Benefit and its Cost

“UB Post”

August 06, 2010

Seems like we are little bit short-sighted. Doesn’t the miser pay double?

Only the Chinese was buying Mongolian minerals before and surely, they will be buying it further. Only the Chinese had been selling the copper from Erdenet Mine through American dealers and is still selling. It has been same with gold. China borders with our country and is the biggest market in the world, whose demand and consumption has been growing more and more. It is quite observable in terms of coal. Russia is geographically the biggest state in the world, which has more coal reserves than our country.

We, the Mongolians, are going to get loans to finance the building of infrastructure, including power plants, railroad, supporting factories required for the excavation and shipment of our coal and other minerals to China whether processed or unprocessed, from China itself, when China is about to have all benefits from that and take all coals. Private companies have already been acting as to such scheme.

It means Mongolia pays for all of other related expenses alone, when China takes all the profits and benefits almost without a single dollar spent. Though these expenses and costs are gallantly called in various ways such as fund raising or finding an investment source, in final it means that we are paying double price for a single thing.

Such a payment is beneficial not for the country but only for politicians. In the country like ours, which is ruled by political parties that are not well-established and that have no structure of internal responsibility, the politicians use this money for own private business in an open or hidden way and saves it to distribute in cash to people to win next elections. They beg money on the name of the people from every foreign country they go to for visits, for own pocket and for the interest of political parties they belong to. Later the people repay the begged money from own pockets. There is no priceless thing in the world, but we have many politicians, who believe that there is. Russians have never abandoned the Erdenet Factory even in their times of hardship, because the factory was built by Russians’ money. They build all infrastructures for the factory and the Erdenet City and prepared Mongolian specialist at own costs.

But what will we do if the Chinese decide to stop buying in case if the coal price drops or finding a pretext not to buy our coal? We will be paying off the debt plus interests despite the fact that we are not able to sell coal.

Instead, cannot we simply put the following requirements? Excavate and ship the coal at your own costs and also build necessary infrastructure. Do it as to our /Mongolian/ standards. Mongolians must work on projects of facilities undertaken in our territory. All activities must comply with our regulations, codes and norms. All exploitation activities are to be controlled by competent Mongolian agencies. But the deposits must be returned to us after certain years. In addition, goods must be supplied to local market. Must pay exploration and other taxes. African countries have already started to put such conditions and requirements for foreigners.

Previously, some African countries got into the trap like as we are about to get into, took sizeable amount of loan from mining companies and government officials of that time embezzled the loan money. As result, these countries have been barely paying off only interest of that big debt from generation to generation. In such countries, those part of population who are wealthier, educated and intelligent, had left the country, while those who are clueless, feckless and weak and who are not able to make something out of what is given, left home, living in constant poverty and illness. These countries turned into “extinct states” begging from all foreign countries: Clear example is Nigeria. This country is among the leaders with its oil reserve, but it is one of the poorest and the most corrupted country in the world that cannot pay off even the interest of its debts took many years ago.

As for Russians, they have made a deal to collect the most of railroad charges not matter which direction the Mongolian minerals are transported too.

It is right time to rethink all about these. Otherwise, as a widely recognized expert on global politics and geo-politician Patag Khanna said, China would have bought Mongolia about after a decade.

Anyway, Mongolia is now called “Mine-golia”.

Translated by P.Shinebayar