- The Washington Times - Wednesday, June 25, 2008

COMMENTARY:

Today’s stratospheric oil prices mean that energy alternatives are “in,” especially nuclear power. Republican presidential candidate John McCain called for the building of 45 nuclear reactors by 2030. However, the known uranium supply is only good for 75 years or less. The global race to control uranium and other minerals is escalating.

Russia, longstanding geopolitical champion and grand master of the Eastern Hemisphere’s chess board, is beating the U.S. and China. It is now focusing on a place far, far away: Mongolia, a former Soviet dependency sandwiched between Russia and China.

Mongolia is rich in natural resources, including coal, copper and uranium. The country’s uranium reserves are estimated at between 100,000 tons and 1.3 million tons. The birthplace of Genghis Khan is a lucrative and strategic prize in the new Great Game in Eurasia. Geologically speaking, Mongolia is right next to Kazakhstan, home of the world’s second-largest uranium deposits. It also abuts China’s voracious market.

As China and India are rising, the jockeying for mineral wealth - including uranium - in Eurasia is one of the principal theaters of the global struggle for resources, which is already defining the 21st century.



It should come as no surprise that Russia is busy deepening its footprint into underdeveloped Mongolia. And this is what should concern Western leaders.

Both Mongolia’s Prime Minister Sanja Bayar and President Nambar Enkhbayar recently visited Moscow and were the toast of town. The reason is simple: Mongolia’s former Cold War masters covet the country’s copper, uranium, coal and railroads, in which it already has strategic stakes. The Russians also see their activity in Mongolia serving as a buffer against a rising China. Russia’s defense minister and the new chief of general staff in May visited Ulan Bator, the Mongolian capital, while a slew of aggressive Russian companies, such as multibillionaire Oleg Deripaska’s Basic Element and Gazprombank, are working hard to grab its natural resources.

In April, then-President Vladimir Putin met in Moscow with Mongolia’s Mr. Enkhbayar and both agreed to increase bilateral trade by more than $1 billion. Russia has offered Mongolia a nuclear reactor and pledged food aid in a time of rising food prices. Most telling were the kind words Mr. Putin had for Erdenet, Mongolia’s largest copper producer. The Russians have a minority stake in the company and would like to expand it.

Moscow’s principal vehicle in Mongolia is its state-owned major defense-industrial concern, Rostechnologii, headed by Putin protege Sergei Chemezov, a veritable industrial empire builder. Mr. Chemezov, a former Soviet foreign intelligence officer, is vigorously promoting Rostechnologii’s assumption of control over 600 industrial enterprises.

Russia’s quest for uranium and other minerals would be worrying enough. But this concern is compounded by a recent, troubling development; the growth of a Mongolian seafaring fleet. As a land-locked country with no access to the sea, Mongolia’s newly-minted fleet of ships would be comical if maritime activities under Mongolia’s banner weren’t so worrisome. The issue is that the Mongolian national banner may serve as a “flag of convenience,” facilitating movement of cargo from, among other countries, nearby North Korea, Lebanon and Syria as well as Russia. The Mongolian registry operator provided services to North Korea and Cambodia, both proven weapons and drugs smugglers. The country’s lack of expertise in shipping, combined with its vast uranium reserves, means this latest Mongolian venture should be a cause for concern in non-proliferation circles.

What is the West’s response to this? It is re-engaging in North Asia - but far too slowly. The U.S.-Russia-China competition requires a firm foothold on the ground in Mongolia to protect strategic and economic interests. France’s Areva is targeting Mongolia’s uranium, competing against Canadian companies. Canada recently established a trade mission in Ulan Bator. This was due in part to Mongolia’s troubling decision to assault the private property rights of both domestic and foreign investors, particularly in the mining sector.

U.S. policymakers have been reminding our Mongolian friends they are dangerously close to becoming resource nationalists. Mongolian parliamentary elections are scheduled for June 29. The outgoing Mongolian Cabinet has prepared legislation instituting massive windfall profits taxes on the mining sector and is clamoring for majority equity stakes in “strategic” mining operations. The two main parties, the post-communist People’s Revolutionary Party and the Democratic Party are both quickly abandoning their much-professed free market values.

The United States is attempting to make its concerns heard. Commerce Secretary Carlos Guttierez wrote to President Enkhbayar that Mongolia’s proposed mining legislation “seems inconsistent with international norms.” Earlier, a number of congressmen also wrote to Mr. Enkhbayar with similar complaints. As many Mongolians are wary of both the Russians and the Chinese, American concerns should ring loud and clear in Ulan Bator.

But much more needs to be done. Paradoxically, Beijing and Washington, Ottawa and London find themselves in the same boat: Chinese and Western companies need a transparent Mongolia. They need a place where business is conducted in accordance to the rule of law - or at least by a set of agreed-upon, clear rules.

Washington needs to know what is happening to the critical uranium deposits and Mongolia’s inscrutable shipping fleet. The jockeying and maneuvering in and around Mongolia may escalate as the great powers assert themselves. Given the geopolitics and rule of law issues involved, the clock is ticking, and America must act.

Ariel Cohen is a senior research fellow at the Heritage Foundation and the author of “Kazakhstan: The Road To Independence” (2008, forthcoming).

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.

 

Click to Read More and View Comments

Click to Hide