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From rugs to riches

Friday, July 27th, 2012
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MINEGOLIA: Ulaanbataar has the look of a gold rush boom town as money from its vast mineral wealth starts pouring in. Half of Mongolia’s population of 4 million lives in the capital, but in most of the countryside (pic, below) life goes on much as it did during the times when Genghis Khan rode across the steppes. Pics: Kunda Dixit

When they tell you in Mongolia that their resource-rich nation has the ‚ÄúDutch Disease‚ÄĚ, one wishes we in Nepal could catch that disease too. The term is used to describe a sudden and large inflow of foreign investment following the discovery of natural resources (usually oil), and the bonanza is accompanied by widespread corruption. We have corruption in Nepal too, but without the natural resource bonanza.

What is happening in Mongolia today is a gold rush, literally, as huge deposits of gold, coal, copper, uranium and oil have been  discovered underneath the Gobi Desert. Suddenly a country half the area of India but with only 4 million people, sees itself staring at riches that could make it regain the glory days of Mongolia’s most famous son, Genghis Khan. (Read: Remanants of a realm) 

But for now, even though royalties from the mines have started coming in, Mongolia is still struggling with the transition from communism as a Soviet satellite, and making democracy work in this sparsely-populated land.

They say you can gauge the level of corruption in a country by the size of the potholes on the streets of its capital. If it is any consolation, roads of Ulaan Bataar have even bigger potholes than the ones in Kathmandu. Mongolia‚Äôs mining industry and Nepal‚Äôs hydropower sector are similar stories of resources squandered, in countries that shouldn’t be poor. Politicians in both countries are too narrow-minded and corrupt to make democracy work and distribute income from natural resources equitably.

In Mongolia and Nepal, the democratic transition has lasted more than two decades, and in both countries elected leaders have let their countries down because of greed, ambition and a chronic inability to prioritise the national interest.

Just like Nepal has a big potential buyer in India for its water resources, Mongolia has a huge export market in China for its mineral wealth. And in both countries this breeds suspicions of the perceived colonial intentions of the southern neighbour. Despite what Stalin did to erase all memory of Genghis Khan and the Soviet-era pogroms against Tibetan Buddhism, the Mongolians seem to tolerate the Russians more, because it is a counterbalance against the Chinese.

Still, things are moving in Mongolia. Mining contracts have been awarded, there are provisions where every Mongolian has a share in some of the big copper and gold mines. Once a sleepy backwater, today Ulaanbataar has the look of a boomtown, sleek new high-rises are going up, new highways are being built and the potholes are being filled. There is a reinstatement of Genghis Khan as a national cultural icon and a campaign to change the western image of him as a rapacious looter to a world leader who brought civilisation to Europe.

Last month, Mongolians voted in elections in which money-minded ex-communists battled the democratic parties. After prolonged bargaining, the Democratic Party finally agreed this week to form a coalition with populist ‚Äúresource nationalists‚ÄĚ which want to reduce the presence of foreigners in the mining sector.

Much in the same way river projects in Nepal become political pingpong, so it is in Mongolia with its mines. The government will be led by the DP‚Äôs Norov Altanhuyag but populist parties like the Mongolian People’s Revolutionary Party and Mongolian National Democratic Party will demand their pound of flesh for support. Both want to limit the open-ended contracts that foreign mining companies got under the previous regime, they want the lucrative coal and copper mines nationalised. They want an agreement by a previous government with a Canadian-Australian mining giant to exploit the Oyu Tolgoi copper mine to be renegotiated. Sound familiar?

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5 Responses to “From rugs to riches”

  1. bombhloe on Says:

    The renegotiated agreement to exploit the mine is the additional boxes of Canadian rye and Australian chardonnays to be delivered just in time ahead of the next elections, when the Mongolian people’s revolutionary party leader Nambar Enkhbayar, ousted in a corruption probe will come back again in a dramatic change of circumstances. I hope so. May Khan genzhis bless mongolia.


  2. Dorji Tsering Sherpa on Says:

    Few days back, half of India was without electricity and black out for many hours!!!! why cannot Nepal sell all the rivers to India and China to develop the hydro electricity and let the lazy Nepalese live like the Sheikh of the gulf countries from the revenues collected from the river water which is now running freely.???


  3. A. Shrestha on Says:

    I have huge respect for Mr. Dixit and I don’t want to tread on your toes. But doesn’t an economy suffer from the “Dutch disease” due to the appreciation of its currency (usually due to the discovery or exploitation of a natural resource as you mentioned) which has a negative impact on its exports, rather than widespread corruption?

    Nevertheless, it is a great read and the similarities are striking. I really wish our political parties would put the development of the nation ahead of their own petty interests.


  4. Kul Chandra Gautam on Says:

    Kunda Dixit mentions many words that came into Nepali via Mongolia and
    Persia. I visited Mongolia in 2004 and met then President Natsag Bagabandi
    who is a historian and a scholar. He asked me where in Nepal I came from
    and I told him I was from Gulmi. Rather curiously, he then asked me if it
    was near Palpa. I said yes, and he then said that an old word for ‘Nepal’
    in Mongolian was ‘Palapa’. A Buddhist monk from Nepal had apparently
    visited Mongolia long ago and said he came from Palpa, near the birth
    place of the Buddha called Lumbini. So Mongolians knew Nepal as Palapa for
    a long time. President Nagabandi had visited Nepal in 2001 but did not
    manage to visit Palpa.
    Kul Chandra Gautam


  5. Rachel on Says:

    A. Shrestha is correct about ‘Dutch disease’. The ‘disease’ is a decline in the manufacturing sector, which can follow the discovery of natural resources and the appreciation of the currency.

    Nonetheless, I really enjoyed this article.

    I also thoroughly enjoyed Kul Chandra Gautam’s anecdote.


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