India Drives Mongolia Into China’s Submission – Analysis

By Shastri Ramachandran*

Prime Minister Narendra Modi was the first-ever Indian Prime Minister to visit Mongolia. He may also be the last, as Mongolia now wishes that he had never come.

Thereby hangs a sordid tale of how the cookie crumbled in the steppes; how the itinerant dream merchant fed false hopes to a credulous but friendly and trusting people; and, how Mongolia – when squeezed by China to apologise for the Dalai Lama’s visit and promise to never again invite him – learned the hard way that India would neither come to its aid nor deliver on its promises. Beijing made Ulaanbaatar kowtow, and that was a resounding slap on New Delhi’s face.

Our story begins in May 2015.

Prime Minister Modi travelled to Ulaanbaatar from China, told people in the land of Genghis Khan of Buddhism in India, and of Buddhism, among other civilisational links, being common to India and Mongolia. He also announced a credit line of $1 billion and assured the Mongolian leaders that India would extend support in diverse fields and increase exports to Mongolia. This was the text.

Pictures showed PM Modi patting a Mongol horse and trying his hand at archery – the symbolism of posing with a bow and arrow aimed unmistakably at Beijing. That underscored the subtext.

Modi’s billion-dollar pledge came as a big boost to Mongolia, which is locked between China and Russia, and overwhelmingly dependent on the former. Time was when Mongolia was in a clover, with the Russians and Chinese competing to win them over; and, Mongolia could leverage its ties with one power for bargaining with the other. If Moscow failed to respond to a felt need, Ulaanbaatar could always seek Beijing’s help; and vice versa.

Lately, that has changed. Russia and China have become allies and Russia too is more dependent on China as the greater power especially in the aftermath of the U.S.-led sanctions triggered by the retaking of Crimea.

As a result, Ulaanbaatar can no longer call on the Kremlin to help when Beijing is uncooperative. A poor country, with a GDP of about $ 35 billion, Mongolia now feels “trapped” between Russia and China, particularly with the Belt and Road Initiative (BRI) as the only show in the region.

This brings us to the subtext of Modi’s visit: For New Delhi, it was a successful foray into “China’s backyard”. It was also a message to Beijing that should it seeks to step up its ‘presence’ in Sri Lanka – which is India’s “zone of influence” – then it should be prepared to face India in its own backyard. In fact, the $1 billion pledged by Modi was India’s answer to the few billion dollars China was pouring into Sri Lanka.

The Mongolian leadership saw Prime Minister Modi’s visit as the arrival of a “new power” that would be a counter to China. It was led to believe that it would enjoy India’s support in standing up to China. Indian support, Ulaanbaatar felt, could be critical in the event of Chinese pressure becoming unbearable at a time when Russia can no longer come to its rescue.

The Prime Minister’s visit gave rise to new expectations of economic as well as geopolitical gains. Mongolia naively saw India as a strategic friend that could help Ulaanbaatar stand up to Beijing.

This sense of strength and support, which the Monglians (mistakenly) perceived they were drawing from India, was palpable when I visited Ulaanbaatar in July 2016. To be Indian was special. After all, Mongolia was expecting a billion dollars from India.

“When will this credit line start flowing,” was a question that men, and women, who matter kept popping at me. I had not the heart to disabuse them of their hopes and expectations, when they saw me as the one who had come down from the elephant which is out to slay the dragon.

The crisis erupted in November 2016.

The Dalai Lama, perhaps encouraged by New Delhi, went on a four-day visit to Mongolia. This was his ninth trip to a place where he is revered, and his photo is kept in many monasteries. China resented this provocation, objected to the Dalai’s visit and warned Ulaanbaatar against hosting him. Ulaanbaatar, confident of India’s support, defied Beijing to receive the Dalai Lama.

China struck swiftly with an unprecedented economic blockade. The sanctions paralysed Mongolia’s economy and trade. China slapped a levy on Mongolian goods and trucks entering China. As Russia is too tied to China, Mongolia turned to India, and asked for the promised one billion dollars.

Ambassador Gonchig Ganbold, who met Ministry of External Affairs (MEA) officials, told a leading English daily: “It’s important that India raises its voice against the unilateral measures China is taking against us which is hurting our people especially when severe winter is upon us.” Silence, he said, could be construed as giving China a “pass” for its behaviour.

The MEA spokesman’s response was: As a close friend of Mongolia, which India regards as its ‘third neighbour’ and ‘spiritual neighbour’, we are ready to work with the Mongolian people in this time of their difficulty.

However, Modi Administration was in a funk. There was no trace of the muscle the Prime Minister had displayed to much applause in Ulaanbaatar in May 2015. Any action to ease Mongolia’s difficulties would have meant inviting China’s wrath. Predictably, the political leadership turned a deaf ear to Mongolia’s desperate plea for help.

As a result, on December 21, Ulaanbaatar apologised abjectly to Beijing. Mongolian Foreign Minister Tsend Munkh-Orgil promised that the Dalai Lama would no longer be allowed to enter his country.

Ulaanbaatar fell in line and Beijing resumed the stalled talks for a loan of $4.2 billion. Without China’s financial assistance, the Mongolian economy would collapse.

It is game, set and match to Beijing. This was an entirely avoidable fiasco arising from sheer misjudgement on the part of Mongolia, the Dalai Lama and the Government of India.

*The writer, an independent political and foreign affairs commentator, based in New Delhi has worked in China and had travelled to Mongolia in July 2016 for the Asia-Europe Editors Round Table. This article first appeared in The Citizen on 26 December 2016. It is being reproduced by arrangement with the writer.


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25 thoughts on “India Drives Mongolia Into China’s Submission – Analysis

  • December 30, 2016 at 5:16 pm
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    Why are we fishing around in Mongolia to begin with? It is landlocked between the two.

    Vietnam, Burma, Japan, etc. are our natural allies.

    The central problem here is that our economy lags China – in PPP terms we are only half their size. Until that changes any moves we make will be vulnerable to this kind of counter.

    We need to court Western multinationals away from China. Doing that should be our utmost priority – they cannot compete on labour costs, even with attempted slave conditions.

    Their political system is incredibly unstable and if we can provide a climate of reasonable and measured policy, moderate stability, decent infrastructure and strong financial incentives, as well as intellectual property protection, then Western multinationals will flock to our shores. They have no love for China, and neither does the Trump administration, which would thoroughly appreciate a reliable, sensible and non-expansionist democratic ally in the region.

    Reply
  • December 31, 2016 at 3:59 am
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    It is absolutely foolish for Mongolia to challenge China on dalai lama issue. Not only Mongolia’s economy is dependent on China, but with the collapse of the Mongolian economy, Mongolia now need China more than ever. Even if Mongolia get a billion dollar from India, it won’t solve Mongolia’s predicament. Mongolia, landlocked by China and Russia, need Chinese market and access, not to mention capital. As for India, it is time for India to also realize, it is foolish to compete with China on financial resources. China’s pocket is too deep, not even the US can compete with China on that front.

    Reply
  • January 1, 2017 at 2:20 pm
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    It is the case with Nepal. Nepal had to suffer Indian blocked in the name of Madhesi right against newly promulgated constitution of Nepal.When China came with assistance to Nepal, India always shows its anger through different irresponsible measure.

    Reply
  • January 1, 2017 at 2:38 pm
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    Baloch leaders must learn from Mangolia that Modi is not a friend in need.

    Reply
  • January 1, 2017 at 4:46 pm
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    #Figment Of Imagination
    #Modi Baiter Cottage Industry
    #How Relevant is Mongolia for India?
    #How to write about Utopia without being there…

    Reply
  • January 1, 2017 at 10:24 pm
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    Raj are you drunk or under the influence of drugs? The USA would destroy every inch of china included its occupied territories if it came down to a full scale war.

    Never compare a giant like the USA with a paper tiger like China. The rich Chinese come to the west. Only failures and bums of the west go to China.

    As for the article it is no loss for India. Mongolia has nothing to offer them and even if they did it would be a logistical nightmare. India is more concerned with Vietnam, Japan, etc

    Reply
    • January 2, 2017 at 5:30 pm
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      Thank you for teaching us a lesson in Diplpmacy.
      First of all, US and China will never engage in an all out war, US and Russia are more likely. The US comeback from 2008’s recession was due to China’s purchase of US debt. In case of war, US can’t find a larger purchaser of debt. No debt purchase means no expenses to maintain an invasion. That’s how deficit economy works. Also, China will also not have an open confrontation for the same reason. In case of war, US will rightfully default on the recovery.
      Secondly, you can’t win wars by chest-thumping. No country single-handedly won ww2, it was won by ‘Allies’. If we don’t ally with strategically located countries (like Mongolia, behind enemy lines), we will be reduced to nothing more than Poland.

      Reply
    • January 3, 2017 at 10:26 am
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      How China Affects the U.S. Economy
      China is the one of the largest foreign holders of U.S. Treasury bills, bonds, and notes. As of October 2016, China owned $1.131 trillion in Treasuries. That’s 29 percent of the public debt held by foreign countries. For details, see What Is the U.S. Debt to China? (Source: “Major Foreign Holders of U.S. Securities,” U.S. Treasury.)

      China buys U.S. debt to support the value of the dollar. China pegs its currency (the yuan) to the U.S. dollar. It devalues the currency when needed to keep its export prices competitive.

      China’s role as America’s largest banker gives it leverage. For example, China threatens to sell part of its holdings whenever the United States pressures it to raise the yuan’s value. Since 2005, China raised the yuan’s value by 33 percent against the dollar. Between 2014 and 2015, the dollar’s strength increased by 25 percent. China allowed the value of the yuan to decline so its exports could remain competitive with Asian countries that hadn’t tied their currency to the dollar. For more, see Dollar to Yuan Conversion.

      Reply
    • January 3, 2017 at 11:37 pm
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      Peter, stop boasting. Your self-proclaimed mighty and potent American military got defeated badly by poorly armed soldiers wearing sandals, straw hats and pyjamas. Your uniform and military equipments look impressive but you can’t fight. The whole world knows about it.

      Reply
  • January 1, 2017 at 11:58 pm
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    The article is written by a person who is clearly under confidant and reflects a negative and defeatist mindset. He could well articulated that India needed to be more forceful in voicing support to Mongolia instead he shows is journalistic skills by writing “slap and other negatives ” right through the article.
    One may be a congress party supporter or a communist like this guy ….but one must not loose hos connect with the nation – India.
    Alas that is not the case with this so called expert.
    Article is fit yo be trashed in the nearest dustbin.

    Reply
  • January 2, 2017 at 2:07 am
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    Notwithstanding these developments India should give the promised aid to Mongolia and demonstrate our commitment to a just cause

    Reply
  • January 2, 2017 at 3:25 am
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    Modiji said he would isloate pakistan. But in realty Pakistan isolated India. Pakistan realigned its foreign policy with Russia successfully. What is our foreign policy. Simple bullshit

    Reply
  • January 2, 2017 at 4:31 am
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    @Peter. Sure the US has stronger military, but does it has pocket as deep as China’s? the US owed the Chinese trillions of dollar. Moreover, Chinese military itself isn’t weak. As strong as the US military is, the US military is so overstretched that it can’t even eliminate the taliban and al qaeda. As for India, sorry to say, India’s wallet is just pocket change compare to China’s. A billion dollar can’t save mongolia. It can give India good feeling for like 5 secs.

    Reply
  • January 2, 2017 at 4:50 am
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    Modi is an unadulterated idiot who loves to talk nonsense , he has also raked up Baluchistan but cant even give them assylum in India .

    Reply
  • January 2, 2017 at 8:29 am
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    Less said the better about India’s external policies the better. Failing to deliver has become commonplace across the spectrum of activity.

    Reply
  • January 2, 2017 at 10:53 am
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    It is a mistake on Mongoli’s part to assume that India would support any action it takes w.r.t to china, like if Srilanka expects China to interfere in everything Srilanka has with India. As some other respondent mentioned here, PM’s visit was more symbolic to show that there is an intent rather than meddling with everyting Mongolia does. India does not gain much with Mongolia and Japan is more strategic.

    Reply
  • January 2, 2017 at 12:00 pm
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    The naive Mongolians didn’t study Modi properly….
    He has been doing the same to his own countrymens fake promises….
    He is the father of all Liars.

    Reply
  • January 2, 2017 at 3:02 pm
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    Studied silence was so deafening for pigeons that they felt the cat may pounce but only in the direction of Failed Deliverer……

    Reply
  • January 2, 2017 at 3:08 pm
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    We are living in a fools paradise the corrupt babudom will be the death of us, a fairly good excercise like the demonitisation has been turned in to a money spinning adventure with the black monied using loop holes to bring the money in to the open and now the income tax officials will make hay by using the new powers to intimidate the tax payers, tax terrorism will have a new meaning. Believe you me Mongolia does not matter we need to be rid of corruption

    Reply
  • January 2, 2017 at 6:20 pm
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    Wow! What a useless and pointless article. Why condemn the PM when he tried to do something no other PM has done before? what is India to do? Send them billions of dollars? Armies? airlift their goods? for what. Sometimes Mr. Ramachandran a measured or no response is the best thing to do especially when you are dealing with a completely unchecked china . India’s interest in Mongolia is totally economical and should stay that way. Sad to see such a poor article.
    @ eurasia review. we expect better pieces from you.

    Reply
  • January 2, 2017 at 6:44 pm
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    I want clarity on one point. SO when distressed Mongolia approach India, what was the actual response of India regarding credit promised to Mongolia. Author was not clear. Did India refused to give, or some portion of promised credit was given, or timing of promised credit.

    Facts were not stated tightly.

    Reply
  • January 3, 2017 at 4:21 am
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    If Mongolia erred in its calculations, with its leadership and Parliament gathering on a Sunday to meet the Indian Prime Minister and subsequently allowing the Dalai Lama to visit, why is the author so livid on Modi and is trashing him? Did India ever proclaim to be a saviour of Mongolia? On the contrary, it was Mongolia despite its geographic landlocked condition that needs to understand. India and Mongolia don’t mutually wield any influence over each other. Nor is the Indian Foreign policy establishment so naive that they can be lost in delusion that they can overcome the overwhelming influence of China of a landlocked neighbour. Trash, Modi-baiting qualifies as analysis.

    Reply
  • January 4, 2017 at 9:44 pm
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    This opinion piece you is full of superficial explanations. In fact, they were on the verge of bankruptcy due to their poor economic policies and already in negotiations for a Chinese bailout when they buckled under domestic pressure from the influential clergy of “Yellow Hat” sect to let Dalai lama come and announce the rebirth and subsequent formal search for their tenth patriarch Jebtsundamba Khutuktu, the next spiritual leader of Mongolia at Gaden Monastery in Ulan Bator and the third most important lama, after the Dalai Lama and the Panchen Lama. Now, despite their normal diplomatic aspirations to play India against China and mindful of our own resource constraints we still did heed to their request and expedited the 1 billion line of credit via Exim Bank by which they plan on building a refinery and oil pipeline in Sainshand province to tide over their too much dependence on China in the longer run. Again, since they had met all their objectives, they thought it proper to adopt a reconciliatory tone so as not to hamper benefits from China anymore, which is a sound move actually. Thus there shouldn’t be any hard feelings since there is only so much you could for a land-locked distant friend, just look at Sino-Nepal ties and their futility against us.

    Reply
  • January 22, 2017 at 12:16 pm
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    Now we see how china handles Trump.

    Reply

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