OBG talks to G. Zandanshatar, Minister for Foreign Affairs and Trade

Interview: G. Zandanshatar

What are Mongolia’s foreign policy priorities in terms of security and economic development?

ZANDANSHATAR: A main priority for Mongolia’s foreign policy in 2012 is expanding, strengthening and developing our strategic relationship with our two neighbours: China and Russia. The stability, progress and sustainable development of China and Russia are essential factors that will create the conditions for the development and security of Mongolia in 2012. China and Russia are global leaders in many areas, so our priority is to continue to strengthen our relations with them.

With Oyu Tolgoi already in motion, in 2012 we plan to start large-scale mining projects such as Tavan Tolgoi. Mongolia is among the 10 richest countries in terms of variety and volume of mineral resources. We need to employ and take advantage of our resources properly and efficiently so benefits reach the people of Mongolia. We need to establish balanced partnerships with our two neighbours, but equally important is to expand and strengthen relations with “third neighbour” with whom we share the same values of democracy, free market economy and human rights. To some extent I can say that the third neighbour policy is a diversification policy since we cannot rely on one supplier or one buyer in a free market economy.

What will be the central focus of Mongolia’s third neighbour policy in the medium-term?

ZANDANSHATAR: The policy is directed towards developing our relations with developed countries sharing the values of democracy and human rights. Therefore, we declared the third neighbour policy in the revised Foreign Policy Concept of Mongolia.

We aim within the policy to expand and develop partnerships with countries and unions such as the US, Japan, the EU, India, the Republic of Korea and Turkey. We are developing a strategic partnership with Japan, as well as comprehensive partnerships with the US, Germany, India, the Republic of Korea and Turkey, and an expanded partnership with Canada and Australia.

How do you plan to counterbalance any risk of overdependence on China?

ZANDANSHATAR: Mongolia is a landlocked country neighbouring two giant markets, Russia and China. People usually think that Mongolia’s exports are dependent on these two countries. It is not as simple as it looks. We should look at it differently because the Chinese and Russian markets provide us with unique opportunities. I always believe that, as emerging markets in the world, these places can create many chances for business people in Mongolia. If one makes a judgement only based on numbers (like that over 80% of total exports go China), it would limit other aspects of the issue. For instance, Chinese buyers and consumers who demand Mongolian mining products must be considered. Their business is dependent on Mongolian exports.

On the other hand, clearly it is our priority to diversify our export products and identify new markets. In this regard, the development of non-mining sectors, especially where we have natural advantages, is the main thing we have been focusing on.

Which non-mining industries are best equipped to increase their presence in the export market?

ZANDANSHATAR: Mongolia has a lot of potential in sectors like agriculture and animal husbandry. The light industries operating in those areas are the most likely candidates to compete in international markets. Our agricultural exports already reach markets like Russia, China, Japan and Europe. However, we should strive to create new products and increase the quality of existing ones. The government will make more efforts to support our export-oriented production.

Therefore, my ministry has just drafted an export promotion programme to realise the goal of increasing and diversifying exports. In this draft, we focus not only on the sectors but also address issues such as establishing export promotion funds, insurance and facilitating more convenient public services. So adoption and implementation of this programme is crucial.