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Mongolia Looks Afar in Its Quest for New ‘Neighbors’

Times Staff Writer

In this land littered with dinosaur fossils, the Tarbosaurus was the biggest predator of them all. Today, as Mongolia grapples with its place in the new world order, locals sometimes joke that their landlocked country is trapped between two Tarbosauruses.

A glance at a Central Asian map suggests why. Two enormous neighbors, China and Russia, surround Mongolia. With a population of 2.5 million, the country would be practically powerless to defend its 5,000-mile border if either dinosaur got hungry.

In response, Mongolia has gone looking for new neighbors. Because it can’t up and move, Mongolia’s “third-neighbor” policy tries to find allies who aren’t on its doorstep. And the United States tops the list.

For most of the last century, Mongolia has eyed Russia warmly and China -- its centuries-long ruler -- warily. The country’s Moscow-led communist rule was brutal, but the Soviets also built roads, spurred industrialization and raised literacy rates. Most Mongolians also feel a cultural affinity with Russia, down to the warm bearhugs. Most polls show that 60% of Mongolians consider Russia their closest ally, with China sixth or seventh.

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Mongolia would like to sell more minerals and livestock -- the backbone of its economy -- to Russia. But Moscow’s economic problems have damped demand even as a booming China salivates over Mongolia’s resources and wide-open spaces.

“China is becoming sort of an empire,” Mongolian Prime Minister Tsakhiagiin Elbegdorj said, sitting in a giant ceremonial hall next to his office. “We hope they can become a responsible empire.... We have no intent to hurt other countries, and we expect the same from our neighbors.”

When Chinese President Hu Jintao visited Ulan Bator, the Mongolian capital, last year, he reassured Mongolians that China had no territorial designs on their country. Although this was comforting, some noted wryly that Chinese leaders didn’t make similar statements when visiting France or the United States.

In truth, Ulan Bator is less afraid that China will grab territory than that Beijing’s economic and political influence will overwhelm Mongolia, undermining its identity and making it so dependent that it must do China’s bidding.

China accounted for 36% of direct investment in Mongolia last year, a figure likely to grow as several mining projects come on line. Beijing is also expanding its influence over its poorer neighbor with loans and grants.

Mongolians point as an example to their nation’s cashmere industry, which once supplied 30% of the global market. Over a few years, fleet-footed Chinese traders exploited falling wool prices to secure most of the business.

“The cashmere example is very sad,” said Layton Croft, the head of the Mongolia office of the Asia Foundation. “China came in and sort of devoured the Mongolian manufacturing industry. But it was also Mongolia’s to lose.”

The trick, Mongolian officials say, will be to capture some of China’s reflected economic vitality without being swallowed up.

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“With or without our fear, China’s economy is growing at a tremendous rate,” said Oyun, Mongolia’s parliamentary vice speaker, who, like many Mongolians, uses a single name. “We have to think clearly how to make the most of it.”

Another priority is to identify third neighbors. Having recently regained its independence after seven decades in Moscow’s sphere, Mongolia is keen to stay that way. “The third-neighbor policy is an important concept,” said Munkh-Orgil, Mongolia’s foreign minister. “We’re more interested in developing relations with not one, two or three, but as many nations as possible. As a small nation, we want to be sure we have friends around the world.”

In reality, its favorite friend is the United States, analysts say. Although Washington doesn’t provide much aid, it’s seen as the only global power able to counter an invasion, should it come to that.

And the simplest way to get the Bush administration’s attention has been to support its agenda. By some calculations, Mongolia’s 180 or so troops based in Iraq -- over the objections of Russia and China -- are among the largest per-capita contribution for any ally, a reflection of the country’s small population. U.S. Deputy Secretary of State Richard L. Armitage, who visited Mongolia early this year, credited Ulan Bator with “punching above its weight.”

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In return, Washington signed a series of economic agreements, although Mongolia has been disappointed that these haven’t led to a free trade agreement.

“When bad people in bad countries hurt American interests, they’re very eager to help them, such as Afghanistan or Iraq,” Elbegdorj said. “Mongolia and small, [peaceful] countries deserve much more attention than Afghanistan, Iraq and other oil-rich countries.”

In addition to welcoming its troop support, analysts say, the U.S. sees Mongolia as an important buffer between Russia and China and a listening post given its proximity to those countries and the Middle East. “With all this space, who knows what American equipment is out there, although it’s got to be significant,” one analyst said, requesting anonymity.

There’s also talk of providing a staging area for U.S. materiel or even a military base, although Mongolia’s constitution currently prohibits foreign troops on its soil.

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Mongolia has also welcomed Japan and South Korea, two resource-starved countries and generous aid donors. Billboards around Ulan Bator are filled with ads for South Korean and Japanese companies, and signs on the road to the airport identify buildings funded by Japanese development funds.

In the end, however, a key part of Mongolia’s future will depend on getting its struggling economy into higher gear. Many Mongolian industries, recently freed from state ownership, suffer from low quality, poor management and weak marketing.

“It’s a real concern,” said Dorjnamjim, country officer with the International Finance Corp., a World Bank affiliate helping private-sector companies. “Managers have no idea how to produce because they had no experience finding customers and were never trained to think, just to follow quotas.”

Officials acknowledge that they have a long way to go, but say they can draw on their traditions. “Because we’re nomads, by nature we must be very entrepreneurial,” Munkh-Orgil said. “If you’re not smart enough, you’re not going to survive.”

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