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