Stuck between China and Russia, Mongolian herders feel stuck | Business and economy

Ulaanbaatar, Mongolia – Dulamsuren Demberel, a 58-year-old shepherd who lives an eight-hour drive from Ulaanbaatar, the Mongolian capital, finds it harder every month to make the family budget work.

Prices of flour and rice, among staples that Mongolian herders cannot produce themselves, have soared due to the war in Ukraine, with headline inflation at 14.5%.

Worse still, the 40% jump in the price of coal, as well as the shortages recent protests have accused over the alleged theft by corrupt officials of 385,000 tonnes of coal for sale in China.

In Mongolia, where winter temperatures often dip below -35°C, around 60% of the population lives in gers – traditional tents – which are not connected to the Soviet-era heating and water network. , but heated using coal stoves. . More than a quarter of households are made up of herders like Demberel, who move their herds and gers several times a year.

“The last time I went to soum they didn’t even sell charcoal,” Demberel, who shares her ger with her husband, second-eldest son, wife and five children, told Al Jazeera, referencing to the provincial district. nearby.

Meanwhile, Demberel, whose husband’s ill health prevents her from working, struggles to justify the trip to Ulaanbaatar to sell sheep, wool and milk, the prices of which are then falling. even as gasoline prices skyrocket. Mongolia produces oil but, with no cost-effective way to refine it into gasoline, exports almost all of it to China.

While exports to China have fallen in recent months as Mongolia’s economy slows under strict COVID-19 restrictions, gasoline prices have risen 65% since Russia launched its war on Ukraine in february.

“Unless you’re selling more than 30 sheep or something, it’s not worth it, even though we can sell in town for a higher price,” Demberel said.
“It’s too far. Paying for gas and other expenses would be the same as selling it in the soum, unless you sell a lot of it.

Mongolia, one of the least populated countries in the world, is economically squeezed by China and Russia, its two giant neighbors, which have historically dominated its vast territory.

As Russia’s war in Ukraine has sent energy prices soaring, China’s weakening economy has dampened trade even as some Mongols question exports of coal and other resources valuables from their government to their southern neighbour.

Mongolia depends on Russia for electricity, gasoline, aviation fuel, liquefied petroleum gas (LPG) and diesel, about 60% of which comes from its northern neighbor.

China accounts for over 80% of Mongolia’s total exports, 60% of its imports and over 40% of its gross domestic product (GDP). Mongolia’s dependence on its larger neighbors is immediately evident by visiting any store, where packaging is covered in Chinese and Russian writing.

“Of course, we are completely dependent on China and Russia,” Narangerel, a 57-year-old businessman in Ulaanbaatar, told Al Jazeera.

“We depend on China in terms of economy, and we depend on Russia for electricity. In addition, we buy 90% of our coal and oil from Russia. All other consumer goods come from China.

Mongolia gained its independence in 1921, after nearly 300 years of rule by the Chinese Qing dynasty. Until the collapse of communism in the early 1990s, the socialist Mongolian People’s Republic functioned as a satellite state of the Soviet Union.

The former Mongol territories, Tuva, Buryatia and Altai are part of the current Russian Federation, while China controls the geographical area of ​​Southern Mongolia as the Inner Mongolia Autonomous Region.

While Mongolia is independent, Moscow and Beijing continue to wield significant influence over the country. After the Dalai Lama’s visit to Ulaanbaatar in 2016, China punished Mongolia by closing the border. Although he is the spiritual leader of the Tibetan Buddhist faith, practiced by the majority of Mongols, the Dalai Lama was not invited back.

Mongolians got a taste of what decoupling from China would look like in 2020 when borders were closed amid China’s COVID-19 lockdowns.

Mongolia’s economy contracted by 4.4%, prompting companies to lay off tens of thousands of workers. Unemployment peaked at 8.5% in April 2021 before dropping to 5.4% in the third quarter of this year. Herders were not considered unemployed, although many could not travel to town to sell meat or milk at the height of the pandemic.

Although the economy has rebounded, the recovery remains fragile due to China’s economic slowdown and the uncertain global economic outlook.

Mining revenue, which accounts for more than 20% of GDP, fell by almost a quarter in the first two months of 2022 compared to the previous year.

Despite a rebound since October, resource export earnings remain well below pre-pandemic levels, with iron ore exports to China, one of the biggest money earners, down 38 % in the first eleven months of this year.

“We used to export fluorite to Ukraine, Russia and China. Now we have stopped exporting to Ukraine. And because the border with China is closed, we cannot export to China,” M Uuganbaatar, 40-year-old executive director of mining firm Bayan Jonsh Co, told Al Jazeera.

Previously, China accounted for 70% of Uuganbaatar’s business.

“Due to inflation, transportation and logistics, costs have increased,” he said. The only advantage is that his exports are bought in US dollars, which he can use to protect himself against the decline of the tugrik, the local currency.

So far this year, the tugrik has lost around 18% of its value against the dollar.

Oyuntsetseg Togoodorj, a kindergarten teacher in Ulaanbaatar who earns a salary of 800,000 tugriks ($234) a month, said feeding her four children was becoming increasingly difficult.

“Two hundred thousand tugrik ($59) a month was enough to buy everything we needed before, but now it should be at least 600,000 ($176) to barely earn enough to survive,” Togoodorj told Al Jazeera. “Throughout the winter, we spent 400,000 ($117) on meat. Now it’s 800,000 ($235).

In addition to rising grocery bills, she also has to deal with higher tuition fees. “We are paying four times what we were paying last year.”

Anger and frustration at Mongolia’s dependence on its powerful neighbors is not hard to find.

Many Mongolians believe that China and Russia discourage the construction of power stations and factories in Mongolia for fear of losing influence in the country. In a notable source of tension, Russia opposed the construction of a dam and hydroelectric power station along the Uldza River, saying it would harm the ecology of Lake Baikal, which lies on the side Russian border.

While Moscow has protested the project on environmental grounds, many Mongols believe its opposition is really motivated by a desire to keep their country in bondage.

“Historically, Russia claims to be our brother, but they seem to have us under control,” Ariunjargal Andrei, a 52-year-old construction engineer, told Al Jazeera. “We buy our electricity from Russia, so it’s not beneficial for them if we build a hydroelectric plant. Therefore, they do not allow us to build it, claiming that it will have a negative effect on Lake Baikal. »

“Russia does not allow us to build the Enkh Gol power station,” Narangerel said. China is…we are getting so many loans that we are in very serious danger.

For many Mongols like Narangerel, the answer to the country’s economic problems lies in achieving greater independence.

“We are not a producing country, we are consumers,” he said.

Batmunkh, a 43-year-old accountant at the country’s fifth largest bank, Khas Bank, who like many Mongolians goes by only one name, summed up the country’s economic problems simply: “The central cause of the success or The failure of the Mongolian economy is China’s economy and China’s anti-COVID policy.