Tsakhia Elbegdorj, President of Mongolia HARDtalk


Tsakhia Elbegdorj, President of Mongolia

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That is a summary of the news, and that's it from me tonight. It is

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Tsakhia Elbegdorj has one of the most attractive-sounding political

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jobs on the planet. He's president of a democratic country which is

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forecast to grow 10% a year for the next decade, sitting on a vast

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reserve of mineral riches that have barely been tapped. That country is

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Mongolia. Here's where things get more complicated. Mongolia is

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sandwiched between two huge, hungry and authoritarian neighbours -

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China and Russia. Can his country maintain its transformation from

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one of the world's poorest to perhaps one of its richest while

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Tsakhia Elbegdorj, welcome to HARDtalk. Thank you. Your country

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has been described as the last major untapped mineral reserve in

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the world, it is forecast to grow, the economy is forecast to grow 10%

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a year as I said in the introduction. The rest of the

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world's economies seem to be moving in the opposite direction. It is

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probably exciting for you as president of Mongolia, is it also

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unnerving to be travelling at such speed? Yes. Mongolia is a

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developing country and a free country. Mongolia is one of the 10

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richest mineral resources country. We share a border with the fastest-

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growing economy in Asia, I mean China. There are also issues

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related with mineral deposits. How to use those benefits for the sake

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of our people. Benefits should not end up in the pockets of few. Our

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people should benefit. In that regard, we have to have some wise

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policy. Wise policy which presumably will deal with the

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problems of corruption, which many people say is still entrenched in

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Mongolia, and also the issue of the sharing of the wealth. It is an

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open question as to whether you are going to end up, in the words of

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one Mongolian observer, Norway or Nigeria. Which way do you think you

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are headed? Fortunately, there are many countries we can learn from.

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There is a tendency when countries are succeeding with mineral

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resources... And what countries are failing. There is a trend, I think

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more open countries are successful. Norway, Canada and Australia. I

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regard my country as an open country. My country is ruled by the

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instructions of our people. My people are watching very carefully.

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Because of that I hope they will follow that good direction, the

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successful direction. You talked about democracy, the importance of

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the rule of law, ending corruption and so forth. In terms of the

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economics, how are you going to try and ride that tiger? There is no

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doubt that if your economy is growing at that pace, your currency

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is going to appreciate enormously. Your Central Bank governor has been

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quoted as saying that the currency war begins in 2013. How will you

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try and tame that in order to ensure the rest of your

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manufacturing does not suffer? have to invest those profits from

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mining in our capacity Health, education and also in

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infrastructure. In order to mine and develop the mines, we need

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infrastructure. We have to have railways, highways, there is huge

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development to be expected in the field of infrastructure. Mongolia

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was the main oil export under the Soviet Union. My country does not

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support that. We would like to see more manufacturing, railways,

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inside of Mongolia. We will invest in that. You are sitting on this

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vast wealth of minerals, coal, gold, copper in particular. Most

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countries want to make themselves attractive to foreign investors.

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How far are you concerned that actually you might be making

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yourself too attractive? You have got these two huge neighbours,

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Russia and China. China in particular desperate for coal. How

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are you going to try and tame that level of demand so you do not

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become sucked into China? We always try to maintain balance between our

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two neighbours, Russia and China. Of course we have a third neighbour

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policy. There are not many countries that have two big

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neighbours. Because of that we have a third neighbour policy. Other

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countries are third neighbour. If there is more investment from third

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neighbour, our two neighbours can benefit. If there is more

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investment there'll be more opportunities to invest in Mongolia

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from China as well as Russia. could just rely on China to take

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pretty much everything that you have got. Their energy demands, two

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years ago they became the largest energy consumer in the world,

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overtaking the US. Those energy demands will increase by 75% in the

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next 20 years or so. If you wanted, China is a lot closer in terms of

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for your mineral wealth is. It would be very easy to build a

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railway to China, but you decided not to. You know we are immediate

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neighbours to China. Of course we want to see economic benefits to

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China. We would like there to be two or three rail networks to China.

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The railway, forgive me for interrupting, that you are now

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constructing, to Russia, it is a lot further away, it is going to be

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a lot more expensive, the World Bank has said it is going to cost

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you three times as much... Three times as much to transport

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resources from the new mines to Russia than it does to China. That

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suggests that you are a little bit concerned about giving China too

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much? We have to build that railway to China and to Russia. Also, we do

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not want all our resources to end up in China or in Russia. There is

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also Japan and South Korea who have a high demand. We would like to

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sell them worldwide. Is that because you fear an over-reliance

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on China or is it simply because you think it would be nice to

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spread your wealth around a little bit? Spread our wealth around is

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good. Relying for infrastructure on one country is not good. Also, I

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hope, our Chinese partner understands that. Except economists

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are saying - I'm quoting from the World Bank report, the profit

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margins on exporting to the rest of Asia, could be less than one-tenth

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the price than through transit through China. You're willing to

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pay a huge price not to become over-reliant on China. We never

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choose our neighbours. We have those two big neighbours, we have

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to pay that kind of price in order to maintain that balance. Also, we

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are negotiating with the Chinese and Russian governments. They are

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giving us some opportunities, access to sea. The UN support this,

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because Mongolia is one of those countries that has no access to sea.

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Those countries who are our immediate neighbours, they have to

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support us. You say you are being even-handed, but when it comes to

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popular sentiment in Mongolia, recent political polls asking,

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which partner is best for Mongolia, China came last behind Russia, US,

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European Union This sounds like people in Mongolia are worried

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about too much Chinese influence. Which is why you are turning away

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to other countries. We are open to people's voices, because of that we

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are an open country. Also China is respecting our people's choice.

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They all know that sales... Except, before you were President... When

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Mongolia hosted the Dalai Lama back in 2002, China closed the border.

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There was different interpretations. Let's be clear about this, China

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has 1.3 billion people, you are a country of 2.8 million people. You

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have got something that China badly wants. Is there a little bit of

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fear in the relationship? Of course we always respect China's one

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country policy. We would like to maintain very good neighbourly

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relations. There is no political difference between our country.

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big political dispute at the moment, but this from a member of the

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Institute of Strategic Studies. He describes your relationship with

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China - Mongolian society has a sense of cultural alienation from

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China and fears that growing economic dependence on this

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powerful neighbour might evolve into political subservience. He is

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putting it in pretty strong terms. How far do you share those

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concerns? Of course we listen to the voices of the experts. They are

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doing some studies there. We keep that in mind. But we are always

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maintaining good relations with China and Russia. There is no big

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problem. We have to listen to that. Also, I think China's authority and

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people there also have that kind of understanding. What about China's

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hold on Mongolia historically? They Inner Mongolia, it has twice as

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many ethnic Mongols as you have in Mongolia itself. How far are you

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concerned that those borders might seem a little bit temporary as far

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as your big neighbour is concerned? There is no ethnic difference

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between our two countries. China respects the cultural exchange

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Turner respects the people in China and Mongolia. He said there are no

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ethnic disputes, but almost a quarter of the 25 Chinese teachers

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at his secondary school have been marked this year. There is ethnic

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tension between Mongols and the Chinese. There are always some bad

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people and some good people. We to

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respect the laws. You mentioned Russia as your other big partner.

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An awful lot of people look at Ru Ru rather big, under the

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eye of the Rotarian country at the partner for you? I think the

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authority to have in China and Russia is very short. Really?

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about saying, it is up to us to stand up for democracy. This is

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what you didat you didg reporter, when the reporting on orting on

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democratic virtues. In Minegolia, Mongolia. My standing is unshaken.

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We respect the establishment in other countries. We never interfere

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with that. You gave an interview earlier this year in which you have

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photographs of Ronald Reagan and Margaret Thatcher. You said one of

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the reasons you admireyou admire Reagan so much was when Mongolia

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st country, within the orbit of the

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Soviet Union, Ronald Reagan stood up and said, the Soviet Union is an

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evil empire. My family's spirit is a very independent one. My way of

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living is very independent. One beauty of our transition from

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communism to democracy is that it was without bloodshed. It was

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pe pe made the transition at the beginning of 1990. People said

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it was that was that way, but we broke that historic waistoric wae

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that way of thinking. We showed that even the poor people can enjoy

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freedom. My point is not that it is worth pursuing. I question is how

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sharp -- how far you should be trumpeting that to beat people in

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China and Russia, who want to move in that direction? Using to be

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holding back and saying, it is not human rights. We always respect the

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desire to live free in countries. We respect that. We support that

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kind of desire. But we never interfere in internal politics.

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Because you fear that China and Russia could quite easily lashed

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back at you? Know. We do not fear that. We stand on our policy. We

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value our relations. That we asked you about your other foreign

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investors. You talk about wanting to spread the wealth around. There

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has been a lot of disquiet recently with the your other foreign

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investors, particularly those private companies that want to

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invest in York huge mineral wealth, because you seem to be going back

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and forth on your contracts, which still are not yet signed. Why are

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you playing this double game? have already signed it. We are

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honouring that contract. Our national interest his first

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priority. Does mining companies also have to deal with local

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grievances and problems. You say that it has been signed. Now, you

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are trying to unpaid that agreement. The mining companies involved

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warned in September that if even a few voices call for the agreements

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to be broken and changed, there is a risk to undermine investor

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confidence. The world is open. There is nothing to be hidden. Even

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in Mongolia, there are some people that think that an agreement with

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Rio Tinto was not perfect. Do you agree with them? Of course I agree

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with them. Even that is not perfect. We have to stand for that agreement.

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That is the first big business deal after the dissolution of the

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communist system in Mongolia. can guarantee, here and now, as

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foreign investors, those big mining companies, that the agreement will

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stay as it is. Absolutely. In terms of the coal mine, you have been

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going back and forth over whether it should be divided up. I think

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the deal was English again to be between China, a Russian consort --

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a Russian conglomerate and the US. He then decided to get the Japanese

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and the South Koreans in. There seems to be a classic case of

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uncertainty, which surely is going to share it - next year away

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investors. Let me explain the system in Mongolia. After

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negotiations, the present the agreement. If the National Security

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Council advance -- agree on that, they make the case to Parliament.

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It was not release of this victory when it first started. The problem

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with this is that the process is so long and the pendulum swings so

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much better outside investors see this and think, oh, Mongolia might

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have a lot of mineral wealth, but in terms of how a bigger Ch things,

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it is not a reliable partner. -- negotiates things. The beauty of

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Mongolia is we are trying to listen to every voice. We are trying to

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find a consensus. In a democracy, if you find a consensus, longevity

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of the decision is guaranteed. In a totalitarian government, it is easy

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and so to make a decision, there are... A year saying the reliance

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on mining could upset very badly Mongolia's environment, its way of

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:21:18.:21:18.

life. Are you listening to people saying that they do not want the

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mining. They say, no we don't support it, because it would

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destroy the whole area. Do you understand it? Yes, I understand it.

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It is one of the other, isn't it? If you are talking about mining on

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this level... You cannot do everything in the long-term. You

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have to listen. Also, I think, it changed so it can't to the mining

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sector. -- chain should come. They should be dialogue with local

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people. They should respond to the grievances. We are talking about

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reports that they could be another 15 of those coalmines. We are

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talking about a huge amount of Mongolia being ripped apart in the

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pursuit of mineral wealth. We have to stay and on-air our first

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agreement. We are learning by doing. Those agreements are very important.

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We are facing our first term. I think Mongolia was a one-time big

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empire. After that, Mongolia was a socialist country under communism.

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Today, we are facing the big interests and big investments. We

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need to learn how to manage those interests and balance them. It is

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very challenging. Trying to maintain the tradition that you are

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busy very proud of, but also exploiting the minerals. It is a

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great opportunity. We are standing. The main direction comes from our

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people, not from the powerful nations. I listen to the grievances

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of our people. I have to listen to them. If it got to the point we

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shed we should not open the mind, because it will damage the

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traditional life, you would stop their mind from opening? No, No.

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Until we see the benefits than damages, we were never shake. It is

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