In Mongolia, a democracy for almost 25 years, popular disappointment in the corruption of successive, elected governments has reached a point of disillusion deep enough to trigger symbolic warrior attacks on the parliament by horsemen armed with bows, arrows and rifles. The statist response has included speech stigmatising these most traditional of challengers as terrorists, demanding and succeeding in obtaining lengthy prison sentences.

As a resource extraction economy supplants the traditional mobile pastoralism as the main source of wealth, popular discontent now regards the alternating elected main parties as equally venal, with Mongolia’s parliamentarians among the richest in the world. Discontent with a democratic system and public sphere dominated by vested interests is widespread, sharpening rhetoric on all sides. Yet the challenge of the mounted warriors was an isolated incident.

A more common response to rising inequality is to try to participate in the mining boom. In Mongolia the full spectrum of mining is found: from the largest of transnational corporate world-scale extractive operations  reliant on technology rather than labour-intensive employment; through to the smallest-scale artisanal miners washing for gold specks in the rivers that flow through the pastures, often called ninjas, for the green plastic bowls they attach to their backs as they tramp between  prospecting sites.

The shift from a pastoral to an extractive economy has led some observers to call the pastoral nomads of Mongolia an oppressed minority, victims of global capitalist exploitation. Yet Mongolia only a generation ago, at most two generations ago, was largely a pastoral society, despite a high urban concentration in the capital city. A pastoral nomad, Sambuu, was President of Mongolia, from 1954 to 1972, at a time when, supposedly, Mongolia was utterly under the Soviet thumb.

How can a majority become a minority? Pastoralism is fast shrinking, both in the numbers who make a living from raising livestock and as a proportion of GDP now that the biggest of coal and copper/gold mines are in operation. But a simple dualist opposition of pastoralism and mining oversimplifies. The biggest of the mines are in the south, in the Gobi, the driest part of Mongolia most prone to climate extremes. The climatic extremes included a bitter winter (dzud in Mongolian)  at the end of 1999 and again two years later, with icy gales so severe that many subsistence graziers lost most of their herds. In the Gobi “a clear majority of placer gold miners are herder households who lost their livestock to dzud. Overall, tens of thousands of small-scale miners are engaged in placer gold mining and represent a major source of conflict with place gold mining companies. For a period, the presence of small-scale miners was tolerated…”[1]

In 2011 the Mongolian government reported: “Due to decline of animal husbandry in 2010, a number of heads of livestock fell by 11.3 million and heads of offspring by 6.4 million compared to the previous year.  Due to high natural losses production of livestock originated products, such as meat, milk, wool and cashmere, dropped significantly.”[2] The proportion of the population classified as poor rose from 29 per cent in 2007 to 39 per cent in 2010. Since then, according to the World Bank,  poverty has shrunk, but in rural areas remains at 35 per cent.[3] This is a contrast with the Soviet bloc era, when pastoralists, organised in collectives, had close to 100% literacy, guaranteed incomes, even state pension at the age of 55.

Mongolia is a big country (the size of France, Germany and Spain combined) with plenty of surface gold available, now that a centralised command and control economy is gone, replaced by weak democratic governments disinclined or unable to do much for the poor.

Disappointment with the fruits of democracy followed a deeply ambivalent response to the unexpected collapse of the Soviet bloc, into which Mongolia had been integrated as an industrial supplier of meat, wool, hides, dairy and other livestock products. Regimentation, collectivisation, government monopolies on buying and processing rural produce all collapsed, to be replaced by markets which favoured the most favoured and penalised the weak. The result was an acceleration of the peri-urban ger districts encircling the built cityscapes of Ulaan Baatar. The rural poor, escaping  the disastrous effects of dzud, erected their circular felt tents (ger) or built and fenced small timber houses, as a winter shelter and temporary refuge. As long as they believed these unserviced districts (no sewers, no piped water, often no electricity) were temporary, they were tolerated as a uniquely Mongolian adaptation, an urbanisation not to be labelled as slums or shantytowns, yet barely tolerated officially and frequently blamed for crime, violence, overgrazing, deforestation and pollution of the water table. But the ger districts, already expanding in the Soviet era, have become permanent, leaving the number of Mongolians actually making their living from mobile pastoralism a minority. Individual families in these districts may pack their ger and return to the pasture lands when seasons improve, thus maintaining the tradition of nomadic mobility, but overall, the ger districts continue to grow.

Mongolia’s official response is that: “the increased population of Ulaanbaatar resulted in shortcomings in service delivery which caused by the overload of hospitals, schools, roads, water supply, engineering facilities, as well as a shortage of housing and socio-cultural amenities. Additionally, air pollution, soil degradation and water contamination have impacted adversely on inhabitants’ health. On contrary, as the number of permanent residents of rural areas has being sharply decreased, livelihoods of rural people became stagnant. The main reasons are lack of basic services and infrastructures, absence of modern facilities, not meeting the demand and requirements of the population in rural localities, and lack of environment conducive to the human development and business opportunities. Population of the local areas and remote regions became sparse due to migration therefore cost of basic social services and commodity price have increased, which negatively affect the population livelihood.”[4]

While Mongolia’s government argues that a depopulating countryside is even harder to service, government revenues are soaring, thanks to the big mines now nearing full production , which have ready markets close by in China. But it is conventional economics that concentrated populations are more efficiently served with modern infrastructure, in contrast to the rural bias of Mongolia’s end of the Soviet bloc.

So the countryside continues to be under-invested, neglected, under-capitalised, and wealth continues to concentrate in the capital-intensive extraction zones, and in the city. The pastoralists have, in a generation, gone from being seen as the true Mongolians, heirs of Chinggis Khan; to becoming peripheral small scale producers vulnerable to fluctuating climates, too scattered to modernise efficiently.

This doesn’t mean all pastoralists are poor, far from it. Concentrations of wealth among livestock producers are not as visible as the bling of the urban new rich, the hurgan bayan, literally, the “rich lambs”, who drive round Ulaan Baatar in their Hummers and tinted glass Jeeps. Wealth in the countryside is, as ever, measured by animals on the hoof which are spread out across the pasture to even the grazing pressure. What is not obvious is who owns the remaining millions of sheep, goats, yaks, horses and camels (the Mongolians define themselves as “the people of the five animals”).

Some of the rich lambs got rich through moving fast and first to commandeer land and herds in the free for all that followed the unexpected collapse of the Soviet bloc. They took possession of lands and assets that had belonged to the negdel, the nomad collectives that organised large scale livestock and meat production, invested in rigorous animal health services, quality control, meat freezing and export to the Soviets, and reliable wages to the pastoralists. All that vanished suddenly, seized by the bold and well-connected. These days, it is said by those in a position to know, that the national marketing of meat is controlled by only three families, whose political influence reaches so high they are able to arrange official subsidies at times that maximise their profits. Nomadic herding was never the egalitarian arcadia imagined by folk in the West, but these days the extremes of inequality are more extreme than ever, in a land with an egalitarian ethos promoted by the negdel.

Fortunes can be made in meat, in a country where autumn is the killing season, a tradition in a land so cold over the long winter that meat can be safely frozen in the earth by one’s ger tent, with no need for electricity. These days, with meat a highly marketable commodity sellable not only within Mongolia but to China’s People’s Liberation Army to the south, he who commands industrial freezers gets to hold onto the plentiful meat of autumn until the lean months of spring, and then make a fortune. If one has the right connections, the Ministry of Agriculture, in the name of the national interest in maintaining meat supply year-round, can be persuaded to establish a meat reserve in spring rather than autumn, buying its bulk meat supplies at premium prices, at public expense.

The great herds owned by the rich lambs are dispersed across the countryside, herded by poor nomads whose karma, in a highly risky climate, ran out and have little choice but to herd the animals of others. The rich are further favoured by the industrial logic of modern livestock production, which emphasizes division of labour and specialisation. Owners of big herds can separate them by age and gender, can concentrate on breeding programs, and sending young adult males to fattening yards close to cities prior to slaughter. To those that have shall be given. The rich get richer, the poor find their fortune as their karma ripens unpredictably.

The urban new rich and the oligarchs of rural Mongolia overlap. Mongolia is in the phase of primitive accumulation, as Marx called it, zerleg kapitalizm (wild capitalism) as it is called in Mongolia. But there are plenty of other ways of getting rich, in a land of great mineral wealth, cashmere wool production, tourist attractions, an urban real estate boom and a stock market for Mongolian companies floating their wares.

Mining is not new. Copper was one of Mongolia’s main exports to the Soviet bloc. But the scale of exploitation now is world class, so big that only the biggest of global multinationals such as Riotinto can finance and operate extraction. The Oyu Tolgoi mine, in the Gobi of southern Mongolia, with a ready Chinese market, is a colossus. It will, its owners say, become the third biggest copper mine in the world. After many delays, 2014 is the year OT (as everyone calls it) goes into full production. Oyu Tolgoi is forecast to produce 150,000 to 175,000 tons of copper in concentrates and 700,000 to 750,000 troy ounces of gold in concentrates, tripling in later years as the open cut operation goes underground. This single mine tilts the whole Mongolian economy towards extraction, making pastoralism, by comparison, seem too hard, too risky, too unrewarding. The resource curse is upon Mongolia.

It is all too easy to blame this on foreign multinationals, as if they invented capitalism and imposed it on Mongolia. But in the early 1990s, when I was president of an Australia Mongolia Society, the Mongolian government was energetically offering its mineral patrimony to Riotinto, BHP Billiton, and anyone else who might dig it up. I set up meetings for a Mongolian minister visiting Australia, at a time when Mongolia, reeling from the Soviet collapse and its entry into the hard world of hard currency, was more than keen to capitalise on its abundance of minerals. In reality, it took 20 years for those prospects to be realised, and some of the delay was due to deep ambivalence in Mongolia as to whether exploitation of the copper/gold deposit needed a foreign owner and operator. The result is that the Government of Mongolia now directly owns 34 per cent of the mine, and stands to earn not only profits but royalties revenue as well, boosting national GDP by about 30 per cent.

The protesters on horseback, traditionally dressed to emphasize their popular legitimacy, who fired at the national parliament and are now goaled, accuse all the major parties of endemic corruption. This strikes a popular note, in a land of deep pastoral tradition where fortunes are made and lost quickly and unpredictably, with the calamitous blizzards of a dzud only the most dramatic of risks a livestock herder must face. Mongolians are deeply suspicious of the new rich, and perhaps with reason. Like the oligarchs of Russia, assets were for the seizing as the Soviet bloc fell apart, and mineral wealth only adds to the opportunity to privatise wealth while socialising the costs of extending services to the dwindling nomadic countryside.

Rebecca Empson, an anthropologist, says when Mongolians look at the new rich, “the turns of fortune involved in the accumulation of this kind of wealth are frequently judged as suspect. Somebody somewhere, it is often claimed, must have been seriously cheated in order to secure these possessions.”[5] Although capitalism, in Mongolian, is called kapitalizm, it is hardly a foreign import, nor is it unique to global mining giants.

For years after the Soviet collapse, the conventional euphemism among economists was that Mongolia, and all the postSoviet nations, were in “transition”, implying both an orderly process and a predestined destination, of modern, late capitalism, complete with its orderly markets and oligopolies. Mongolia’s “transition” was disorderly, rapacious, benefiting the brazen.

Tsetsegee Mounkhbayar, leader of the protesting horsemen, is behind bars, officially guilty of a terrorist threat to the state, sentenced in early 2014 to 21 years; likewise five of his cavalry companions. But his protest is popular. Among his demands was that parliament not repeal legislation passed in 2009 to protect pasture land, popularly known as “the law with the long name.” But the messy reality is that it is not only giant mining corporations taking pasture land as their private fiefs, but also the rich lambs, the new class of former cadres who seized their moment.

Now, one of the few voices heeding the concerns of the masses is the Mongolian government’s National Human Rights Commission, which in its latest report, of November 2013, said of the district where the Oyu Tolgoi mine powers ahead: “we met with herders who lost their pastureland and so had to resettle in the soum [district] center asking another herder to take care of their cattle which survived the changes. Other herders might have left the province for another place. For others who stay in their home land, their nomadic lifestyle is being destroyed. Traditionally, it was usual for herders to move around for better pastureland four or more times a year, but now moving around for one or two times is considered ‘many’. Due to shrinking pastureland, some herders are forced to spend summer at their winter camps.”

The 2009 Law With the Long Name is officially the ‘Law to Prohibit Mineral Exploration and Mining Operations at the Headwaters of Rivers, Protected Zones of Water Reservoirs and Forested Areas’. This well-intentioned law failed, not only because of big mining companies but also small pastoralists seeking their fortunes panning for gold in streams coming from Mongolia’s mountains, bearing flecks of gold.

Mongolia’s abrupt ejection from the command economy cocoon into the global neoliberal marketplace has been a rough ride, favouring the well-favoured rich lambs. The rough riders led by Ts. Mounkhbayar diagnose Mongolia’s acute embarrassment of riches distributed unevenly, but solutuions are at hand.


[1] Giovanna Dore and Tanvi Nagpal, Urban Transition in Mongolia, Environment, vol 48 #6 July 2006


[3] World Bank, Mongolia Economic Update, November 2013, 15


[5] Rebecca Empson, The Dangers of Excess: Accumulating and Dispersing Fortune in Mongolia;  Social Analysis, Volume 56, Issue 1, Spring 2012, 117–132

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.