These days it sits on the verge of a mineral mining boom for anyone who can reach a deal with the government. With Western investments in doubt, David Sneath explains that Putin has been renewing old ties.
Mongolia owes its political sovereignty to Russia. Despite some bitter memories of the Soviet era, Mongolians have not forgotten this fact. In 1911, as the Qing empire that ruled China collapsed, the “outer” portion of Mongolia declared independence with Tsarist Russian support.
At first the newly independent nation was ruled by the head of the Buddhist church, the Bogd Khaan or “living Buddha of Urga [latterday Ulaanbataar]”, but in 1919 the capital was occupied by the Chinese warlord Xu Shuzheng. In 1920 the Russian civil war spilled over into Mongolia when a White Russian army led by the “mad baron” Ungern Sternberg attacked the Chinese, taking the capital from them the following spring.
The Soviets reacted by sending troops in support of Mongolian revolutionaries to oust Sternberg the same year. After the Bogd Khaan died in 1924, they established the first Soviet satellite state – the Mongolian People’s Republic.
For much of the 20th century Mongolia developed along Soviet lines. A Cyrillic alphabet was introduced and Russian was widely taught as a foreign language. Much of the elite went to university in the USSR or other Comecon countries.
Mongolia’s domestic politics mirrored that of its Soviet Big Brother. The 1930s saw purges, mass executions and the ruthless centralisation of power by “Mongolia’s Stalin,” Marshal Khorloogiin Choibalsan. In 1939 a Japanese invasion was repulsed by a combined Soviet–Mongolian army led by the celebrated Russian general Georgy Zhukov, a victory that is commemorated to this day.
In 1952 Choibalsan was succeeded by the Russophilic Yumaagiin Tsedenbal, whose wife was Russian, and who followed Khrushchev in criticising his predecessor’s “cult of personality”. Relations with communist China were good until the Sino-Soviet split of the 1960s saw Mongolia side with Russia. This led to an intensification of anti-Chinese sentiment and the return of Soviet troops.
Mongolia subsequently became entirely dependent on the USSR and Comecon for large-scale investment in urban centres, public services and industry, but it was not disappointed. Industry was developed, including the huge joint Russian-Mongolian copper mine of Erdenet, and national annual income grew at around 5%-6% in the 1970s and 1980s.
From Soviet satellite to third neighbour
In the Gorbachev era, Tsedenbal was succeeded by the reform-minded Jambyn Batmönkh, who launched his own versions of glasnost and perestroika. Reform led to the remarkable bloodless revolution of 1990 in which the ruling party simply resigned in the face of peaceful protest and introduced a multi-party parliamentary democracy.
But the USSR had supported Mongolia’s economy with a subsidy estimated at 37% of the country’s GDP. As the Soviet system collapsed, Russia withdrew both its troops and its economic support. A “shock therapy” campaign of privatisation saw most people lose out to a small rich elite as Mongolia was flung into a deep economic crisis. Incomes collapsed and unemployment soared.
The 1990s saw a political and public move away from Russia. The state turned to nationalism, which had been carefully regulated in the Soviet period, to create a new populist politics in the wake of the collapse of Marxist-Leninism. The imperial heritage of the great 13th-century conqueror Chinggis Khan was glorified to an extent impossible in the Soviet period, since in Russian history he was seen as the notorious architect of the “Mongol yoke” of tartar rule.
Mongolia adopted the “third neighbour” policy – seeking political, economic and cultural connections with partners other than Russia and China, particularly the US, EU, Japan and South Korea. With Russia in economic crisis in the late 1990s, China became the country’s chief trading partner and a major source of foreign investment, much to the disquiet of the Mongolian public, who remained deeply wary of Chinese influence.
Putin’s charm offensive
When Putin came to power, he took steps to repair relations with Mongolia. He visited the country in 2000, the first Russian leader to have done so since Brezhnev. Three years later he wrote off nearly 98% of an $11bn (£7.3bn) debt that Russian had claimed it was owed from the Soviet era.
In part this reflected Mongolian domestic politics. The Mongolian People’s Revolutionary Party (shortened to Mongolian People’s Party since 2010) had been the ruling Communist-style party in the Soviet era. Although rebranded as a moderate socialist party fully committed to a market economy, it retained a relatively pro-Russian stance.
Nambaryn Enkhbayar, had the makings of a Mongolian Putin. He served as prime minister (2000-04) and president (2005-09). The personal chemistry between Enkhbayar and Putin was said to be good, and Enkhbayar took credit for the waiving of the national debt. However, the success of the more pro-western Democratic Party in presidential and parliamentary elections in 2009 and 2012 cooled relations with Moscow and strengthened third-neighbour policies once more.
A new courting season
One of the country’s most important economic prospects is the enormous copper and gold deposit at Oyu Tolgoi in the Gobi desert that has attracted the Anglo-Australian multinational Rio Tinto. The prospect of a mining boom attracted other foreign investment and created high hopes for rapid economic growth.
Yet wrangling between Rio Tinto and the government over the terms of the deal has stalled the development, slowed the economy and led to public disillusionment. The Democratic president, Tsakhiagiin Elbegdorj, has had to turn to his first and second neighbours for loans and bilateral trade agreements, receiving the Chinese premier Xi Jinping last August and Putin in September.
Although China is by far the bigger trade partner, Russia remains the more popular of the two, and Putin played his hand well. He agreed to visa-free travel between Russia and Mongolia to widespread satisfaction. The Mongolian public retains a certain amount of nostalgic sympathy for Russia and this has been strengthened by the recent flight of western investment.
Elbegdorj is now looking to Russia for further investment in the jointly owned railway network to benefit from continental trade with China. Neither the crisis in the Ukraine nor the Western chill towards Russia has had a serious impact upon Mongolian relations with its onetime Soviet ally. He may be persona non grata in Kiev, but Vladimir Putin is far from unwelcome in Ulaanbaatar."
To read previous instalments from our Russia’s borders series, click here.