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For Mongolia, China's Too Close For Comfort

Stocks in this article: ACH

Mongolians have worried about being swallowed by China at least since Genghis Khan's Mongol conquerors swept across much of Asia in the 13th century. Wanting a written language to unite Mongol tribes, he turned to a Turkic people, the Uighurs, to develop a script and not to China, whose character-based language was used in Korea, Japan and Vietnam.

Chinese came to dominate commerce and comprised about 10 percent of Mongolia's 1 million population after it was absorbed into the last Chinese dynasty, the Qing, set up by another group of horseback warriors, the Manchus. Purges, first by a murderous White Russian general and his motley army and then in the 1960s and '70s by Mongolia's Soviet-backed government, killed or drove off the remaining Chinese.

After peacefully shedding communist rule, Mongolia searched for ways to shake off its dependence on Moscow and keep Beijing at bay.

"It's an identity problem we Mongolians have not to be drawn into that big melting pot" of China, said Col. Munkh-Ochir Dorjjugder, director of defense studies at National Defense University and a former head of analysis for Mongolia's intelligence agency. "This tiny tribe, this tiny group that has survived all this time now wants to preserve what we have."

To do so, they crafted a plan for outreach to major global players; they called it the "third neighbor" policy, taking a throwaway phrase U.S. Secretary of State James Baker used on an early bridge-building trip in 1990. Beyond sending troops to Iraq and Afghanistan and offering an air base after September 11 to court the U.S., Mongolia has drawn in Japan as a key investor, the European Union for guidance on development and even faraway NATO as a security partner. The approach has been enshrined in a national security strategy.

Amid the current China-fueled rush for resources, the strategy identifies Mongolia's mineral wealth as a security Achilles heel, citing the risk of "turning into a raw materials appendage to other countries." As part of that, China and Russia are each limited to a third of Mongolia's total foreign investment.

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