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Modern Mongolia: A Review |
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Saturday, 05 November 2005 |
 Modern Mongolia - Cover  : From Khans to Commissars to Capitalists
by Morris Rossabi
University of California Press, 428 pages, $24.95
Reviewed by William Bikales
Reader beware, this book is more of a diatribe than a work of
scholarship, and the picture it presents of Mongolia’s development over
the last 15 years is wildly off the mark.
Morris Rossabi, an American medievalist best known for a biography of
Khublai Khan, argues that the foreign donors who came to Mongolia’s aid
following the 1991 termination of Soviet support forced the country to
follow “pure market” policies of shock therapy, minimal government and
privatization. The disastrous results, supposedly, were poverty,
corruption, environmental degradation, cultural decline and economic
dependence on China.
A balanced portrayal of the achievements and failures of this era,
including a critical assessment of the role of foreign aid, would be of
great value. But Mr. Rossabi set out instead to compile a catalogue of
everything that has gone wrong in Mongolia—some of it real, some only
rumored and some a reflection of his own misunderstandings—and blame it
all on the market economy. He supports this conclusion by drawing
unquestioningly on any sources, however unreliable, that seem to
corroborate his preconceptions, and disregarding all others.
Any assessment of developments in post-Communist Mongolia must first
acknowledge the horrendous circumstances the country confronted in
1991. The total debt owed to the Soviet Union at the end of 1990 stood
at 478% of Mongolia’s GDP, a staggering figure. After decades of Soviet
support, dependence on Soviet aid was growing. From 1985-90, new Soviet
credits averaged 40% of Mongolia’s GDP per year, higher than ever
before.
In 1989, Mongolian government expenditures, sustained with Soviet
funds, equaled 65% of GDP. The gap between what the country produced
and what it consumed was incomprehensibly vast and growing rapidly.
With per capita GDP peaking at $270 in 1989, Mongolia was in no
condition to withstand a major economic shock.
When the Soviet Union disintegrated, that massive financial aid was
abruptly cut off, and Soviet bloc trading arrangements, on which
Mongolia’s industry and agriculture depended for cheap inputs and
guaranteed export markets, collapsed. The country suffered a blow
equivalent to the loss of 60% of GDP.
Landlocked between two giant neighbors, Mongolia had been kept in
virtual isolation from the non-Soviet bloc world for 70 years. Its
transport infrastructure, trade, even its power grid were all linked to
the imploding Russian economy. Other conditions posed further
challenges; Mongolia entered the 1990s with a population of two million
scattered over an area the size of Western Europe, and with a harsh
continental climate that adds steeply to the cost of almost all
economic activities.
Under such circumstances it was inevitable that unemployment and
poverty would soar and budget revenues plunge. Identifying and
developing new and sustainable sources of growth under such entirely
different market conditions was bound to be an enormous and extended
challenge.
But none of this matters to Mr. Rossabi. His proposed solution to
poverty is simple: The government must pay higher wages and pensions,
maintain other social expenditures, and hold down electricity and heat
prices. Environmental degradation? Hire lots of park rangers and
enforce those laws. Industrial decline? Support companies with budget
funds and low interest bank credits, and with high import tariffs and
export bans on raw materials. Difficulties in the lives of the herding
population? Maintain the heavily subsidized herder cooperatives of the
communist era. And so on.
He actually notes, from a study done in 1998, that rock musicians are
hurting under the new system because the state fails to provide them
with the support they need. Oblivious to the difficult choices and
trade-offs that policy makers confronted, he asserts repeatedly that it
was only the donor-imposed pure market-economy ideology of “weak state
and minimal government” that prevented Mongolian leaders from solving
all these problems.
Democracy has taken deeper root in Mongolia than in any other former
Communist country of the Central and East Asia region. The country has
seen four peaceful changes of power following fair elections, the
emergence of a perennially squabbling but highly influential Democratic
movement, and the transformation of the Mongolian People’s
Revolutionary Party, the former communists, into a moderate force.
One reflection of the vitality of Mongolian democracy has been enormous
variations in policy over these years. First there was radical voucher
privatization and other rapid reforms during the 1991-92 Byambasuren
administration. Then the conservative 1992-96 Jasrai government slowed
reform, halted privatization and poured resources into a spanking new
state-owned steel mill, financially teetering crop farms and large
infrastructure projects. A new wave of market-oriented reforms began
under M. Enkhsaikhan in 1996-98. And finally came N. Enkhbayar’s
moderation from 2000-04. It is impossible to reconcile these sharp
pendulum swings in policy making with Mr. Rossabi’s insistence that, at
the behest of donors, Mongolia has pursued a consistent “shock therapy”
approach.
Whether one prefers Mr. Enkhsaikhan’s policies or Mr. Enkhbayar’s is
not the point here. These elected Mongolian leaders played a central
role in shaping the country’s economic policies, were held accountable
for their actions by the voters, and foreign aid flowed in under all of
them. The book’s exaggeration of the role of the donors obscures one
central fact: Mongolia has emerged as a truly self-governing and
independent country for the first time in centuries.
That emergence is also evident in Mongolia’s skillful management of its
foreign policy. China’s ascendance as an economic power, simultaneous
with Russia’s economic decline, has created an extraordinarily complex
set of challenges, given the historic Mongolian suspicion of China’s
intentions and the long, porous border between the two.
The economic and social benefits to Mongolia of China’s rise have been
enormous. For example, the cheap Chinese consumer goods whose “flooding
of the market” is repeatedly deplored by Mr. Rossabi have played an
essential role in maintaining Mongolian living standards. China’s
market has helped fill the gap created by the end of Comecon trade.
Growing Chinese economic influence is already provoking a nationalistic
reaction among many Mongolians. Relations between the two nations might
be strained at times. But most observers would agree that Mongolia’s
choice to maintain an open stance based on strategic balance and close
ties to both old and new partners—including Japan, the U.S., South
Korea, Turkey and others—rather than a protectionist stance aimed at
shutting China out, is a wise one. This book seems to suggest
otherwise.
The black-and-white view that permeates Mr. Rossabi’s book could not
have been sustained had he troubled to undertake research that meets
even minimal standards. As in any new democracy, newspapers in Mongolia
for much of this period were simply not yet prepared—or expected by
their readers—to carefully check facts and distinguish between rumors
and reality. Despite this, Mr. Rossabi relies heavily on third-party
English translations of Mongolian newspapers as his principal source of
information—in his 905 endnotes there are more than 500 such citations.
He also uses Western newspaper pieces by journalists who passed briefly
through Ulan Bator. For example, his discussion of street children
cites a 2000 article in the Detroit Free Press to the effect that in
Mongolia “no one was homeless 10 years ago.” He lists interviews, 90%
of which took place before June 1999, and which he utilizes as
selectively as he does news reports; no views that do not fit neatly
into his framework are presented. After mid-1999 his principal source
is a selective collection of news clippings, picked to demonstrate the
disastrous conditions in Mongolia. The reader can imagine what sort of
book could be written about any country using such a methodology.
As a result, the book is riddled with factual errors and does serious
injustice to those figures of this period whom Mr. Rossabi disapproves
of—almost everyone—and equally to that handful whom he professes to
admire, but whose positions and roles he grossly distorts. To cite one
example, H. Hulan, lionized by Mr. Rossabi as one of the leading
opponents of the “champions of the market economy,” was in fact the
chief advocate of the 1999 pension reform—a reform that the book
attacks repeatedly as a prime example of Western advisors pushing
radical free market ideas on Mongolia.
It should come as no surprise to anyone that Mongolia still faces many
serious problems, including high poverty. Still, per capita GNP is more
than double the official (and exaggerated) numbers of the late
Communist era, and life expectancy, infant mortality, and other key
indicators are also better. Foreign direct investment is surging into
the country’s mineral sector. The outcome of Mongolia’s transition has
been its emergence as an open, robust and highly democratic low-income
developing country, facing the same challenges as most low-income
countries, but with strong basis for optimism about the future.
Mr. Rossabi expresses admiration for the Mongolian pollster, L. Sumati.
A recent Sumati poll revealed some interesting findings. Only 8% of the
population described current economic conditions in Mongolia as “good”
or “very good,” 41% called them “partly good and partly bad,” 44%
called them “bad” and the remaining 7% called them “very bad.” Asked
about the current political system, the country split evenly between
those who described themselves as fairly or very satisfied, and those
who are fairly or totally unsatisfied.
At the same time, 84% (out of 95% who responded) of those surveyed said
that the transition to the market economy in 1990 was the right step.
And 90% said that the transition to democracy was the right step. If
Mr. Rossabi had shown just a touch of the wisdom that the Mongolian
people display, he might have written a much better book.
Mr. Bikales is principal economist in the Asian Development Bank’s
Southeast Asia department. Prior to joining the ADB, he served as
economic adviser to several Mongolian governments from 1993-2001.
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