Squeezed between China and Russia, Mongolia’s herders really feel pinch | Enterprise and Economic system

Ulaanbaatar, Mongolia – Dulamsuren Demberel, a 58-year-old herder who lives an eight-hour drive from Mongolia’s capital Ulaanbaatar, finds it more durable every month to make the family price range work.

Costs of flour and rice, among the many primary staples Mongolia’s herders can not produce themselves, have soared as a result of warfare in Ukraine, with general inflation operating at an eye-watering 14.5 %.

Even worse has been the 40 % leap within the worth of coal, in addition to shortages recent protests have blamed on corrupt officers’ alleged theft of 385,000 tonnes of coal on the market in China.

In Mongolia, the place winter temperatures typically dip beneath -35°C, about 60 % of the inhabitants lives in gers – conventional tents – that aren’t linked to the nation’s Soviet-era heating and water grid, however as a substitute heated utilizing coal-powered stoves. Multiple-quarter of households are made up of herders like Demberel, who relocate their flocks and gers a number of occasions per yr.

“Final time once I went to the soum, they weren’t even promoting coal,” Demberel, who shares her ger along with her husband, her second-eldest son and his spouse and 5 youngsters, instructed Al Jazeera, referring to the provincial district close by.

In the meantime, Demberel, whose husband’s poor well being leaves him unable to work, finds it exhausting to justify making the trek to Ulaanbaatar to promote sheep, wool and milk, the costs of that are in decline at the same time as gasoline costs soar. Mongolia produces oil however, with out a cost-effective means to refine it into gasoline, exports virtually all of it to China.

Whereas exports to China have declined in latest months as Mongolia’s financial system slows underneath strict COVID-19 curbs, gasoline costs have risen as a lot as 65 % since Russia launched its warfare in Ukraine in February.

“Except you promote greater than 30 sheep or one thing, it’s not price it, regardless that we are able to promote within the metropolis at a better worth,” Demberel stated.
“It’s too far. Paying for gasoline and different bills would simply make it the identical as promoting it within the soum, until you promote lots.”

Mongolia, one of many world’s most sparsely-populated international locations, is being squeezed economically by China and Russia, its two big neighbours, which have traditionally dominated its huge landmass.

Whereas Russia’s warfare in Ukraine has prompted vitality costs to skyrocket, China’s weakening financial system has dampened commerce at the same time as some Mongolians query their authorities’s export of coal and different invaluable sources to their southern neighbour.

Mongolia will depend on Russia for electrical energy, gasoline, aviation gasoline, liquefied petroleum gasoline (LPG) and diesel, about 60 % of which comes from its northern neighbour.

China accounts for greater than 80 % of Mongolia’s whole exports, 60 % of imports and greater than 40 % of its gross home product (GDP). Mongolia’s dependence on its larger neighbours is instantly apparent on visiting any retailer, the place packaging is roofed with Chinese language and Russian writing.

“After all, we’re totally depending on China and Russia,” Narangerel, a 57-year-old businessman in Ulaanbaatar, instructed Al Jazeera.

“We’re depending on China by way of our financial system, and we rely on Russia for electrical energy. Additionally, we purchase 90 % of our coal and petrol from Russia. All different shopper items come from China.”

Mongolia gained independence in 1921, after practically 300 years of rule by China’s Qing Dynasty. Till the collapse of communism within the early 90s, the socialist Mongolian Folks’s Republic operated as a satellite tv for pc state of the Soviet Union.

Former Mongolian territories, Tuva, Buryatia and Altai are a part of at present’s Russian Federation, whereas China controls the geographic space of Southern Mongolia because the Interior Mongolia Autonomous Area.

Whereas Mongolia is unbiased, Moscow and Beijing proceed to exert vital affect over the nation. After the Dalai Lama’s go to to Ulaanbaatar in 2016, China punished Mongolia by closing off the border. Though he’s the religious head of the Tibetan Buddhist religion, practised by the vast majority of Mongolians, the Dalai Lama has not been invited again.

Mongolians skilled a style of what decoupling from China would appear like in 2020 when the borders have been closed as a part of China’s COVID-19 lockdowns.

Mongolia’s financial system shrank by 4.4 %, prompting companies to put off tens of 1000’s of employees. Unemployment peaked at 8.5 % in April of 2021 earlier than declining to five.4 % within the third quarter of this yr. Herders weren’t thought of unemployed, though many couldn’t get to town to promote meat or milk in the course of the peak of the pandemic.

Whereas the financial system has rebounded, the restoration stays shaky because of China’s financial slowdown and the unsure international financial outlook.

Mining income, which accounts for greater than 20 % of GDP, dropped by practically one-quarter within the first two months of 2022, in contrast with the earlier yr.

Regardless of rebounding since October, useful resource export revenues stay properly beneath pre-pandemic ranges, with iron ore exports to China, one of many greatest money-makers, down 38 % within the first eleven months of this yr.

“We used to export fluorite to Ukraine, Russia and China. Now, we’ve stopped exporting to Ukraine. And since the border is closed with China, we are able to’t export to China,” M Uuganbaatar, a 40-year-old govt director at mining enterprise Bayan Jonsh Co, instructed Al Jazeera.

Beforehand, China accounted for 70 % of Uuganbaatar’s enterprise.

“Resulting from inflation, transportation and logistics, prices have elevated,” he stated. The one upside is that his exports are bought in United States {dollars}, which he can use to hedge in opposition to a declining tugrik, the native foreign money.

Thus far this yr, the tugrik has misplaced about 18 % of its worth in opposition to the greenback.

Oyuntsetseg Togoodorj, a kindergarten trainer in Ulaanbaatar who earns a wage of 800,000 tugriks ($234) a month, stated feeding her 4 youngsters is changing into more and more troublesome.

“200 thousand tugrik ($59) a month, was sufficient to purchase all we wanted earlier than however now it ought to be a minimum of 600,000 ($176) to make barely sufficient to outlive,” Togoodorj instructed Al Jazeera. “For the entire winter, we used to spend 400,000 ($117) for meat. Now it’s 800,000 ($235).”

Along with elevated grocery payments, she can be coping with larger faculty charges. “We’re paying 4 occasions what we used to pay final yr.”

Anger and frustration over Mongolia’s dependence on its highly effective neighbours will not be exhausting to search out.

Many Mongolians consider China and Russia discourage the development of power-generation crops and factories in Mongolia for worry of dropping their affect over the nation. In a single notable supply of tensions, Russia has opposed the development of a dam and hydropower technology plant alongside the Uldza River, claiming it could harm the ecology of Lake Baikal, which lies on the Russian aspect of the border.

Whereas Moscow has protested the mission on environmental grounds, many Mongolians consider its opposition is absolutely motivated by a want to maintain their nation subservient.

“Traditionally Russia claims to be our brother however they appear to maintain us underneath thumb,” Ariunjargal Andrei, a 52-year-old building engineer, instructed Al Jazeera. “We purchase our electrical energy from Russia, so it isn’t helpful for them if we construct a hydropower plant. Due to this fact, they’re not permitting us to construct it, claiming it’ll have a damaging impact on Lake Baikal.”

“Russia will not be permitting us to construct the Enkh Gol energy station,” Narangerel stated. China is … we’re getting so many loans that we’re in actually severe hazard.”

For a lot of Mongolians similar to Narangerel, the reply to the nation’s financial troubles lies in attaining higher independence.

“We’re not a producing nation, we’re customers,” he stated.

Batmunkh, a 43-year-old accountant on the nation’s fifth largest financial institution, Khas Financial institution, who, like many Mongolians goes by one identify, summed up the nation’s financial issues merely: “The central explanation for the success or failure of the Mongolian financial system is the Chinese language financial system and China’s anti-COVID coverage.”