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Mongolia needs allies to withstand China's looming threat

Ulaanbaatar turns to US and India in face of Beijing's military and economic might

| Mongolia, Central Asia, Afghanistan

China's Communist Party celebrated its 70th anniversary on October 1 by parading an array of advanced weaponry through the streets of Beijing. Two weeks earlier, Khaltmaagiin Battulga, the charismatic and populist president of neighboring Mongolia, paid his first state visit to India.

The two events were connected, an example of the way smaller countries on China's periphery are busily seeking new allies to balance their neighbor's growing might. Yet Battulga's visit, and Mongolia's attempts to seek new friends more broadly, also show the limitations of that approach.

Mongolia's geopolitical destiny is to be sandwiched between Russia and China. For decades during the Cold War it was a Russian satellite. Today its economy is so dependent on China that it risks becoming a client state once again.

Hence Battulga's trip to New Delhi in September. Mongolia hopes improved ties with so-called "third neighbor" states like India and the U.S. will give it room to manage a lopsided relationship with Beijing.

India has similar aims: in 2015, Narendra Modi became its first prime minister to visit Mongolia, part of a broader attempt to build ties with powers with histories of strained relations with Beijing.

A pugilistic former wrestling champion often described as a "Trump of the Steppe," Battulga was elected in 2017 in part on promises to stand up to China.

Public antipathy toward Beijing is easy to find in Mongolia, for reasons both historical and contemporary. The country is festooned with statues of Genghis Khan, the 13th-century leader who began an imperial expansion that eventually conquered China along with much of the Eurasian landmass.

People ride horses for tourists visiting the Genghis Khan Statue Complex, east of Ulaanbaatar.   © Reuters

As one political observer put me when I visited the capital Ulaanbaatar during September: "Mongolia is lucky we didn't end up as part of China. If we did, the fate of the Uighurs in Xinjiang, or the students in Hong Kong, would probably be our fate too."

Yet Battulga's negotiating position is weak. Mongolia might be large geographically but its population of three million is tiny, as is its gross domestic product of $12 billion. Its economy is heavily dependent on mining, the product of which is almost all sold to China. Declines in global commodity prices forced it to accept an IMF bailout in 2017.

Even its limited foreign investment successes merely underline this reliance on China's market. Anglo-Australian miner Rio Tinto is developing a gigantic $7 billion copper mine in the country's southern Gobi desert, whose output all ends up trucked over the border to China.

China is also able to better intimidate neighbors like Mongolia with its military prowess too. As well as a celebration of Communist Party longevity, the recent anniversary parade was designed to showcase these capabilities to its neighbors.

China is pushing Mongolia to become a full member of the Shanghai Cooperation Organization, a Beijing-based security grouping of Eurasian states -- a step Battulga has so far resisted, seeking to improve ties with other regional powers instead.

The U.S. is one important option. Some in Washington view Mongolia as a democratic "oasis," part of a constellation of democracies such as Japan and Taiwan which together might provide some resistance to China's rise. This hope provided some of the subtext for a meeting between Battulga and U.S. President Donald Trump in Washington in July.

Russia is Battulga's other obvious avenue. During his 2017 election victory he pledged to strengthen ties with Moscow. Some of the fruits of that effort were unveiled in September, when Russian launched a new $1.5 billion fund to build infrastructure in Mongolia.

Yet the brutal truth is that, while these relationships are valuable, for countries like Mongolia they only go so far. The U.S. is an unreliable friend, as it demonstrated this week in abandoning its longtime Kurdish allies in northern Syria. Russia's Vladimir Putin is trying to forge a new anti-Western pact with China. Neither is likely to do much to help Mongolia if its relations with Beijing worsen.

In 2016, before Battulga's election, Mongolia was given a sharp reminder of the reality of life in China's orbit. A predominantly Buddhist country, Mongolia decided to host a visit from the Dalai Lama. A predictable furious response followed from Beijing, along with punitive tariffs forcing Mongolia into offering a humiliating apology and promises of no further visits in future.

These kinds of economic and security tactics are familiar enough to other smaller nations around China's borders. A handful of Asian countries, including Cambodia and Laos, have over recent years opted to become de facto Chinese clients. Most of the rest are trying as best they can to avoid such a fate.

But in Ulaanbaatar, as in other regional capitals, the fact of China's coming dominance is now rarely disputed. Absent an unexpected regime collapse in Beijing, few doubt China will in time supplant the U.S. as Asia's important political and military player, as it has already done economically.

In a coming era of by power rivalry, smaller Asian states like Mongolia will prosper to the extent they successfully manage and exploit economic ties with their largest neighbors -- and China in particular. This is a task they are mostly going to have to manage on their own.

James Crabtree is an associate professor in practice at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is author of "The Billionaire Raj."

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