IDSA-ISS, Mongolia Bilatéral Dialogue on “Emerging International Strategic Dynamics: Indian and Mongolian Perspectives” Session I: Indian and Mongolian Foreign Policy Issues Chair: Mr. Gautam Bambawale, Joint Secretary (East), Ministry of External Affairs, Government of India Participants: Dr. D Ganbat, Director, ISS : India-Mongolia Relations Amb. Phunchok Stobdan, Senior Fellow, IDSA : India-Mongolia Relations Mr. Adiyasuren, Researcher, ISS :Mongolian New Government Policy and the Economic and Energy Policy of Mongolia Dr. S Kalyanaraman, Research Fellow, IDSA : India’s Security in Asian Context Mr. Sanjeev K. Shrivastav, Researcher, IDSA : US Rebalancing Policy towards Asia and India's Position Dr. Ganpat stressed that India featured importantly in Mongolian “third neighbour” policy which seeks to establish ties with key western and eastern nations. Since the establishing of relations in the 1955, 30 agreements have been signed between the two nations that build upon historical and cultural relations that existed between the two nations. At the political level, relations were good with the Mongolian President Mr. T Elbegdorg’s visiting New Delhi in 2009 and President Patil’s visiting Ulaanbaatar in 2011. In 2009, the meeting between the two countries resulted in joint declaration which emphasised the broadening of cooperation between the two countries. He added that democratic institutions in his country have strengthened over the past decade and is seen as a key value that they share with India. Trade between the two countries have been constrained due to the lack of infrastructure in Mongolia . Bilateral trade has grown only from 20 million in 2008 to 46.7 million in 2011. Uranium exploration is being keenly pursued by Jindal steel after acquiring 2 exploration licenses. Other resources include gold, copper and iron ore that are present in vast quantities in Mongolia. This mining boom in the country is the key reason behind the high growth rates being experienced in the country. Dr. Ganpat said that analysts expect Mongolia economic growth rate to rise from 13% last year to 15% this year, which is the highest growth rate in the world. The country has 170 billion tons of coal, 205 million tons of petroleum and 68 thousand tons of uranium reserves. Relations between the two countries are likely to be underpinned by economic cooperation led by the mining industry in the coming years. Other areas of cooperation include the nuclear and defence sectors. Recently, the two countries inked an agreement for the peaceful use of nuclear energy and arrangements were made for nuclear physicists from Mongolia to study in India. There also exist vast potential for the development of renewable energy especially wind and solar energy. India’s also annually participates with the Mongolian armed forces in joint exercises called ‘Nomadic Elephant’ while the Border Guard Organisation and National Security Council in both the countries meet regularly to discuss topics of mutual interest like international terrorism which is seen by both countries as a threat. Over the decades, cultural and religious ties have strengthened and will remain the most important element in the relationship. Ambassador Phunchok Stobdan described India-Mongolian relations from an Indian perspective. The historical and cultural ties between the two countries have been well documented for centuries. It was driven initially by Buddhism, then through the Silk Route and then through ties with China and Tibet. Post 1955 India and Mongolia have had an active diplomatic engagement, this was particularly highlighted in 1972 when Mongolia co-sponsored with India and Bhutan a UN resolution for the recognition of Bangladesh at the cost of their relations with Pakistan. He further added that Mongolia’s successful transition to democracy during the 1990’s has been hailed by many particularly in Central Asia as a model for replication. For India, Mongolia is an important strategic partner with regards to China, Asia Pacific and multilateral forums like SAARC, NAM, UN General Assembly. Often, each country has reciprocated sponsorship of the other. For instance, India sponsored Mongolia entry as an observer into NAM while Mongolia supported India’s non-permanent membership in UN Security Council. Over the last couple of decades, Mongolia has maintained a balanced foreign policy as compared to their 1960’s and 1970’s tilt towards Russia. Some key policy guidelines that they follow were securing democracy and market reforms through multilateral efforts. Their third neighbour policy has been strongly advocated by Mongolian scholars and includes the United States, India, Japan and South Korea. Last year they inked an agreement with NATO aiming to promote common understanding on regional and global security issues. Furthermore, post 9/11 the United States has been steadily been increasing its footprint in Mongolia by providing Mongolian soldiers training for peacekeeping missions. From the Chinese perspective, Mongolia is important for economic reasons, regional security, transit route for oil and gas, as a potential land bridge with the West, the potential to counter terrorism in Xinjiang and US influence in the region. Defence ties between India and Mongolia are gradually developing through joint military exercise called ‘Nomadic Elephant’. For India, Mongolia is important both politically and strategically. It provides a potential access route into Siberia untapped resource rich region in the future and factors importantly into India’s energy, Eurasia, China and Russia policy. He recommended that India should take steps in enhancing ties with Mongolia including enhancing tourism between the countries for both religious and medical purposes. Mr. Adiyasuren spoke on the topic of Mongolian New Government Policy with particular focus on economic and energy polices. One of the key priorities of the 2012 government has been to diversify the economy away from its dependence on the mining sector and increase foreign investment. The government has recognised the lack of infrastructure and intends to add value on the resources they are mining by building refineries. Inspite of the mining boom, Mongolia suffers from a trade deficit. Two of the biggest mines in Mongolia are Tavan Tolgoi and Oyu Tolgoi which once fully operational, would generate more than half of the money in the economy. Dependence on the mining sector needs be reduced through the process of industrialization, by building raw material processing plants and establishing of a fund for non mining exports. India’s achievements in the IT sector could significantly contribute to development in Mongolia where 70% of its population is below the age of 30. As for the government energy policy, the country is still dependent on energy imports and would require millions to be invested in infrastructure. Majority of their energy comes from coal fired plants which is unsustainable over a longer period and creates serious health hazards. Therefore the government has seen the need to adopt renewable energy as its primary energy source. Though there exist vat potential for solar and wind energy in Mongolia, the presence of outdated technology presents a significant challenge. Further imperative have been given to hydroelectricity and nuclear but to a lesser extent because of the environmental impacts of large hydro projects and the lack of technical knowhow for the exploitation of their vast Uranium reserves. In this regard India is likely to be an important partner considering their experience with nuclear energy. Dr. Kalyanaraman spoke on India’s security in the Asian context. He was of the opinion that there existed three factors behind a countries actions namely fear, interest and honour. Addressing the first factor, terrorism emanating from Pakistan and their nuclear weapons is seen as the primary short term threat to India, while Chinese claims to become Asia’s hegemonic power is a threat from a long term perspective. The Chinese threat is likely to remain and is intensifying as is seen with their defence cooperation in Bangladesh, Sri Lanka and Burma. The ‘string of pearls’ strategy and building of infrastructure in POK raise concerns of a potential two front war in India. Indian interests lie in the fostering of economic growth and economic interdependence between countries in the regions. This is clearly visible as foreign trade is 48% of GDP. Vital in maintaining Indian growth rates is energy security and since majority of the requisite fossil fuels are imports, the protection of sea lanes of communication becomes foremost of India’s security interest. India’s security concerns also manifest with regards to the South China Sea. Two major acts of aggression by the Chinese last year go against the Indian tenet of freedom of navigation. In the ASEAN region, India’s large economic interest and safety of the large Indian Diaspora are key concerns. He proceeded to elaborate India interest in the gulf region which is dominated by trade, Diaspora and remittances flow. The Iraq war and more recently the Libyan invasion required the evacuation of significantly number of Indian people. In the immediate neighbourhood, the strong ties India shares with its neighbours has often resulted in India getting embroiled into their domestic politics as seen recently with regards to Maldives. Other concerns revolve around preventing Afghanistan from emerging as Pakistan backyard post 2014, enhancing ties with Central Asian countries and the propping of the Indian manufacturing sector. For India, prestige drives our interaction and participation in international multilateral institutions. This was largely the case during Nehru era and briefly after that, however post 1990’s there was a fundamental reorientation in India foreign policy towards economic diplomacy. In addition, charting our own independent course in handling internal affairs and external affairs is a prestige issue and finally maintaining balance of power equilibrium is absolutely vital to our interest. Mr Sanjeev Shrivastav spoke about US rebalancing policy towards Asia. He was of the opinion that US foreign policy was in the process of undergoing a change from a predominant focus on the Persian Gulf towards Asia Pacific. Large part of this strategy is dependent on India. This will see the development of 60% of their naval forces being deployed in the Asia Pacific region. This was also visible when President Obama within days of his re-election participated in the East Asian Summit. The process had actually started in 2009 with Hillary Clinton preparing the ground by conducting regular visits in the region. Rebalancing is not new to American foreign policy as witnessed during the Cold War; however the Chinese rise is a new development. India in response has welcomed the move as articulated by Indian Ambassador Ms Nirupama Rao’s nuanced statement in United States. However India needs to prepare and develop the internal capacity by adequately allotting financial resources in the budget. Asia Pacific is likely to remain a zone of contention but war is unlikely to unfold. Economic restructuring in the region is going to be vital in shaping how the region develops.