Eurasian Bridgehead

Low Level

The German Asia-Pacific Business Association (OAV), one of the largest foreign trade associations in the country, announced that the business trip to Mongolia will take place in August as planned. Subsequent to the uprisings that shook Ulaanbaatar last week, the mood in the country remains tense. In the aftermath of the June 29 elections, accusations of fraud sparked protest demonstrations that left 5 dead and 200 - 300 injured. This business trip, on behalf of the German Ministry of Finance, has the objective of concluding business deals in the Mongolian raw materials sector. Whereas Mongolia's business relations are predominantly with the People's Republic of China and Russia, German-Mongolian business relations have remained at a low level. Also present are mining companies from Canada and Australia.

Diversification

Up to now Mongolian resources have not drawn much attention. Mongolia is among the world's ten richest nations in raw materials. Copper fields mined in Erdenet, Mongolia's second largest city, are among the world's largest copper deposits. Siemens delivers equipment for the Mongolian-Russian joint venture copper mining enterprise. Other than copper, Mongolia also has gold, rare metals such as molybdenum and extensive deposits of coal, which is very important for China's steel industry. But so far Mongolian resources have been exploited very little, particularly the deposits located in the Gobi Desert, some of which have never been touched. There are long-term prospects of business deals in this branch, not least of all, because of the rising costs of raw materials. The government in Ulaanbaatar has an evident "interest in diversifying its international partners for the exploration and extraction of raw material deposits,"[1] explains the OAV in its written invitation for the business trip. The government wants to avoid being too strongly dependent on Russia and China, enhancing therefore opportunities for German companies.

Dissuasive

One of the main causes of the recent uprisings are disputes over Mongolian raw materials, a sector in which German entrepreneurs are hoping to profit. According to observers protests escalated into violence, because anger in the population, over the sale of the national resources to foreign companies at bargain rates, has been growing over the years. While investors are being granted mining concessions at the best possible conditions, more than a third of the Mongolian population is still living at the minimum existence level. Though the average family income has risen 60% since 2005, the prices of staple foods - particularly bread and flour - have risen during the same period more that 100%.[2] Poverty protests occurred already back in 2006. But the West stood firm. The International Monetary Fund (IMF) warned the Mongolian government against increasing the social benefits of the population and criticized the government's increase of child allowances. Western pressure has prohibited the passage of a mining law that would insure national control over the resources and lay the basis for higher state revenues. It has a "dissuasive effect on foreign investors," declared the OAV.[3]

Land Bridge

Raw materials are not the only reason Mongolia is so important to Germany. Another reason is its geo-strategic location, providing an overland bridge to or a bridgehead against the People's Republic of China. This is demonstrated with the activities of one German enterprise, that has been active in Ulaanbaatar for years: the Deutsche Bahn AG. The German railroad company seeks to begin regular freight transport to China already this year, after having transited through Poland, Belarus, Russia and Mongolia. In this project the Deutsche Bahn is working in collaboration with the Mongolian railroad. Test runs for this project, known as the "Eurasian Land Bridge,"[4] have been in progress for the past 3 years. Since the most recent successful test in January, the transition to business operations appears possible in the near future. The Deutsche Bahn is carrying out the entire project in a joint venture with the state controlled JSC Russian Railways (RZD) - also in Mongolia - where the RZD has charge of the modernization and the development of the rail network.[5]

Between Russia and China

The significance of Mongolia, as was confirmed by the German ambassador in Ulaanbaatar, lies above all in "its geographic location situated between Russia and China."[6] Since the demise of the Genghis Kahn Empire, this country has found itself successively under Chinese then Russian domination. With the upheavals brought on in the 90s,[7] the government has been seeking to overcome its dependence on Moscow and Beijing, and accordingly has opened its country to the West. German foundations, affiliated with political parties, are engaged in overhauling the Mongolian justice system. Mongolian mining authorities - particularly important because of the mineral riches of the country - have been established with the aid of the German Federal Agency for Geological Studies and Natural Resources (BGR). One BGR official was awarded the Mongolian Friendship Medal, the highest honor a foreigner can receive. The westward opening of the country also includes the military domain - a situation that, on the other hand, permits Mongolia to become a western bridgehead on the southeastern flank of Russia and on the northwestern border to China.

Alumni Association

The German-Mongolian military cooperation dates back to the October 3, 1995, "Agreements On Military Training Aid." Ten Mongolian commissioned and non-commissioned officers are sent annually to Germany for training. According to the German ambassador, alongside these training courses there are "regular defense and security policy (...) general staff briefings."[8] This cooperation is in coordination with the USA. The ambassador reports that "we carry out joint seminars on questions of foreign and security policy" in the George C. Marshall Center in Garmisch-Partenkirchen, jointly run by the USA and Germany. Last year the Marshall Center initiated a so-called alumni association in Ulaanbaatar that organizes former Mongolian army seminar participants. According to the Marshall Center [9] they have the "full backing of the Mongolian parliament" as well as the Foreign and Defense Ministries.

Anti-Chinese Potential

The full significance of the Mongolian bridgehead only becomes apparent, when considering the domestic situation of the People's Republic of China, in whose Inner Mongolia autonomous region, the aspirations of reinforcing autonomy away from Beijing and, if the opportunity presents itself, intensifying bonds with Ulaanbaatar still thrive.[10] In both Mongolia and in the Inner Mongolia the Tibetan variation of Buddhism is very strongly implanted, and there the Dalai Lama is also highly revered.[11] In Mongolia and - to a certain extent - also in Inner Mongolia, Japan is quite influential. During World War II, the idea of using Tibet, Mongolia and Inner Mongolia to weaken China, led to the Axis Powers considering having the three territories merge to form a "pan-Mongolian Confederation."[12] Even though today this sort of vision appears unrealistic, it nevertheless helps explain the anti-Chinese potential posed by the cooperation with Mongolia in the tradition of Berlin's foreign policy.

[1] Unternehmerreise in die Mongolei vom 19. bis 26. August 2008; www.oav.de
[2] Mongolen wählen Parlament; n-tv.de 27.06.2008
[3] Mongolei-Branchenbericht für Zulieferer und technische Berater im Bergbausektor, Investoren und Explorateure im Rohstoffbereich sowie Finanzdienstleister; www.oav.de
[4] Deutsche Bahn schickt Güterzüge nach China; Die Welt 26.05.2008
[5] Russische Unternehmen investieren stärker in der Mongolei; www.bfai.de 18.04.2008. See also Zum zweiten Mal
[6] Gespräch mit dem Außerordentlichen und Bevollmächtigten Botschafter der Bundesrepublik Deutschland in der Mongolei, S. E. Pius Fischer; www.ulan-bator.diplo.de
[7] Die Mongolische Volksrepublik leitete 1990 umfassende politische und wirtschaftliche Reformen ein.
[8] Gespräch mit dem Außerordentlichen und Bevollmächtigten Botschafter der Bundesrepublik Deutschland in der Mongolei, S. E. Pius Fischer; www.ulan-bator.diplo.de
[9] Die ehemaligen Lehrgangsteilnehmer des Marshall Center aus der Mongolei gründen ihren eigenen Absolventenverein; www.marshallcenter.org 30.05.2007
[10] see also Identität and Strategies of Attrition (III)
[11] see also Strategies of Attrition (I), Strategies of Attrition (II), The Olympic Torch Relay Campaign, Operations Against China and Mobilize at Any Time
[12] see also Strategies of Attrition (III)