Headline Sep 23, 2014/



ONE OF THE WORLD'S  fastest growing economies, Mongolia finds itself in a gold rush, but at odds with the sources of its new-found wealth:

The foreign miners and financiers dazzled by the unfathomable bounty under its vast terrain.

Some foreign fear that populist politician, pandering to a belief that the nation is selling its birthright too cheaply, may kill the goose before it has laid any golden eggs. Almost certainly not ;  but  ''resources nationalism'' will surely make life uncomfortable for geese.

Because of falling commodity prices and a slowdown in China, which takes over 85% of its exports, Mongolia's roaring economy slowed drastically last year  -to a mere 12% or so GDP growth, from over 17% in 2011.

But the benefits produced by these giddy numbers remains elusive for many Mongolians.

The frozen main streets of  Ulaanbaatar, the capital, are gridlocked. In the glitzy mall in Central Tower, it is warm enough to browse the posh shops in a T-shirt.

Yet more than half of  Ulaanbaatar's  1.3m  people live in  ''ger districts''  on its fringes, shanty towns of felt tents often with no running water or electricity  
According to the  IMF, the number of Mongolians living in poverty fell by about ten percentage points in 2011, thanks to the government handouts. But that still left some 30% below the poverty line.

For them, the most obvious effects of the inflow of foreign money are sharply rising prices, unplanned urbanisation and presence of rich looking foreign visitors and residents. 

In a vibrant young democracy, plenty of politicians tell Mongolia's  2.8m people that they should be faring better as the country hurtles towards rich-world average incomes.

In recent parliamentary elections, about a quarter of the seats went to ''resource nationalists''.

And then, at the same time, a scandal blew up when the foreign controlled owner of  Ovoot Tolgoi, a Mongolian coal mine, wanted to sell it to a Chinese state-owned enterprise.

Acutely  conscious of their commercial dependence on China, Mongolians are sensitive to any hint of its gaining control over them.

A  ''strategic entities foreign investment law''  was pushed through, tightening approval procedures.

Mongolia is far from unique in having such a law, bit is taken as a sign of incipient backlash 

The mine has just produced its first copper concentrate. It is expected to begin commercial production by the end of June.

In the Gobi desert,  just  80km from the border with China, which will but its products, it seems well on track to meet the ambitious hopes vested in it. Yet the president accused the company of having spent more than had been scheduled-

When the investment agreement was signed in  2009  -nearly $7 billion so far; of being slow in explaining why; of paying its management too much; and of employing more foreigners than it was supposed to.

The smug consensus among foreign businessmen is that the government needs Rio more than Rio needs it. So, at a time of  stress in global mining, when projects elsewhere are facing the axe, this was very high risk and dangerous.  

Mongolia knows its own appeal to global investors. Last November, it raised $1.5 billion in international markets.

Its bond, inevitably called   ''Chinggis''   after the national hero, Genghis Khan, was heavily oversubscribed, and traded initially better on terms better than those available to, for example, Spain.

But the price of the Chinggis has proved as volatile as its namesake and much more vulnerable to shareholder disputes.

Some investors had hoped that the government  would moderate its behaviour.

But if history was any  guide,  this land of Genghis,  that one great conqueror of China and most of the Eurasian land mass,  -was really going to quail before the scribblers in the bond market?

With respectful dedication to the Students, Professors and Teachers of Mongolia. See Ya all  on !WOW!   -the World Students Society Computers-Internet-Wireless:

''' All Liberal Turns "'

Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless


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