How Mongolia can benefit from relations with Germany

There has been a bit of a stir in military circles throughout Asia in the last few weeks as the UK sent a carrier strike group through the South China Sea for the first time since 1997.


Another small deployment in the region may be more important to Mongolia. The German Navy is sending a frigate to Asia for the first time in 20 years to 'express support for regional partners sharing Germany's values.'


Mongolia is one such partner. Its relations with Germany in modern times date back to the 1920s and were developed through ties between the German Democratic Republic and the Mongolian People's Republic. The current relationship is perhaps Mongolia's strongest in Europe: Germany is the third-largest development donor to Mongolia; Mongolian troops served under German command in Afghanistan; and around one percent of the Mongolian population speaks German.


[Author's note: I was pleasantly surprised to encounter the German language on my travels through Mongolia.]


The deployment of this frigate is reportedly a big effort for the German Navy. German Defense Minister Annegret Kramp-Karrenbauer has spoken about the deployment with Chinese counterpart Wei Fenghe and said Germany needs to 'mark its position in the region.'


These are signals that Berlin is looking east, and thanks to long-standing diplomatic and cultural ties, Mongolia is well-placed to capitalize on this new focus.

In some ways this is already happening. In March, officials from both countries met virtually and expressed an intent to increase trade and investment; in June, this was developed further through the Mongolian National Chamber of Commerce and Industry, which discussed an opportunity to export nut products with representatives from the German Embassy; and the military bonds forged in Afghanistan were evident in July, when Mongolian peacekeepers returned home through Germany.


This is welcome progress - but surely bilateral trade can be more ambitious than just nut products?


German carmakers are going to need a lot of lithium-ion batteries for their new fleets. (VW)
German carmakers are going to need a lot of lithium-ion batteries for their new fleets. (VW)

First, Mongolia has enormous renewable energy potential and German companies are leaders in this field. If the Mongolian government was to incentivize investment in the country's renewable energy potential, possibly by dialling down subsidies for coal-fired power, it could leverage its existing connections to Germany to attract capital inflow. Germany has already been investing in upskilling mining engineers in the country.


Second, German carmakers Audi and Volkswagen have said they intend to transition completely to electric vehicles, meaning they're going to need a lot of lithium batteries; Mongolia, conveniently, has significant untapped lithium reserves. These companies will be looking to secure and diversify their lithium supply chains. Mongolia may seize that momentum.


Third, Mongolia is one of the only countries in Asia to maintain good working relations with all of the continent’s major powers; Russia, China, the US, Japan, and India. If Germany really does intend to 'mark its position in the region', it would do well to develop existing diplomatic and cultural ties with a well-connected country like Mongolia.


It is becoming more challenging for Mongolia to walk the tightrope between China, Russia, and the US. Germany (and by extension the EU), it seems, could provide a decent insurance policy.

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