Cooperation with Mongolia

Prime Minister Shinzo Abe on his visit to Ulan Bator on March 30 agreed with Mongolian Prime Minister Norov Altankhuyag and President Tsakhia Elbegdorj to promote bilateral cooperation in the fields of mineral resources development, trade relations and the environment. They also agreed to launch a trilateral framework consisting of Japan, Mongolia and the United States for policy discussions.

Apparently Mr. Abe wants to push Asia diplomacy by forging strong ties with Mongolia, which borders China to the south and Russia to the north and has diplomatic relations with North Korea.

He is the first Japanese prime minister to visit Mongolia since Prime Minister Junichiro Koizumi visited the country in 2006. Back in Tokyo, he said that Japan “attaches importance to relations with countries which share the same values such as the rule of law and basic human rights.”

His visit shows that he is trying to counter China’s moves to increase its influence in Mongolia and other parts of Asia. But he must keep in mind that unless he improves Japan’s relations with China, which have deteriorated due to a dispute over the sovereignty issue involving the Senkaku Islands in the East China Sea, the situation in this region will not be stabilized.

Mongolia, with a population of some 2.84 million people, has a land area about four times the size of Japan. It has large deposits of coal, copper, gold and uranium. It is also believed to be rich in rare metals and rare earths. China is Mongol’s No. 1 trade partner, with about 90 percent of Mongol’s exports going there. Chinese firms are stepping up efforts to acquire firms owning the right of management over Mongolian mines. The possibility cannot be ruled out that Chinese firms will take control of transactions involving coal, iron ore, crude oil and other natural resources from Mongolia.

Mongolia’s one-party communist rule collapsed in 1990 and the country’s democratization has made progress. Mongolia faced an economic crisis when the prices of natural resources plummeted due to the 2008 global financial crisis, but China’s rapid growth helped to revive its economy.

Mongolia has been trying to strengthen its ties with Japan, which it regards as its “third neighbor.” If Mongolia can build stronger trade ties with Japan, it can reduce its dependence on China, and to some extent Russia as well, which is Mongolia’s No. 2 trading partner. Japan needs Mongolia’s natural resources while Mongolia needs Japan’s technology and capital. As Prime Minister Abe has stated, Mongolian-Japanese cooperation in the development of Mongolia’s natural resources is a “win-win scenario.” Japan and Mongolia also agreed to hold talks in Ulan Bator this month for an economic partnership agreement.

China is nervously watching the deepening of ties between Japan and Mongolia. It is all the more important for Mr. Abe to hold talks with Chinese President Xi Jinping at an early date to lay the foundation for solving the dispute over the Senkaku Islands.