By Pascal Goodman

Ghengis Khan, Mongolia’s most famous citizen, built a vast empire spanning from Korea to Eastern Europe—from Russia in the North to India in the South. Though ruthless in conquest, it was the largest empire in human history, and its impact, both cultural and political, has been much greater than many think.

From secularism and freedom of religion to the fashion of trousers, Mongolia spread many cultural norms throughout its empire, but this widespread influence soon dwindled. The children of Temujin—Ghengis Khan’s birth name—fell prey to internal strife and thrift. The empire withdrew to its plains and blue skies, continuing as a politically insignificant nation until relatively recently. But with the end of communist rule and its excesses, and spurred by political and economic reforms, Mongolia is once again on the rise.

But Mongolia’s most recent arrival on the international stage is not due to military prowess, to horses and arrows, but to geology. Mongolia is part of the Central Asian Orogenic Belt (CAOB), a geological term for a mountain range rising through tectonic shifts by continental plates. This results in Mongolia’s geological terrain being incredibly rich in mineral resources, which have been to a large extent undiscovered and unsurveyed until now. The country has vast coal, copper and gold deposits, which are highly valuable assets for a resource-hungry China. There are also vast quantities of molybdenum, uranium and cerium, a rare-earth mineral. These metals are all used in technological components and with the recent discovery of tungsten reserves in neighbouring Chinese Inner Mongolia, it is likely that Mongolia’s potential for rare-earth minerals is only dawning.

One of the biggest mines in the world to date is Mongolia’s Oyu Tolgoi copper-gold mine. It is run by a Canadian company, Ivanhoe Mines, and is owned through a majority stake by the global mining giant Rio Tinto. Initial estimates place the mine around 36 million tonnes of copper and more than 1,300 tonnes of gold. Due to start commercial production in 2013, the mine lies in the South Gobi desert, close to China and 550km away from the capital Ulanbataar, which makes the mine an ideal site for exporting through Chinese ports.

In 2011, mineral exports reached a peak of over $2.3 billion, which, in turn, means minerals are clearly the country’s largest export. A huge increase in demand gave coal exports an unprecedented advantage with China, representing 92% of the country’s exports in 2011.

But minerals are not the only issues in modern day Mongolia. After gaining independence from China in 1921, the nation was ruled as a one-party satellite state of the Soviet Union. The party in charge, called the Mongolian People’s Revolutionary Party (MPRP), made sure to make Soviet influence more tolerable to the population by contrasting it with centuries of Chinese domination. The MPRP ruled Mongolia from 1921 until 1992, casting a profound influence over the country’s culture.

In Western Mongolia, on the Onon river and in the area surrounding Burkhan Khaldun mountain, there is something called the ‘forbidden zone’. It earnt its name as Genghis Khan’s burial place, which is sacred to Mongol herders with their shamanistic beliefs. But Moscow was weary of Mongolian nationalists’ eagerness to rekindle patriotic pride and independence struggles. They therefore decided to close off the area completely and enclose it with a heavily guarded military enclosure. Entering the zone was punishable by death, and infrastructure development around the area, including the construction of roads, was banned. This is still visible by satellite today. Many pundits believe it was an ideal zone to be used for the Soviet Union’s missile practice, and there are strong indications that at some point nuclear warheads were stored there.

For many years, the people of Mongolia were kept in abject poverty and discouraged from looking into their own history. Intellectuals and archaeologists were systematically eliminated if they looked too closely into Genghis Khan or the history of the empire. The Mongolian language, which for centuries had been written in the Uyghurjin Mongol Bichig script developed by Genghis Khan’s scholars, was written in Mongolian Cyrillic from the 1940s onwards and is still in use today.

Since independence, change has swept through Mongolia. It is by no means a perfect democracy, but it is a multipartite one. The statistics are telling. According to the World Bank, Mongolia saw a 6.4 % real GDP growth rate in 2010, but that figure is predicted to be at least 15 % in 2011. In 1990, real GDP growth was -3 % meaning the economy was essentially shrinking. Life expectancy has risen from a mere 61 years in 1990 to 67 in 2008, compared to a rise from 75 to 79 years for the European Union over the same period.

The Mongolian government has also a huge beneficiary of overseas development assistance (ODA), but it has weaned itself off aid. The amount of ODA coming into Mongolia decreased from 85 % of the government’s income in 2000 to a mere 17 % in 2008, diminishing in lockstep with the rise of growing mineral exports. For a country that has three times the landmass of France, Mongolia’s population only just reached 2.7-million in 2008.

But not all is well, obviously. That same year, 35.2 % of the population lived below the poverty line, but in 2009 that number increased alarmingly to 38.7 %, according to the Asian Development Bank. The country is now at high-risk of falling prey to the ‘Dutch disease’, whereby its reliance on natural resources and shift away from manufacturing will leave its economy fragile and vulnerable to the whims of international markets, as seen by the real GDP growth drop to -1.3 % in 2009, compared to a rise of 8.9% the previous year.

This has resulted in the Mongolian economy facing dire inflationary problems, driven by foreign investment. Throughout 2011, the inflation rate approached 9.2 % against a generally regarded ‘optimal’ target of 3 %. Inflation is due to grow to almost 13% in the coming years, according to many economists. This means that for a population which has traditionally been nomadic, the price of meat, a staple of the Mongolian diet, has sky-rocketed. The percentage of urban poor is also on the rise.

Mongolia is also grappling with land rights issues and legal entitlement, heir to two opposing systems. One of them, enshrined in law since Genghis Khan’s Yassa (Great Law), states that any herder may may pitch his yurt anywhere in the country without hindrance. This suited the Communist regime, which forbade private property, but private property was then enshrined in the new constitution of 1992. The former, quite obviously, contradicts the latter, leading to a serious problem for the mostly nomadic migrants from the countryside who are unable to afford sedentary lodging.

On the political front, the MPRP still yields enormous power and influence. It has decided to drop the ‘R’, for Revolutionary, in its name and become the Mongolian People’s Party, but it governed nearly without interruption until 2004. Its main opposition is the Democratic Party, which has been in a government coalition with the MPP since 2006, which is run by the current Prime Minister, Sükhbaataryn Batbold , a member of MPP.

Sandwiched between Russia to the North and China to the South, Mongolia has always been living in the shadow of its neighbours. With popular resentment against the Chinese running high, Mongolia is attempting to diversify its political alliances and is attempting to sign a series of trade treaties with countries further afield to avoid being overly reliant on China. The United States, Japan and South Korea are now all bent on benefiting from the country’s mineral resources.

Because of this, Mongolia is gaining power worldwide and it is fast becoming a strategic source of minerals to fuel the world’s technological growth. But it is important that Mongolia’s leaders remembers that with this growing power also comes a responsibility to its people. The last thing Mongolia needs is to copy the so-called “resource curse” economies in Africa, where little to no wealth flows from burgeoning extractive industries to citizens. Without urgently needed political and economic reform, it is likely that foreign mining companies will be pressured by Western powers and customers into taking a more active role in development.

The last time Mongolia rose to international prominence, it created an empire unrivalled in history for its breadth and scope of administration. Its modern day rise takes a different shape, because of its wealth in minerals, but Temujin’s dream of expanding influence is fast becoming a reality.

Photos by Mike Nowicki