Sep 38 min read

Mongolia's Geopolitical Dilemma: Balancing Russia and China

Introduction

In the complex chess game of international politics, Mongolia finds itself in an increasingly precarious position.

Sandwiched between two global powers – Russia to the north and China to the south – Mongolia's recent decision not to arrest Russian President Vladimir Putin despite an international warrant has brought its delicate balancing act into sharp focus.

This blog post aims to analyze Mongolia's current geopolitical situation, with particular emphasis on its energy dependence and the challenges it faces in maintaining its sovereignty and pursuing its national interests.

Historical Context

To understand Mongolia's current predicament, we must first look at its historical relationships with Russia and China.

For much of the 20th century, Mongolia was a Soviet satellite state, heavily dependent on Moscow for economic and military support.

Following the collapse of the Soviet Union in 1991, Mongolia transitioned to a democratic system and market economy, but its ties with Russia remained strong.

Meanwhile, China's rapid economic growth in recent decades has led to increased Chinese influence in Mongolia, particularly in the economic sphere.

This has created a delicate balancing act for Ulaanbaatar, as it seeks to maintain good relations with both neighbors while preserving its independence and sovereignty.

Current Geopolitical Landscape

Russia's Influence

Despite the end of the Soviet era, Russia continues to exert significant influence over Mongolia:

Energy Dependence: Mongolia relies heavily on Russia for its energy needs, particularly oil and gas imports.
Military Cooperation: Russia remains Mongolia's primary military partner, providing training and equipment.
Cultural Ties: Decades of Soviet influence have left a lasting cultural impact, with Russian still widely spoken and studied in Mongolia.

China's Growing Presence

China has become increasingly important to Mongolia's economy:

Trade: China is Mongolia's largest trading partner, accounting for over 60% of its total foreign trade.
Investment: Chinese companies are major investors in Mongolia's mining sector, a crucial part of the country's economy.
Infrastructure: China's Belt and Road Initiative has led to significant infrastructure projects in Mongolia.

Energy Dependence: A Key Factor

Mongolia's energy dependence on Russia is a critical factor in its geopolitical positioning. Let's examine this in more detail:

Current Energy Situation

Oil Imports: According to the International Energy Agency (IEA), Mongolia imports nearly 100% of its oil products from Russia.
Electricity: While Mongolia has its own coal-fired power plants, it still imports electricity from Russia, particularly for its western regions.
Natural Gas: Mongolia currently doesn't have a natural gas network, but there are plans for a Russia-China gas pipeline that would transit through Mongolia.

Data on Energy Dependence

To illustrate Mongolia's energy dependence, let's look at some key statistics:

Oil Imports: In 2020, Mongolia imported approximately 1.5 million tons of oil products from Russia, according to the Mongolian Ministry of Mining and Heavy Industry.
Electricity Imports: The World Bank reports that in 2019, about 20% of Mongolia's electricity consumption was met through imports, primarily from Russia.
Energy Mix: The IEA provides the following breakdown of Mongolia's total energy supply in 2019:
- Coal: 70%
- Oil: 25%
- Renewables and waste: 5%

This data clearly shows Mongolia's heavy reliance on fossil fuels, particularly coal and imported oil from Russia.

The Putin Arrest Warrant Situation

In March 2023, the International Criminal Court (ICC) issued an arrest warrant for Russian President Vladimir Putin, accusing him of war crimes related to the conflict in Ukraine.

As a member of the ICC, Mongolia would theoretically be obligated to arrest Putin if he entered the country.

However, Mongolia's government made it clear that they would not do so.

This decision highlights several key aspects of Mongolia's geopolitical situation:

Pragmatism over Principle: By choosing not to enforce the ICC warrant, Mongolia prioritized its practical needs (maintaining good relations with Russia) over international legal obligations.
Energy Security: The fear of potential Russian retaliation, particularly in the energy sector, likely played a significant role in this decision.
Limited Options: Mongolia's geographical position and economic realities leave it with few alternatives to Russian energy in the short term.

Academic Political Analysis

From an academic perspective, Mongolia's situation can be analyzed through several theoretical lenses:

Realism

The realist school of international relations would view Mongolia's actions as a clear example of a small state prioritizing its survival and security in an anarchic international system.

By refusing to antagonize Russia, Mongolia is acting in its perceived self-interest, recognizing the power imbalance between itself and its larger neighbor.

Key Points:

Power Politics: Mongolia's decision reflects the realities of power politics in its region.
Security Dilemma: Mongolia faces a classic security dilemma – actions taken to increase its security (like closer ties with the West) could paradoxically decrease its security by antagonizing Russia.

Liberal Institutionalism

From a liberal institutionalist perspective, Mongolia's decision not to enforce the ICC warrant represents a failure of international institutions to constrain state behavior.

However, this theory would also emphasize Mongolia's continued engagement with international organizations and its attempts to diversify its relationships.

Key Points:

Institutional Constraints: The ICC's limited enforcement mechanisms highlight the challenges faced by international institutions.
Complex Interdependence: Mongolia's situation demonstrates the complex web of economic, political, and security relationships that shape state behavior.

Constructivism

Constructivists would focus on how Mongolia's identity and interests are shaped by its historical experiences and relationships with Russia and China. They might argue that Mongolia's decision reflects a particular understanding of its role in the region and its relationships with its neighbors.

Key Points:

Identity Formation: Mongolia's self-perception as a buffer state between Russia and China influences its foreign policy decisions.
Norm Contestation: The situation highlights competing norms – international justice versus regional stability and national interest.

Data Analysis: Mongolia's Economic Ties

To further understand Mongolia's position, let's examine some economic data:

Trade Data

According to the Observatory of Economic Complexity (OEC):

Exports (2020):
- China: 70.5% of total exports
- Switzerland: 8.23%
- Russia: 1.51%
Imports (2020):
- China: 35.1% of total imports
- Russia: 29.8%
- Japan: 8.68%

This data illustrates Mongolia's economic dependence on both China and Russia, with China dominating exports and both countries being crucial for imports.

Foreign Direct Investment (FDI)

The Bank of Mongolia provides the following data on FDI inflows by country (cumulative, 1990-2020):

China: 34.2%
Canada: 11.7%
Netherlands: 6.9%
Luxembourg: 5.8%
Singapore: 4.3%

Russia does not appear in the top five, indicating that while it's crucial for trade and energy, it's not a major direct investor in Mongolia.

Future Predictions

Based on the current situation and historical trends, we can make several predictions about Mongolia's future geopolitical positioning:

Continued Balancing Act

Mongolia is likely to continue its delicate balancing act between Russia and China for the foreseeable future.

However, this may become increasingly challenging as tensions between these powers and the West escalate.

Prediction: By 2030, Mongolia will have further diversified its diplomatic and economic relationships, potentially increasing engagement with countries like Japan, South Korea, and India.

However, Russia and China will remain its most important partners.

Energy Diversification

Mongolia will likely intensify efforts to diversify its energy sources to reduce dependence on Russia. This could include increased investment in renewable energy and the development of its own oil refining capabilities.

Prediction: By 2035, Mongolia will have reduced its reliance on Russian oil imports to less than 70% of its total oil consumption, down from nearly 100% today.

Renewable energy will account for at least 20% of its energy mix, up from about 5% currently.

Economic Integration with China

China's economic influence in Mongolia is likely to grow, particularly through the Belt and Road Initiative.

This could lead to increased infrastructure development but also concerns about economic dependence.

Prediction: By 2030, China's share of Mongolia's foreign trade will exceed 75%, up from about 60% today.

This will be accompanied by significant Chinese investment in Mongolia's infrastructure, particularly in transportation and energy.

Sovereignty Concerns

As both Russia and China become more assertive in their foreign policies, Mongolia may face increased challenges in maintaining its sovereignty and independent foreign policy.

Prediction: By 2025, Mongolia will have strengthened its "third neighbor" policy, seeking closer ties with democratic countries to balance against Russian and Chinese influence.

This could include enhanced security cooperation with countries like the United States and Japan.

Mining Sector Development

Mongolia's vast mineral resources will continue to be a key driver of its economy and a focus of foreign investment.

Prediction: By 2030, Mongolia will have developed at least two new world-class mining projects, likely with significant Chinese investment.

However, there will be increased domestic pressure to ensure these projects benefit the Mongolian people and do not lead to environmental degradation.

Climate Change Adaptation

Mongolia is particularly vulnerable to climate change, with rising temperatures threatening its traditional nomadic lifestyle and agriculture.

Prediction: By 2040, climate change will have forced significant adaptations in Mongolia's agriculture and livestock sectors.

âThis could accelerate urbanization and potentially increase economic dependence on mining and other industries.

Regional Integration

Mongolia may seek to play a larger role in regional organizations as a way to balance its relationships with Russia and China.

Prediction: By 2030, Mongolia will have deepened its involvement in organizations like the Shanghai Cooperation Organisation and potentially joined new regional economic integration initiatives.

Challenges and Opportunities

As Mongolia navigates its complex geopolitical environment, it faces several challenges and opportunities:

Challenges

Energy Security: Reducing dependence on Russian energy imports will be costly and technically challenging.
Economic Diversification: Mongolia's economy remains heavily dependent on mining exports, making it vulnerable to commodity price fluctuations.
Climate Change: Mongolia is one of the countries most affected by climate change, with rising temperatures threatening traditional livelihoods.
Demographic Pressures: Mongolia's population is young and increasingly urbanized, creating pressures for job creation and improved public services.
Corruption: Persistent corruption could hinder economic development and erode public trust in institutions.

Opportunities

Strategic Location: Mongolia's position between Russia and China could be leveraged for economic benefit, particularly in terms of transit trade.
Renewable Energy Potential: Mongolia has significant potential for solar and wind energy development, which could reduce energy dependence and create new economic opportunities.
Tourism: Mongolia's unique culture and pristine landscapes offer potential for sustainable tourism development.
Digital Economy: With a young, tech-savvy population, Mongolia could position itself as a regional hub for digital innovation.
Peacekeeping Role: Mongolia's neutral status and peacekeeping experience could allow it to play a larger role in regional security dialogues.

Policy Recommendations

Based on this analysis, several policy recommendations can be made for Mongolia's government:

Energy Diversification: Accelerate investments in renewable energy and explore possibilities for nuclear energy development with international partners.
Economic Diversification: Develop policies to support non-mining sectors, particularly in high-value services and manufacturing.
Enhanced Diplomacy: Strengthen the "third neighbor" policy by deepening ties with democracies like Japan, South Korea, and India, while maintaining positive relations with Russia and China.
Infrastructure Development: Carefully evaluate Belt and Road Initiative projects to ensure they align with Mongolia's long-term interests and do not create unsustainable debt.
Education and Innovation: Invest in education and research & development to position Mongolia as a knowledge economy in the region.
Climate Adaptation: Develop comprehensive climate adaptation strategies, particularly for the agriculture and livestock sectors.
Anti-Corruption Measures: Strengthen anti-corruption institutions and increase transparency in government and business dealings, particularly in the mining sector.
Regional Integration: Actively participate in regional forums and initiatives to amplify Mongolia's voice in regional affairs.

Conclusion

Mongolia's decision not to arrest Putin, despite its ICC obligations, is a clear illustration of the complex geopolitical realities facing this landlocked nation.

Sandwiched between two global powers and heavily dependent on Russia for its energy needs, Mongolia finds itself in a precarious balancing act.

The country's energy dependence on Russia, coupled with its growing economic ties to China, creates a challenging environment for maintaining true independence and pursuing its national interests.

However, Mongolia's unique position also presents opportunities for it to play a larger role in regional affairs and to leverage its strategic location for economic benefit.

As we look to the future, Mongolia will need to navigate carefully between its powerful neighbors while also diversifying its economy, energy sources, and international relationships.