Undermining Mongolia

Corporate hold over development trajectory

Publication

Sukherel Dugersuren (OTWatch)

19 February 2020

This report exposes, using leaked cables from the US embassy, how mining companies Rio Tinto and Turquoise Hill Resources and the powerful states backing it, such as the US, Canada, and the UK, managed to push the Government of Mongolia into a deal that ineffectively safeguards the interests of its people.

Mongolia signed an Investment Agreement for the Oyu Tolgoi Project -Mongolia’s largest gold and copper mine- that privileges “western” corporate interests by offering generous corporate oriented incentives that do not fill public coffers.

We show that the power inequities and pressure on Mongolia to comply with international expectations were facilitated by a context dramatically restructured to a market economy narrowly focused on mining. Policy that is argued to support ‘good governance’ and ‘rule of law’ to protect the market against unwanted influence from the state, in practice has dismantled public checks and balances.

Other factors of influence, such as the political instability and manoeuvring of Mongolia’s political elite along with the 2007-2008 financial crisis left Mongolia with increasingly weak negotiating powerand susceptible for corruption.

Following up on the report, in this online story(opens in new window) , SOMO and the Mongolian NGO OT Watch show how international corporate and diplomatic pressure over the past 30 years prevents Mongolia to profit from its own natural resources.

The full report can be downloaded via the link below. A Mongolian version of the report is also available.