EXECUTIVE SUMMARY

 

Northeast Asia and Mongolia: Opportunities and Challenges

 

(8-10 November 2005)*

 

Introduction

On 8-10 November 2005 APCSS held its first conference on Mongolia and its role in shaping the Northeast Asian security environment. The conference was co-sponsored by the School of Hawaiian, Asian and Pacific Studies of the University of Hawaii and the East West Center. The Mongolian Academy of Management was another major contributor.  The collective effort of Honolulu based think tanks and educational institutions was unprecedented and very rewarding in terms of covering a wider than usual scope of security issues and providing a stronger interdisciplinary approach.

Among the key objectives for the conference was to assess the role of Mongolia in regional processes in Northeast Asia, such as economic integration, development of common infrastructure, use of energy resources, protection of environment as well as cooperation in fighting transnational crimes.  Since Northeast Asia is one of the priority areas of Mongolia’s foreign policy, the conference was designed to assess the current state and future prospects of Mongolia’s relations with her immediate neighbors in order to understand their likely impact on U.S.–Mongolia partnership and key Asian security issues. One of the expected major outcomes of the conference was the identification of new opportunities for promoting multinational cooperation in Northeast Asia- a region that has been lacking in mutual confidence, security interaction, and regional institution building.

The conference brought together government ministers, senior diplomats, defense officials, businessmen, journalists and leading academics from Mongolia, China, Japan, South Korea, Russia, Canada and the United States.  Among the most prominent participants were Sangajav Bayartogt, Mongolia’s Minister of State and Head of the Cabinet Secretariat, Batbayar Bat-Erdene, leading Mongolian politician and one of the country’s  top political commentators,  Ravdan Bold, Ambassador of Mongolia in the United States, Robert Scalapino, perhaps the most distinguished U.S. and international expert on Asian affairs. The Pacific Command was represented by Ravic Huso, Foreign Policy Adviser.

Among the major findings of this conference:

 

International cooperation in Northeast Asia remains limited and generally unsatisfactory given the large economic and political weight of regional countries. In fact, regional cooperation is becoming even more problematic as the continuing rise of China and the relative decline of US presence in Northeast Asia are uncoordinated and present additional concerns for regional nations. The other challenge is the general rise of nationalism in most if not all Northeast Asian states which impedes cooperative efforts in the multinational format.  Democratization of societies is another factor that seems to divide rather than unite Northeast Asian states. The values gap is not decreasing but in fact increasing as China and Russia are clearly favoring partnerships with countries that avoid value oriented, not to mention military oriented, alliances with the United States.

Mongolia faces a serious dilemma of how to continue forging value based relations with the United States without jeopardizing its increasingly important economic ties with China. The recent slowing down of the democratization process in Mongolia does not help the positive (for the United States) resolution of this dilemma. To help Mongolia stay the democratic course and not be overrun by China’s economic might, more Western economic assistance and investment will be required in order to resolve the country’s acute social challenges, such as poverty, large shadowy economy, corruption and growing gap in economic standards of urban and rural areas.

 

The Korean peace process is the most important and the only example of multilateral security interaction between Northeast Asian states. However it is uncertain and unlikely that the Korean process could develop into a permanent security dialogue in Northeast Asia as long as its agenda is limited to nuclear issues and, more importantly, as long as the United States refuses to engage North Korea economically and politically.

Mongolia plays a unique role in the Korean Peninsula by continuing close relations with its North Korean neighbor. Mongolia is perceived by Pyongyang as Northeast Asia’s only non-threatening nation. Mongolia is also one of the few if not the only country in the world which has a visa free regime with North Korea. There are 1,000 North Koreans working in Mongolia’s construction business. Mongolia is planning to invite more of them. There was a debate among conference participants whether Mongolia should allow North Korean laborers into the country. Official Ulan Bator strongly believes that engagement rather than isolation of North Korea is the way to go and rejects attempts by outside forces to discourage Mongolia from maintaining traditional ties with North Korea. Apart from that, Mongolia needs to diversify the immigrant labor force to avoid a dependence on China, which already has 10,000 construction workers in Mongolia.

Northeast Asia objectively requires more economic integration as most of its nations are experiencing an economic boom as well a growing need in energy resources. The region however was characterized by the conference experts as an underachiever in the integration process. As one speaker colorfully put it, Northeast Asian economic integration has remained more imagined than real. Within the region, the ratio between the volume of international trade and the volume of combined GDP is roughly same as North America which consists of only three countries. Furthermore, a large volume of the region’s trade is conducted with external partners like EU and the United States.  As for the energy sector, it has been characterized by more competition than cooperation as China and Japan are fiercely competing for an access to Russia’s energy resources.

Mongolia is well placed to facilitate economic and energy cooperation in Northeast Asia. It has large reserves of coal, hydro resources and minerals that are in demand by China and other regional countries. Mongolia is also a natural transportation and transit bridge for regional trade and energy supplies. Despite the fact that 70 percent of Mongolia’s trade is with Northeast Asia, its overall role in regional trade remains limited. Mongolia’s neighbors continue to impose high tariffs on its exports or transportation services. Since Mongolia does not have any refineries, all petroleum products, such as gasoline, diesel fuel, jet fuel and lube oils are imported-mostly from Russia.  Mongolia’s road and railway infrastructure is not very efficient and needs to be upgraded. One third of Mongolia’s own population has no access to modern electricity. Political issues and mistrust between Mongolia and China have precluded the transiting of Russian oil and gas supplies to China through the Mongolian territory. Russia and China treat Mongolia with suspicion as a close US partner and often bypass Mongolia’s genuine economic interests and needs. At the same time, Russia has politically benefited by writing off Mongolia’s debt of $10 billion dollars and remains the more preferred neighbor than China.

Recommendations for the U.S. policy makers:

 

Enhance support of Mongolia’s political, economic and social transitions.  Mongolia – with relatively minimal outside political support, aside from economic aid from the international community – has managed its own process, and the US needs to support and promote Mongolians’ gains – especially as it seeks to expand democracy’s global reach.  First and foremost, Mongolia, despite challenges to the process, is a potential harbinger of democracy for Central Asia, where autocracy continues to dominate.  The US would find ready results in supporting further Mongolia’s own democratic consolidation and encouragement of the Mongolian model for the institution-weak states of Central Asia.  Mongolia’s observer status in the Shanghai Cooperation Organization is a potentially useful multilateral avenue for this purpose.

Assist in improving Mongolia’s abilities to meet its new strategic realties, such as protection of the country’s borders against illegal migration and infiltration by Central Asian terrorists, its preparedness to respond to natural disasters; and train peacekeeping forces. Mongolia has been a reliable partner in the war against terrorism and global peacekeeping operations and should be rewarded by helping its own defense capability against local extremist infiltrations. Mongolia should be offered a full NATO Partnership for Peace status.

 

Offer stronger support for Mongolia in regional security fora by assisting its membership of the Asia-Europe Meeting (ASEM) and track two Northeast Asia Cooperation Dialogue (NEACD). In the future, Mongolia could serve as Northeast Asia’s Geneva and multilateral venue for regional security dialogue. The six-party process on Korea currently held in Beijing could eventually transform into a broader regional security process but the ideal permanent venue for it would be Ulaanbaatar rather than Beijing.

Encourage Mongolia’s exchanges and confidence-building with North Korea as they can serve the cause of peace building and stabilization on the Peninsula and gradual engagement of North Korea in regional economic affairs.  This would simultaneously enhance Mongolia’s profile in regional security discussion and facilitate Mongolia’s role  as a potential Northeast Asian security dialogue convener.

 

Mongolia needs to be included in and encouraged forward in its continued economic opening.  The establishment of a Northeast Asia Free Trade Association with the United States, Japan and Korea would further enhance Mongolia’s Third Neighbor options and reinforce the Mongolia-Korea-Japan natural economic territory.  Japan has been Mongolia’s largest aid provider, and South Korea plays a significant role as well.  That territory could see US, Korean and Japanese banks and investors active in Mongolia and benefiting from Mongolian resources.  A greater US commitment should realize a boom in Mongolian imports to the US and enhanced US tourism and investment in Mongolia.

Follow Up:

 

The co-sponsors of the conference expressed interest in continuing the dialogue on Northeast Asia and the role of Mongolia in different formats. Mongolia’s Ambassador in the United States suggested that a follow up conference be held in Ulaanbaatar at a time convenient to all interested parties.

*Prepared by Rouben Azizian

 

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