There’s a sense of youthful excitement about Ulaanbaatar. Propelled by a boom in the mining sector, Mongolia’s capital is growing rapidly, noisily and, in some respects, uncontrollably.
By far the largest city in this vast but sparsely populated country, Ulaanbaatar’s population is swelling with herders pouring in from the steppe in search of jobs and with foreign investors wanting to get their hands on Mongolia’s mineral resources. During the week the Irish pubs and the French and Italian restaurants are filled with expats and businessmen just off the plane from Hong Kong or Seoul. Those who stay for the weekend get to experience the real local nightlife, which rarely ends before dawn, fuelled by endless bottles of Chinggis Khan vodka.
Ulaanbaatar, or UB as it’s referred to here, is a fascinating mosaic of the old and the new, the indigenous and the foreign. Traditional gers still dot the city, as do historical gems like the Choijin Lama Temple complex, a peaceful oasis hidden behind the busy business district. However, several new high-rises, like the Central Tower and the Sky Tower, have sprung up in recent years around Suukhbaatar Square and now house the international mining, engineering and financial services companies that had taken a foothold in Mongolia.
Peace Avenue, the main road traversing the city, is packed with cars late into the night and it is always very noisy, as drivers use the car horn to signal just about any road maneuver. The journey from my hotel to the city centre takes anywhere from 15 minutes to an hour, depending on the time of day and the skill of the driver.
Whether navigating the roads or the business landscape, conditions change rapidly and having a backup plan seems key to surviving in Mongolia. In late 2010 the Mineral Resources Authority unexpectedly suspended about 250 gold mining licences in response to civil groups calling for government action against environmental damage. The new set of laws was intended to improve the government’s oversight of the mining sector, but the new legislation was prepared too hastily and enforcement became a problem. After a brief pause, it was business as usual for most mining companies. Two years on the government is still struggling to formulate an effective set of regulations.
The law limiting foreign ownership interest in Mongolian companies to less than 49% was another curveball for foreign investors. Passed in May 2012, the law effectively stopped the Aluminium Corporation of China (Chalco) from buying 60% of Toronto-listed South Gobi Resources, whose main assets are in Mongolia. Most observers interpreted it as yet another manifestation of the Mongolians growing wary of China’s increasing influence in their mining sector.
Mongolian lawmakers are in a predicament. The country needs foreign investment and it needs to cultivate a relationship with China, its biggest export market. After a series of erratic policy decisions, it is time for the government to reassure the foreign partners that Mongolia will honour its part of the deal. At the same time, frequent corruption scandals and the intertwining of business and politics have shaken up many people’s confidence in the government. Several Mongolians I meet complain that many politicians are businessmen first, civil servants second. In their view, few are looking after the interests of the people.
According to estimates by the IMF, Mongolia’s economy will grow by an average 14% a year for the next four years. In theory this would mean a rise in living standards for the country’s tiny population. Politicians are feeling the pressure to deliver on this promise and it is not surprising that populist rhetoric dominated the June 2012 parliamentary elections. The new coalition government, led by the Democratic Party, has vowed to tackle corruption and ensure that the interests of the Mongolian people are protected. Time will tell whether they keep their promise.
Driving out of UB into the countryside, we pass one of four power plants supplying UB with electricity, heat and hot water. Enormous over-ground pipes carry the hot water into the city. Insulation is visibly lacking, with a swath of exposed pipes. By the time the water reaches the more far-flung corners of the city, the likelihood of a hot shower is anyone’s guess.