:00:04. > :00:13.That is a summary of the news, and that's it from me tonight. It is
:00:13. > :00:17.Tsakhia Elbegdorj has one of the most attractive-sounding political
:00:17. > :00:21.jobs on the planet. He's president of a democratic country which is
:00:21. > :00:26.forecast to grow 10% a year for the next decade, sitting on a vast
:00:26. > :00:32.reserve of mineral riches that have barely been tapped. That country is
:00:32. > :00:34.Mongolia. Here's where things get more complicated. Mongolia is
:00:34. > :00:39.sandwiched between two huge, hungry and authoritarian neighbours -
:00:39. > :00:42.China and Russia. Can his country maintain its transformation from
:00:42. > :00:52.one of the world's poorest to perhaps one of its richest while
:00:52. > :01:13.
:01:13. > :01:15.Tsakhia Elbegdorj, welcome to HARDtalk. Thank you. Your country
:01:15. > :01:19.has been described as the last major untapped mineral reserve in
:01:19. > :01:24.the world, it is forecast to grow, the economy is forecast to grow 10%
:01:24. > :01:31.a year as I said in the introduction. The rest of the
:01:32. > :01:34.world's economies seem to be moving in the opposite direction. It is
:01:34. > :01:40.probably exciting for you as president of Mongolia, is it also
:01:40. > :01:45.unnerving to be travelling at such speed? Yes. Mongolia is a
:01:45. > :01:52.developing country and a free country. Mongolia is one of the 10
:01:52. > :02:00.richest mineral resources country. We share a border with the fastest-
:02:00. > :02:10.growing economy in Asia, I mean China. There are also issues
:02:10. > :02:11.
:02:11. > :02:16.related with mineral deposits. How to use those benefits for the sake
:02:16. > :02:21.of our people. Benefits should not end up in the pockets of few. Our
:02:21. > :02:28.people should benefit. In that regard, we have to have some wise
:02:28. > :02:31.policy. Wise policy which presumably will deal with the
:02:31. > :02:39.problems of corruption, which many people say is still entrenched in
:02:39. > :02:42.Mongolia, and also the issue of the sharing of the wealth. It is an
:02:42. > :02:49.open question as to whether you are going to end up, in the words of
:02:49. > :02:59.one Mongolian observer, Norway or Nigeria. Which way do you think you
:02:59. > :03:01.
:03:01. > :03:03.are headed? Fortunately, there are many countries we can learn from.
:03:03. > :03:13.There is a tendency when countries are succeeding with mineral
:03:13. > :03:17.
:03:17. > :03:24.resources... And what countries are failing. There is a trend, I think
:03:24. > :03:29.more open countries are successful. Norway, Canada and Australia. I
:03:29. > :03:38.regard my country as an open country. My country is ruled by the
:03:38. > :03:41.instructions of our people. My people are watching very carefully.
:03:41. > :03:51.Because of that I hope they will follow that good direction, the
:03:51. > :03:51.
:03:51. > :03:55.successful direction. You talked about democracy, the importance of
:03:55. > :04:04.the rule of law, ending corruption and so forth. In terms of the
:04:04. > :04:07.economics, how are you going to try and ride that tiger? There is no
:04:07. > :04:10.doubt that if your economy is growing at that pace, your currency
:04:10. > :04:14.is going to appreciate enormously. Your Central Bank governor has been
:04:14. > :04:17.quoted as saying that the currency war begins in 2013. How will you
:04:17. > :04:24.try and tame that in order to ensure the rest of your
:04:24. > :04:27.manufacturing does not suffer? have to invest those profits from
:04:27. > :04:36.mining in our capacity Health, education and also in
:04:36. > :04:46.infrastructure. In order to mine and develop the mines, we need
:04:46. > :04:51.
:04:51. > :05:01.infrastructure. We have to have railways, highways, there is huge
:05:01. > :05:07.
:05:07. > :05:12.development to be expected in the field of infrastructure. Mongolia
:05:12. > :05:17.was the main oil export under the Soviet Union. My country does not
:05:17. > :05:27.support that. We would like to see more manufacturing, railways,
:05:27. > :05:27.
:05:27. > :05:35.inside of Mongolia. We will invest in that. You are sitting on this
:05:35. > :05:41.vast wealth of minerals, coal, gold, copper in particular. Most
:05:41. > :05:43.countries want to make themselves attractive to foreign investors.
:05:43. > :05:46.How far are you concerned that actually you might be making
:05:46. > :05:52.yourself too attractive? You have got these two huge neighbours,
:05:52. > :05:56.Russia and China. China in particular desperate for coal. How
:05:56. > :06:04.are you going to try and tame that level of demand so you do not
:06:05. > :06:11.become sucked into China? We always try to maintain balance between our
:06:11. > :06:15.two neighbours, Russia and China. Of course we have a third neighbour
:06:15. > :06:19.policy. There are not many countries that have two big
:06:19. > :06:24.neighbours. Because of that we have a third neighbour policy. Other
:06:24. > :06:29.countries are third neighbour. If there is more investment from third
:06:29. > :06:31.neighbour, our two neighbours can benefit. If there is more
:06:31. > :06:40.investment there'll be more opportunities to invest in Mongolia
:06:40. > :06:48.from China as well as Russia. could just rely on China to take
:06:48. > :06:51.pretty much everything that you have got. Their energy demands, two
:06:51. > :06:58.years ago they became the largest energy consumer in the world,
:06:58. > :07:05.overtaking the US. Those energy demands will increase by 75% in the
:07:05. > :07:08.next 20 years or so. If you wanted, China is a lot closer in terms of
:07:08. > :07:16.for your mineral wealth is. It would be very easy to build a
:07:16. > :07:19.railway to China, but you decided not to. You know we are immediate
:07:19. > :07:29.neighbours to China. Of course we want to see economic benefits to
:07:29. > :07:30.
:07:30. > :07:32.China. We would like there to be two or three rail networks to China.
:07:32. > :07:36.The railway, forgive me for interrupting, that you are now
:07:36. > :07:39.constructing, to Russia, it is a lot further away, it is going to be
:07:39. > :07:45.a lot more expensive, the World Bank has said it is going to cost
:07:45. > :07:50.you three times as much... Three times as much to transport
:07:50. > :07:53.resources from the new mines to Russia than it does to China. That
:07:53. > :08:02.suggests that you are a little bit concerned about giving China too
:08:02. > :08:08.much? We have to build that railway to China and to Russia. Also, we do
:08:08. > :08:12.not want all our resources to end up in China or in Russia. There is
:08:12. > :08:20.also Japan and South Korea who have a high demand. We would like to
:08:20. > :08:23.sell them worldwide. Is that because you fear an over-reliance
:08:23. > :08:27.on China or is it simply because you think it would be nice to
:08:27. > :08:36.spread your wealth around a little bit? Spread our wealth around is
:08:36. > :08:46.good. Relying for infrastructure on one country is not good. Also, I
:08:46. > :08:49.
:08:49. > :08:52.hope, our Chinese partner understands that. Except economists
:08:52. > :08:55.are saying - I'm quoting from the World Bank report, the profit
:08:56. > :08:58.margins on exporting to the rest of Asia, could be less than one-tenth
:08:58. > :09:03.the price than through transit through China. You're willing to
:09:03. > :09:07.pay a huge price not to become over-reliant on China. We never
:09:07. > :09:15.choose our neighbours. We have those two big neighbours, we have
:09:15. > :09:22.to pay that kind of price in order to maintain that balance. Also, we
:09:22. > :09:30.are negotiating with the Chinese and Russian governments. They are
:09:30. > :09:35.giving us some opportunities, access to sea. The UN support this,
:09:36. > :09:38.because Mongolia is one of those countries that has no access to sea.
:09:38. > :09:48.Those countries who are our immediate neighbours, they have to
:09:48. > :09:49.
:09:49. > :09:51.support us. You say you are being even-handed, but when it comes to
:09:51. > :09:54.popular sentiment in Mongolia, recent political polls asking,
:09:54. > :09:56.which partner is best for Mongolia, China came last behind Russia, US,
:09:56. > :10:06.European Union This sounds like people in Mongolia are worried
:10:06. > :10:08.
:10:08. > :10:14.about too much Chinese influence. Which is why you are turning away
:10:15. > :10:24.to other countries. We are open to people's voices, because of that we
:10:25. > :10:25.
:10:25. > :10:35.are an open country. Also China is respecting our people's choice.
:10:35. > :10:42.They all know that sales... Except, before you were President... When
:10:42. > :10:50.Mongolia hosted the Dalai Lama back in 2002, China closed the border.
:10:50. > :10:54.There was different interpretations. Let's be clear about this, China
:10:54. > :10:59.has 1.3 billion people, you are a country of 2.8 million people. You
:10:59. > :11:02.have got something that China badly wants. Is there a little bit of
:11:02. > :11:05.fear in the relationship? Of course we always respect China's one
:11:05. > :11:14.country policy. We would like to maintain very good neighbourly
:11:14. > :11:17.relations. There is no political difference between our country.
:11:17. > :11:24.big political dispute at the moment, but this from a member of the
:11:24. > :11:27.Institute of Strategic Studies. He describes your relationship with
:11:27. > :11:29.China - Mongolian society has a sense of cultural alienation from
:11:29. > :11:35.China and fears that growing economic dependence on this
:11:35. > :11:39.powerful neighbour might evolve into political subservience. He is
:11:39. > :11:47.putting it in pretty strong terms. How far do you share those
:11:47. > :11:56.concerns? Of course we listen to the voices of the experts. They are
:11:56. > :11:58.doing some studies there. We keep that in mind. But we are always
:11:58. > :12:04.maintaining good relations with China and Russia. There is no big
:12:04. > :12:10.problem. We have to listen to that. Also, I think China's authority and
:12:10. > :12:20.people there also have that kind of understanding. What about China's
:12:20. > :12:26.
:12:26. > :12:31.hold on Mongolia historically? They Inner Mongolia, it has twice as
:12:31. > :12:35.many ethnic Mongols as you have in Mongolia itself. How far are you
:12:35. > :12:41.concerned that those borders might seem a little bit temporary as far
:12:41. > :12:44.as your big neighbour is concerned? There is no ethnic difference
:12:44. > :12:54.between our two countries. China respects the cultural exchange
:12:54. > :12:58.
:12:58. > :13:03.Turner respects the people in China and Mongolia. He said there are no
:13:03. > :13:10.ethnic disputes, but almost a quarter of the 25 Chinese teachers
:13:10. > :13:17.at his secondary school have been marked this year. There is ethnic
:13:18. > :13:23.tension between Mongols and the Chinese. There are always some bad
:13:23. > :13:33.people and some good people. We to
:13:33. > :13:36.
:13:36. > :13:40.respect the laws. You mentioned Russia as your other big partner.
:13:40. > :13:50.An awful lot of people look at Ru Ru rather big, under the
:13:50. > :13:53.
:13:53. > :13:59.eye of the Rotarian country at the partner for you? I think the
:13:59. > :14:06.authority to have in China and Russia is very short. Really?
:14:06. > :14:13.about saying, it is up to us to stand up for democracy. This is
:14:13. > :14:23.what you didat you didg reporter, when the reporting on orting on
:14:23. > :14:30.
:14:30. > :14:35.democratic virtues. In Minegolia, Mongolia. My standing is unshaken.
:14:35. > :14:39.We respect the establishment in other countries. We never interfere
:14:39. > :14:44.with that. You gave an interview earlier this year in which you have
:14:44. > :14:48.photographs of Ronald Reagan and Margaret Thatcher. You said one of
:14:48. > :14:53.the reasons you admireyou admire Reagan so much was when Mongolia
:14:53. > :14:58.st country, within the orbit of the
:14:58. > :15:08.Soviet Union, Ronald Reagan stood up and said, the Soviet Union is an
:15:08. > :15:12.
:15:12. > :15:17.evil empire. My family's spirit is a very independent one. My way of
:15:18. > :15:25.living is very independent. One beauty of our transition from
:15:25. > :15:35.communism to democracy is that it was without bloodshed. It was
:15:35. > :15:39.
:15:39. > :15:44.pe pe made the transition at the beginning of 1990. People said
:15:44. > :15:48.it was that was that way, but we broke that historic waistoric wae
:15:48. > :15:55.that way of thinking. We showed that even the poor people can enjoy
:15:55. > :15:59.freedom. My point is not that it is worth pursuing. I question is how
:15:59. > :16:06.sharp -- how far you should be trumpeting that to beat people in
:16:06. > :16:16.China and Russia, who want to move in that direction? Using to be
:16:16. > :16:19.
:16:19. > :16:24.holding back and saying, it is not human rights. We always respect the
:16:24. > :16:31.desire to live free in countries. We respect that. We support that
:16:31. > :16:35.kind of desire. But we never interfere in internal politics.
:16:35. > :16:41.Because you fear that China and Russia could quite easily lashed
:16:41. > :16:46.back at you? Know. We do not fear that. We stand on our policy. We
:16:46. > :16:49.value our relations. That we asked you about your other foreign
:16:49. > :16:54.investors. You talk about wanting to spread the wealth around. There
:16:54. > :16:57.has been a lot of disquiet recently with the your other foreign
:16:57. > :17:03.investors, particularly those private companies that want to
:17:03. > :17:13.invest in York huge mineral wealth, because you seem to be going back
:17:13. > :17:16.
:17:16. > :17:26.and forth on your contracts, which still are not yet signed. Why are
:17:26. > :17:27.
:17:27. > :17:37.you playing this double game? have already signed it. We are
:17:37. > :17:38.
:17:38. > :17:45.honouring that contract. Our national interest his first
:17:45. > :17:54.priority. Does mining companies also have to deal with local
:17:55. > :18:04.grievances and problems. You say that it has been signed. Now, you
:18:04. > :18:10.are trying to unpaid that agreement. The mining companies involved
:18:10. > :18:14.warned in September that if even a few voices call for the agreements
:18:14. > :18:21.to be broken and changed, there is a risk to undermine investor
:18:21. > :18:27.confidence. The world is open. There is nothing to be hidden. Even
:18:27. > :18:34.in Mongolia, there are some people that think that an agreement with
:18:34. > :18:42.Rio Tinto was not perfect. Do you agree with them? Of course I agree
:18:42. > :18:45.with them. Even that is not perfect. We have to stand for that agreement.
:18:45. > :18:50.That is the first big business deal after the dissolution of the
:18:50. > :18:54.communist system in Mongolia. can guarantee, here and now, as
:18:54. > :19:03.foreign investors, those big mining companies, that the agreement will
:19:03. > :19:10.stay as it is. Absolutely. In terms of the coal mine, you have been
:19:10. > :19:16.going back and forth over whether it should be divided up. I think
:19:16. > :19:21.the deal was English again to be between China, a Russian consort --
:19:21. > :19:25.a Russian conglomerate and the US. He then decided to get the Japanese
:19:25. > :19:28.and the South Koreans in. There seems to be a classic case of
:19:28. > :19:38.uncertainty, which surely is going to share it - next year away
:19:38. > :19:39.
:19:39. > :19:48.investors. Let me explain the system in Mongolia. After
:19:48. > :19:52.negotiations, the present the agreement. If the National Security
:19:52. > :20:02.Council advance -- agree on that, they make the case to Parliament.
:20:02. > :20:13.
:20:13. > :20:20.It was not release of this victory when it first started. The problem
:20:20. > :20:24.with this is that the process is so long and the pendulum swings so
:20:24. > :20:29.much better outside investors see this and think, oh, Mongolia might
:20:29. > :20:34.have a lot of mineral wealth, but in terms of how a bigger Ch things,
:20:35. > :20:38.it is not a reliable partner. -- negotiates things. The beauty of
:20:38. > :20:46.Mongolia is we are trying to listen to every voice. We are trying to
:20:46. > :20:54.find a consensus. In a democracy, if you find a consensus, longevity
:20:54. > :21:02.of the decision is guaranteed. In a totalitarian government, it is easy
:21:02. > :21:08.and so to make a decision, there are... A year saying the reliance
:21:08. > :21:18.on mining could upset very badly Mongolia's environment, its way of
:21:18. > :21:18.
:21:18. > :21:21.life. Are you listening to people saying that they do not want the
:21:21. > :21:29.mining. They say, no we don't support it, because it would
:21:29. > :21:33.destroy the whole area. Do you understand it? Yes, I understand it.
:21:33. > :21:38.It is one of the other, isn't it? If you are talking about mining on
:21:38. > :21:45.this level... You cannot do everything in the long-term. You
:21:45. > :21:51.have to listen. Also, I think, it changed so it can't to the mining
:21:51. > :22:01.sector. -- chain should come. They should be dialogue with local
:22:01. > :22:01.
:22:01. > :22:08.people. They should respond to the grievances. We are talking about
:22:08. > :22:12.reports that they could be another 15 of those coalmines. We are
:22:12. > :22:18.talking about a huge amount of Mongolia being ripped apart in the
:22:18. > :22:25.pursuit of mineral wealth. We have to stay and on-air our first
:22:25. > :22:35.agreement. We are learning by doing. Those agreements are very important.
:22:35. > :22:35.
:22:35. > :22:44.We are facing our first term. I think Mongolia was a one-time big
:22:44. > :22:53.empire. After that, Mongolia was a socialist country under communism.
:22:53. > :22:59.Today, we are facing the big interests and big investments. We
:22:59. > :23:02.need to learn how to manage those interests and balance them. It is
:23:02. > :23:07.very challenging. Trying to maintain the tradition that you are
:23:07. > :23:15.busy very proud of, but also exploiting the minerals. It is a
:23:15. > :23:20.great opportunity. We are standing. The main direction comes from our
:23:20. > :23:30.people, not from the powerful nations. I listen to the grievances
:23:30. > :23:36.
:23:36. > :23:40.of our people. I have to listen to them. If it got to the point we
:23:40. > :23:50.shed we should not open the mind, because it will damage the
:23:50. > :23:50.
:23:50. > :24:00.traditional life, you would stop their mind from opening? No, No.
:24:00. > :24:02.
:24:02. > :24:10.Until we see the benefits than damages, we were never shake. It is