source: FT.com Kuwait 1950. Abu Dhabi 1970. Qatar 1995. Mongolia 2012? Mongolia, endowed with vast resources and growing at 17 per cent, has a gold-rush atmosphere. The miners, bankers and lawyers who have descended on Ulan Bator like to believe it is the next El Dorado. Those who wish the country well hope it can be more than that: a well-run democracy in which opportunity is equitably spread. John Finigan, an Ã¼ber-optimist who runs Mongoliaâ€™s Golomt Bank, thinks of Qatar, which had a $7bn economy in 1995. Today, it has a gross domestic product of $174bn and the worldâ€™s second-highest per capita income of $98,000. Why, asks Mr Finigan, shouldnâ€™t Mongolia do the same? Its top 10 mines alone contain minerals worth $2.75tn, which would make every Mongolian â€“ all 2.7m of them â€“ a millionaire. Mongolia, which sits on Chinaâ€™s doorstep, has decades worth of coal, copper, gold, rare earths and uranium. Its president calls it a global epicentre. The best response to such euphoria is, to put it in technical terms: â€œWhoah there.â€ The aspiration to turn Mongolia into a Qatar is admirable, the likelihood of it becoming Nigeria not negligible. Certainly, Mongoliaâ€™s tiny population â€“ in an area three times that of France â€“ should help. But think about it. A country with fragile institutions and a GDP per capita of $3,000 is about to be hosed with billions of dollars. What could possibly go wrong? There are at least four things Mongolia must get right: governance, equity, economic management and geopolitical strategy. Governance is key. Here Mongolia has strengths along with obvious weaknesses. Since Mongolia broke loose of Russia in 1992, it has been, against all odds, a fairly functioning democracy. It has had regular presidential and parliamentary elections, only one mired by violence. Mongolians are 95 per cent literate. What about the leaders themselves? Mongolia has a surprisingly large cohort of technocrats trained abroad, either in Russia or eastern Europe, or in the US, UK and Japan. Present leaders have gone on missions abroad reminiscent of Japanâ€™s post-Meiji forays to learn from the west. Warding off the â€œresource curseâ€ is a priority: regular study trips include the Gulf, Chile, Norway and Canada. There are plenty of negatives, too. It costs an estimated $2m to get a seat in the 76-member parliament. With MPs wages at $800 a month, that suggests they see rich rent-seeking opportunities once they get there. As the money starts to trickle in â€“ $5bn in foreign investment last year â€“ corruption has risen. Mongolia has slipped in Transparency Internationalâ€™s rankings to 120. The previous president has been arrested on suspicion of corruption, though he insists the charges are fabricated. Assuming politicians donâ€™t steal the spoils, how should they be divided? First, Mongolia must decide how to split the booty between itself and foreigners, who have capital and knowhow. Rules for foreign investment are in flux. Tsakhia Elbegdorj, the president, says Mongolia used to be an ugly bride. Now that she is â€œhighly educated and beautifulâ€ foreigners are flocking to woo her. The challenge is to raise the dowry without being greedy. If the riches in the ground are as claimed, foreigners will probably come anyway. Trickier is how to divide the cash among Mongolians. Direct transfers have been tried, a dispersal of a few hundred dollars to every Mongolian â€“ usually before elections. That is not the way to go. Politicians talk sensibly about investing in education, infrastructure and training. They intend to put money away in a stabilisation fund and a sovereign wealth fund. They will have to do all this and more. In the past few years, Ulan Batorâ€™s population has boomed to 1.2m. Herders have been driven by killer winters and lured by money. Only a few have found it. About 500,000 live in gers, nomad tents, most without sanitation or proper heating. Macroeconomic management is tricky. Educated Mongolians know all about â€œDutch diseaseâ€, the strangling of third industries in resource-rich countries. Even before the cash is truly gushing, inflation is at 20 per cent. In 2010, Mongoliaâ€™s togrog was the worldâ€™s best-performing currency, not good for exporters. Other industries, such as farming, will need support. Finally comes geopolitics. It usually does. Mongolia is wedged between Russia and China, the latter a ravenous market. Yet Mongolians dislike China and suspect it of having inappropriate territorial intentions. These fears have already impeded the construction of a railway needed to export coal and triggered an ill-thought out foreign investment law. Undoubtedly, Mongolia has a golden opportunity. But it also has a heady brew of mammoth problems. One must wish it the best â€“ and fear for the worst.