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Wednesday, July 6, 2011




Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates



U.S. Could be Mongolia’s Third Neighbor

Sept. 19 – The United States can help Mongolia to balance the pressure from two large authoritarian neighbors, Russia and China, American eminent political scientist, Francis Fukuyama writes in his blog “Mongolia, Mining, and Malfeasance.”

“The country needs support from outside powers and particularly from the United States,” said Fukuyama without going in details about how in particular the United States could help the Northern Asian democracy squeezed between its two massive neighbors.

The American professor and his colleagues Larry Diamond and Steve Krasner from Stanford’s Center on Democracy, Development, and the Rule of Law faculty (CDDRL) traveled to Mongolia at the invitation of President Elbegdorj to teach an abridged form of the Draper Hills Summer Fellows program to a group of young Mongolians under the auspices of the Mongolian Institute for Strategic Studies.

The connection to CDDRL came about as a result of Mongolia’s position as chair this year of the Community of Democracies, an intergovernmental organization focused on strengthening and deepening democratic norms and practices worldwide.

After visiting Mongolia and Myanmar one after another, Fukuyama found these two countries to have a lot in common: they border China and much of their recent foreign policy has been driven by a desire to get out from under Chinese domination.

“It’s not fun to live with a neighbor like that,” writes Fukuyama.

But when your country has just about “everything the world, and in particular, its neighbor China, needs,” including coal, copper, uranium, gold, rare earths, and the like, you will be interested in having a good economic relations.

Mongolia recently became to be the fastest growing economy in the world, registering over 17 percent growth in 2011, largely driven by mining. Mining, writes Fukuyama, “poses a huge problem of corruption and other ills associated with the resource curse.”

At the same time, the American politologist remarks that among “all former Communist states, Mongolia has been by far the most successful as a democracy outside of European countries like the Baltic states, Poland, or the Czech Republic; unlike the Central Asian –“stans” it has maintained a competitive multiparty electoral democracy since the Russian withdrawal in the early 1990s.”

Talking about the controversy surrounding the arrest and conviction of the country’s former President Enkhbayar on corruption charges, Fukuyama says that it is important to put this issue in context.

“Since South Korea’s democratic transition, Korean presidents have launched politicized investigations of rivals on corruption charges. It’s a terrible practice to get into, but it also doesn’t mean that Korean democracy is failing or non-existent,” he writes, adding that “Judicial independence is something that needs to be built over time; if the system needs work, this should not detract from the country’s nonetheless impressive record of democratic institution-building over the past 20 years.”

The next meeting of the Community of Democracies, the Governing Council of which consists of 25 members, including the United States, India, Finland, South Korea, Sweden, Poland and many others, will be held in Ulaanbaatar in April of 2013.

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