these mining investors started investing here? One of our bureaucrats who knew the mineral mapping data by heart said to the investor, just dig here and trust me, I know the stomach of Mongolia by heart and there is good stuff in the ground.”

Mongolia is a land of dramatic beauty. It also has one of the most dramatic histories, which is unknown to many. It won its independence in 1921 with Soviet backing and a communist regime was installed in 1924. When the Soviet Union left in 1991, the door to democratization was flung wide open, but poverty and deep economic depression also set in. The Soviet Union’s assistance at its height amounted to one third of Mongolia’s GDP, but suddenly disappeared over night.

The current President of Mongolia, Elbegdorj Tsakhia, who has a Harvard education, was a young man when the Russians left and led the first demonstrations for democracy and reforms in Mongolia. He told the story of how he was visited by the Polish Solidarity leaders and taught how to manage an effective demonstration, give rousing orations and write banners against the local ruling elites hanging on to Communism when the Russians left.

President Elbegdorj is a cheerful man with one of those faces which emanates eternal youth and optimism. The struggles he has been through over the last 22 years, which include being thrown out as prime minister of Mongolia twice, is reflected in his wiry old hands.

In a closed meeting with people who had come to Mongolia to share their experiences in democratic education, the passion for freedom and human rights was palpable in his being. He summarized the essence of his struggle when he said “This is my freedom; Mongolian freedom, not Western freedom and I will defend it with my life.”

The multinational mining corporation Rio Tinto operates in more than 50 countries and can be likened to a state of its own. It is a commercial company, but in many ways it operates like a state, with a well-thought out public affairs policy for different countries. If anything, it is perhaps run much better than many states in the world. It has no option because it has to deliver profit to its shareholders.

The good news is that Rio Tinto, like Mongolia, has also had a long journey in democratization, which began with its Bougainville mine in Papua New Guinea in the late 1980s. It is still facing legal challenges, with a US federal appeals court reviving a lawsuit in 2011, seeking to hold Rio Tinto responsible for human rights violations and the thousands of deaths linked to the Bougainville copper and gold mine it once ran. Rio Tinto today has a global code of business conduct, where human rights and doing business democratically is its center piece. The company has learned its lesson.

Today, many in Mongolia feel that life was better under communism than it is under capitalism. There are high economic growth rates, but Mongolians note that this is not being translated into prosperity.

Poverty is at 30 percent and the disparity of income is already causing social problems. Yet there are more brand new Hummers and Mercedes Benz four wheel drives found in Ulaanbaatar than in Jakarta. President Elbegdorj is worried about this and asked “Is this economic development a blessing or a curse?”

Democratization in Rio Tinto has helped sustain profits. There may be many weaknesses in Rio Tinto, but it is in Mongolia’s interest to ensure that like Rio Tinto, Mongolia can also produce profit while adhering to human rights, business integrity and accountability — all of which are pillars of democracy. This will ensure that democracy delivers and economic development can be enjoyed by all Mongolians.

Ghenghis Khan, meaning Universal Ruler, once guided Mongolia to prosperity and victory. May his spirit descend on the leaders of Mongolia today and guide them through this next challenge facing yet another giant in order that welfare is delivered to all the people of Mongolia.

The writer, a former journalist, is secretary-general of the Indonesian Community for Democracy (KID). She was a recipient of the Nieman Fellowship for Journalism at Harvard University in the class of 1994.


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