Managing the fallout from the Ukraine war, especially energy and food import disruptions from Russia is creating more concerns for import-dependent Mongolia.
A new concern is that the China-Europe freight transportation that transits via Mongolian territory could be disrupted and delayed, which is a significant earner for Ulaanbaatar. Also, Europe-bound flights, which pass through Russia, have been rerouted through Central Asia prolonging flight hours.
What’s more, Mongolia imports wheat and fertilizers and farmers are concerned about rising fertilizer pricing as they need key nutrients to plant spring crops in May. Low crop growth and agricultural import interruptions may cause more food prices to rise later.
Farmers are getting more agricultural subsidies and credits from the government as some of them still aren’t fully paid for their sales last fall.
But the Ukraine war doesn’t bring all bad news for Mongolia.
Mongolia long championed for an economic and energy corridor connecting Russia and China hoping to benefit from the ever-growing partnership between the two countries. Trade between China and Russia surged to almost $150 billion in 2021. And Mongolia can become a go-between the two countries benefitting off from the huge trade volume.
To that effect, a flagship contract was signed by Gazprom with Ulaanbaatar to design a new gas pipeline linking Russia to China via Mongolia, which can allow Gazprom to redirect its Europe-bound gas flow to China.
The contract signature was a major step towards building a Trans-Mongolian gas pipeline, which has been only at the study and conceptual level in the past. But it was overshadowed by the Ukraine war.
The Gazprom contract prompted public demonstration on the main square in Ulaanbaatar supporting Ukraine and calling not to aid the Russian aggression. The police disbursed it presuming it primarily being anti-government.
Officially, Mongolia abstained on the UN General Assembly vote condemning Russia and all government officials refrained from expressing opinions publicly about “special operation” in Ukraine.
The main opposition Democratic Party (DP) has been vocal about the Ukraine war and condemned Russia. One of the leaders of DP said he would contribute to the humanitarian aid to Ukraine.
Geopolitically, the rivalry between the China-Russia duo and the United States remains a key challenge for Mongolia while the country depends entirely on its two neighbors for trade and access to the world.
The Ukraine war is testing the durability of Mongolia's "third neighbor policy" deftly implemented in the past three decades by building partnerships beyond the country's neighbors.