Kazakhstan: Nazarbayev Seeks to Make Economic, Diplomatic Inroads in Mongolia

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www.eurasianet.org writes that,

Kazakhstan’s president, Nursultan Nazarbayev, visited Mongolia with the twofold intention of bolstering political stability there following last month’s post-election protests, and seeking an economic foothold in the East Asian country’s lucrative and under-developed mining sector.

While long on declarations of friendship and short on specifics, Nazarbayev’s August 6-7 visit opened the door to Kazakhstani investors to pump their petrodollars into projects in Mongolia and gain access to its vast mineral resources. “Mongolia, like Kazakhstan, is a country that is rich in mineral assets,” Nazarbayev told a joint news conference on August 6. “We have agreed to exchange experience in the development of deposits by Kazakhstani investors. We have specialists who can do this.”

Investors from China, Russia and the West have long been engaged in a largely backstage struggle over Mongolia’s subsoil resources, which include coal, copper, gold, iron ore, oil, phosphates, zinc and uranium. Concerns over outside investment and the management of resources has prompted the Mongolian government to tighten up laws governing the development of mineral assets in recent years, and some Western investors have pulled out after having their fingers burnt.

“The West has withdrawn from the fight for Mongolian assets, and Russia and China are becoming the main rivals,” commented Russia’s Kommersant newspaper on July 1 in a report discussing the implications of the contested election victory of the Mongolian People’s Revolutionary Party (MPRP), which culminated in violent protests resulting in five deaths. Prime Minister Sanjaagiin Bayar is friendly towards Russia, said Kommersant, but Mongolia also greatly depends on China — for trade, for example. “This means that, after the election results are summed up, a serious struggle could begin in the MPRP between the pro-Russian and pro-Chinese groups,” the newspaper concluded.

As the big powers fight over resources, Kazakhstan hopes to quietly gain access without antagonizing its neighbors. The effects of the global credit crunch notwithstanding, Kazakhstani businessmen are aggressively seeking new markets. Gaining a foothold in Mongolia would be considered a coup for Kazakhstan.

Nazarbayev signed a joint declaration with his Mongolian counterpart, Nambaryn Enkhbayar, on August 7 at the end of his two-day visit. In addition to pledging cooperation in the extractive industry, the two states expressed interest in enhancing bilateral contacts in agriculture, banking, and infrastructure and transport development.

To boost bilateral trade, which fell 44 percent in 2007 to around $30 million, the countries are also looking to improve air links with flights from Astana to Ulan Bator and Bayan-Olgiy — home to most of Mongolia’s ethnic Kazakh diaspora of some 100,000, or about 4 percent of Mongolia’s population. Despite the proximity of Mongolia and Kazakhstan, their borders do not meet and road links are through Russia and China.

“We are not satisfied with the current state of trade between Kazakhstan and Mongolia,” Nazarbayev said. “The development of trade relations is hampered by the absence of a proper road. We want to build a road from Kazakhstan to Mongolia through Russian territory.” During the visit, Nazarbayev also promised to supply Mongolia with up to 1.5 million tons of crude oil, and up to 30,000 tons of wheat next year.

While the economic element of Nazarbayev’s visit was undoubtedly important, some observers saw another unstated but significant political aim associated with the trip. The specter of the colored revolutions that brought regime change in CIS states such as Kyrgyzstan, Ukraine and Georgia is particularly alarming for post-Soviet leaders like Nazarbayev who have been in power since the Soviet collapse in 1991. The sight of rioting Mongolian crowds seeking to overturn the results of elections won by the MPRP, the successor to the Communist Party that ruled Mongolia when it was a Soviet satellite, to install the pro-Western Democratic Party was not a welcome one to the Kazakhstani administration. Nazarbayev prizes stability, both domestic and regional, above all.

Underscoring the attempt to divert Mongolia firmly away from a pro-Western orientation was the mention in the joint Kazakhstani-Mongolian declaration of the Shanghai Cooperation Organization (SCO), dominated by Russia and China. The organization “plays an important role in the development of good-neighborly relations and cooperation between countries of the region,” the declaration said, calling for further cooperation between the SCO and Mongolia, which has observer status, in energy, infrastructure, communications and transport.

After his visit to Mongolia, Nazarbayev headed further east to Beijing to attend the Olympics. Ahead of the games, he was received on 8 August by President Hu Jintao, who is not a fan of revolutionary change either.

Editor’s Note: Joanna Lillis is a freelance writer who specializes in Central Asia.

Posted August 8, 2008 © Eurasianet

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One Response to Kazakhstan: Nazarbayev Seeks to Make Economic, Diplomatic Inroads in Mongolia

  1. […] for Mongolian assets, and Russia and China are becoming the main rivals,” said Russia’s Kommersant newspaper in July of last […]

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