The strains of headlong growth start to take their toll
Any given day during the summer,
the skies of Ulan Bator are caked in a thick smog that leaves many residents
covering their faces or avoiding the outdoors altogether. According to the
World Health Organization, air pollution contributes to the death of nearly
1,600 Mongolians each year. The WHO report, released last year, indicates that
the concentration of dust particles in the air is 35 times more than the
recommended level.
This is of course partly
explained by Mongolia’s geographic reality and the sand storms from the Gobi
Desert in the south of the country. However, a predominant element of the
pollution is man-made and results from ubiquitous coal-fired stoves and the
incineration of garbage during Mongolia’s harsh winters.
The silver lining of this looming
crisis is the historical renaissance of Mongolia from forced suzerainty under
the Soviet Union and Imperial China to a flourishing democratic state in a
region of corrupt neighbours. In 2011, Mongolia became the fastest growing
economy in the world with 17.3 percent GDP growth as pegged by the World Bank.
Mongolia’s mining and resource
sectors are the main driver of the boom which has driven foreign investors to
Ulan Bator with hopes of securing lucrative development contracts.
However, this growth remains
uncertain due to Mongolia’s over-dependence on the global commodity market. The
country has not yet managed to mature its financial investments to diversify
and spread its risk across markets.
But to Ulan Bator’s credit, it
has leveraged the current energy climate to its advantage and is starting to
acknowledge that now is the time to accrue benefits from international
partners. Mongolia has been channelling its assets to pressure Russia and China
to cooperate more on important issues such as energy security, mining and
defence. Earlier this month, Mongolian President Tsakhia Elbegdorj remarked in
an interview that he believed China and Russia should account for Mongolia in
their regional cooperation plans.
Specifically, Elbegdorj pointed
to energy security and the need to redirect a planned natural gas pipeline from
Russia to China so that it would include Mongolia. Elbegdorj stressed that
transiting through Mongolia is “economically beneficial” and noted that his
government is “trying to persuade our two neighbors not to exclude us from that
project. The Chinese side has already agreed to discuss this and also the
Russian side.”
Whether the pressure is altering
the calculus of Moscow and Beijing is dubious. Russia, which provides the bulk
of Mongolia’s energy imports, has consistently indicated that its
decision-making on the pipeline would be centered on economics and not political
pressure.
The current pipeline would send
gas from Siberia directly to western China through a narrow border channel
between Kazakhstan and Mongolia – effectively shutting out both countries from
the project. Gazprom, which is spearheading the deal from the Russian side, has
denied that the snub was politically motivated and has indicated that the
decision comes down to pricing and avoiding costly transit fees.
Mongolia is desperate to be
included in the deal as it would not only provide an economic boost via transit
fees, but allow the government to address the escalating problem of air
pollution in Ulan Bator by switching to the more efficient and cleaner heating
option of natural gas.
The burgeoning surrounding
environs of Ulan Bator are littered with traditional nomadic houses – called
gers. Mongolians from all across the country are rapidly migrating to the
capital in hopes that the expanding wealth of the nation will provide increased
opportunities. Unfortunately, the dividend of these personal investments does
not always pay out. Many new city dwellers find themselves working several jobs
just to keep up with rising income levels and booming real estate prices.
And then there is the pollution.
With land around the capital rising in value rapidly, the ger communities are
forced into very tight quarters, creating an economic ghetto in a city that is
growing faster than any other in the world. The World Bank and a host of
international development agencies have recognized this threat and mobilized
nearly US$45 million for the Ulan Bator Clean Air Project.
The initiative aims to help
reduce the city’s reliance on coal-powered stoves and replace them with more
efficient gas models. The Project also has been offering subsidies to lower the
cost of the transition for this marginalized population in Ulan Bator.
Despite these positive signs, air
pollution in Mongolia is likely to continue to be a problem for several years.
Gailius Draugelis, an energy specialist at the World Bank on the Project, stressed
that “there is no magic bullet for reducing air pollution. Significant domestic
and foreign funds have been raised to support a wide range of solutions.
Enlisting the support of the citizens and the local private sector is also very
important.”
Draugelis also indicated that a
solution to the issue must be Mongolian and that foreign assistance could only
have a temporary effect. "Many solutions will require Ulaanbaatar citizens
to change technologies and learn how to use them. The local private sector will
need to supply and service these technologies.” As foreign investors continue
to flock to Mongolia, there will be increased pressure for the government to be
accountable and transparent on this issue. For Mongolia, great wealth has
ushered in great obligation.
Jonathan Berkshire Miller
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.
