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Serendipity and Stealth, Resistance and Retribution: Policy Development in the Mongolian Mining Sector (Progress in Development Studies, forthcoming) Peter Blunt 1 Confederation of Mongolian Trade Unions, Ulaanbaatar, Mongolia and Ganbaatar Sainkhuu 2 Member of the State Great Hural (Parliament) of Mongolia Abstract The paper analyses a policy development process designed to advance the sustainable development of mining-affected communities in Mongolia and, indirectly, to invigorate debate concerning resource nationalism and community resistance to corporate predation. The policy process arose from a research report on community development agreements whose findings reached interested parties in Mongolia despite the ban placed on them by the donor research sponsor. The findings highlight, first, the lengths to which development assistance will go in its defence of foreign mining interests and the corporate-led assault on the commons; second, the serendipitous and vigorously contested nature of policy development; and third, the swift, 1 Peter Blunt is Consultant to the President of the Confederation of Mongolian Trade Unions, Ulaanbaatar, Mongolia. He is also a non-resident Visiting Fellow, School of Social Sciences, University of Adelaide, Adelaide, SA 5001, Australia ([email protected] ). From August 2012 to November 2013 he was Governance Programme Manager, Swiss Agency for Development and Cooperation, Ulaanbaatar, Mongolia. Thanks are due to Selenge Nergui for making the initial contact between the authors of this paper that triggered the policy development process discussed herein, and to she, Mandukhai Altankhuyag, and Tsunara Ganbold (the SDC Governance Team) for excellent pro bono translation and interpretation work and research assistance. The views expressed in this paper are solely those of its authors. 2 Ganbaatar Sainkhuu is an independent Member of the State Great Hural (Parliament) of Mongolia and President of the Confederation of Mongolian Trade Unions ([email protected] ). 1
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Serendipity and Stealth, Resistance and Retribution: Policy Development in the Mongolian Mining Sector

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Page 1: Serendipity and Stealth, Resistance and Retribution: Policy Development in the Mongolian Mining Sector

Serendipity and Stealth, Resistance andRetribution: Policy Development in the Mongolian

Mining Sector(Progress in Development Studies, forthcoming)

Peter Blunt1

Confederation of Mongolian Trade Unions, Ulaanbaatar, Mongoliaand Ganbaatar Sainkhuu2

Member of the State Great Hural (Parliament) of Mongolia

AbstractThe paper analyses a policy development process designed to advance the sustainable development of mining-affected communities in Mongolia and, indirectly, to invigorate debate concerning resource nationalism and community resistance to corporate predation. The policy process arose from a research report on community development agreements whose findings reached interested parties in Mongolia despite the ban placed on them by the donor research sponsor. The findings highlight, first, the lengths to whichdevelopment assistance will go in its defence of foreign mining interests and the corporate-led assault on the commons; second, the serendipitous and vigorously contested nature of policy development; and third, the swift,

1 Peter Blunt is Consultant to the President of the Confederation of MongolianTrade Unions, Ulaanbaatar, Mongolia. He is also a non-resident Visiting Fellow, School of Social Sciences, University of Adelaide, Adelaide, SA 5001, Australia ([email protected]). From August 2012 to November 2013 he was Governance Programme Manager, Swiss Agency for Development and Cooperation, Ulaanbaatar, Mongolia. Thanks are due to Selenge Nergui for making the initial contact between the authors of this paper that triggered the policy development process discussed herein, and to she, Mandukhai Altankhuyag, and Tsunara Ganbold (the SDC Governance Team) for excellent pro bono translation and interpretation work and research assistance. The views expressed in this paper are solely those of its authors.2 Ganbaatar Sainkhuu is an independent Member of the State Great Hural (Parliament) of Mongolia and President of the Confederation of Mongolian TradeUnions ([email protected]).

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variegated, muddled, uncompromising, yet effective, reactions of power to perceived threat. It is argued that Mongolia’s interests will best be served by a strong form ofresource nationalism and that its predominantly indigenous population will be crucial to achieving this and to the defence of the commons.

Key Words: community development agreements, mining, Mongolia, Switzerland, SDC, policy development, resistance, indigenous, serendipity, resource nationalism, parliament, social justice, the commons, national sovereignty, Oyu Tolgoi, corporate predation, manufacture of consent, neoliberalism

IntroductionThis paper is a sequel to a case study published in this Journalin 2014, which recounted events surrounding the unilateraltermination in May 2013 by the Swiss Agency for Development andCooperation (SDC) of a joint research project between SDC and theMinistry of Mining of the Government of Mongolia (Blunt, 2014).The research project was terminated by SDC because its earlyresults were deemed to threaten Swiss and other western interestsin Mongolia’s mineral resources. The conclusion to Blunt (2014,p.14) observes that ‘despite the embargo placed on the researchfindings and (the) unilateral cancellation of the researchproject... (it was likely) that... the research findings andrecommendations would find their way to sympathetic sites ingovernment’ (parentheses added).Here, the circumstances are discussed of the take-up five monthslater, in mid-October of 2013, by ‘sympathetic sites ingovernment’ (principally the second author of this paper) ofpolicy recommendations concerning community developmentagreements (CDAs) contained in the banned research report, and ofthe inclusion of some of those recommendations in national policyapproved by the Mongolian parliament in late December 2013[‘State Policy on the Mining Sector of Mongolia (2014-2024)’ –the Policy]. CDAs between rural communities and mining corporations providerecompense for damages inflicted on livelihoods and theenvironment and can therefore be effective means for establishing

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sufficient levels of tolerance among affected communities forthem to allow mining activities to proceed uninterrupted (e.g.,World Bank, 2010a, 2010b). The CDA policy inclusions couldtherefore have significant positive consequences for sustainablecommunity development in rural Mongolia and national economicperformance as well as ramifications for state sovereignty andpolitical legitimacy. The main purpose of the paper is to analyse the process of policydevelopment that resulted in the CDA inclusions in the Policy.The discussion illustrates how policy-making can be serendipitousand conflict-ridden, in part confirming Sutton’s (1999)description of it as ‘a chaos of purposes and accidents’. But italso reveals the extent and character of the opposition that canbe engendered and the types of retribution that can be meted outby vested interests to policy advocates and their supporters. The reactions on the part of SDC to the research findings set outin Blunt (2013, 2014) and to the policy developments analysed inthis paper indicate clearly that SDC in Mongolia operatesstrictly according to the maxim of ‘self-interest first’, payinglittle heed when its own interests are at risk to potentialdevelopment benefits for the country that it professes to beassisting. Such doublespeak, such unabashed self-interest andlack of altruism are to be expected from development assistance(e.g., Blunt, 2012; Blunt & Lindroth, 2012; Blunt, Turner &Hertz, 2011; Blunt, Turner & Lindroth, 2012, 2013). However this case is noteworthy for a number of other reasons.First, it highlights wider hypocrisy on the part of SDC, evidentin the sharp contrast between its espousal and proselytisation ofstandard principles of good governance (such as transparency,avoidance of conflicts of interest, and ‘freedoms’ of debate,information, and association) and its flagrant disregard forthese same principles in its own behaviour. This confirms Roy’s(2004a, p. 49) view that in the establishment lexicon the meaningof terms like freedom has ‘little, if anything, to do withfreedom’ as we would want it, as opposed to freedom to do prettymuch anything you please.Second, for people who are unwilling to accept as fair orreasonable this view of development assistance, and are prepared

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to say so openly and to behave accordingly, the case shows thatretribution can be swift and uncompromising, illustrating howpower responds when it is challenged or thwarted, or when itslayers of deceit are peeled-back by intellectual enquiry (Hedges,2011; Chomsky, 2011, 2013). A clear message from this case isthat either ‘you say the things that are required for service topower’ (Chomsky, 2007, p. 2) - even when its manifestations arepartly merely that of petty officialdom - or you suffer theconsequences. The findings confirm Roy’s expectation that theeffects of such ‘probing’ can include ‘a bilious rush of abuse,intimidation, and blind anger’: in short, ‘the intellectualequivalent of a police baton charge.’ However the case was made more pointed because, in ‘provokingthis kind of unconstrained, spontaneous rage...,’ it exposed ‘theinstincts of some of these normally cautious, supposedly“neutral” people, the pillars of democracy – judges, planners,academics’ and development officials (Roy, 2001, p. 27). That isto say, the case laid bare the inner workings and the thinly-veiled real intentions of the ‘manufacture of consent’ (Chomsky &Herman, 1988), a major consequence of which of course is a denialof social justice for the poor people that development assistancepurports to be its primary beneficiaries (Blunt & Lindroth,2012).Another noteworthy feature of the case was the opposition’smisjudgement of CDAs as constituting a threat, which caused it toact in ways that ran counter to its own interests and to those ofall other affected parties. The paper thereby affords insightsinto some of the difficulties and some of the compromises thatmust be made in the interests of progress, and the depth offeeling surrounding mining in Mongolia. Such conditions are to beexpected where the interests of powerful corporations and membersof government influenced or co-opted by them are involved. Theseinterests are underpinned by neoliberal ideology, and by thepressures in favour of it that are exerted by internationalfinancial institutions and by donor agencies, whose job it is toestablish and maintain conditions that allow ‘their’ corporationsto make the most of the rich pickings on offer. The case showsthat the fervour with which the dogma is applied, the degree of

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hostility directed at its critics and the rationality of responsecan be strongly influenced by the idiosyncrasies and limitationsof the usually foreign petty officials associated with suchorganisations. Among Mongolians, many younger, mainly foreign-educated, membersof the emerging middle class - those who have benefitted fromsome ‘trickle down’ and the greater opportunities for consumptionafforded by more open markets - are also broadly supportive ofthe establishment status quo. However, this is a potentiallyvolatile mix because surveys show that among most ordinaryMongolians there is increasing discontent with chronic highlevels of poverty and rising inequality, which are perceived tobe a consequence of the unfair and corrupt deals that have beenstruck between government and foreign mining corporations (SaintMaral Foundation, 2014). In such circumstances, seemingly minormisjudgements or overreactions – in this case to policysupportive of CDAs - can be inflammatory or, at least, morecounterproductive than one might otherwise expect.The analysis is situated within the discourse surroundingcommunity-owned or commonly-held and nurtured natural resources,or ‘the commons’ (Ostrom, 1990), which include minerals, and theforests, rivers, mountains, and pasturelands that can beadversely affected by their exploitation. Community opposition tosuch exploitation can be traced back formally at least to thethirteenth century, to the Magna Carter’s Charter of the Forests(Chomsky, 2012a). In the last 30 years in particular, communityenjoyment of such traditional sources of sustenance has been‘steadily dismantled’ worldwide on the basis of a ‘perversedoctrine’ known as the tragedy of the commons, ‘a doctrine whichholds that collective possessions will be despoiled so thereforeeverything has to be privately owned’ (Chomsky, 2012a). Thedamaging consequences of this doctrine are graphicallyillustrated by the effects of big dam construction, which in thelast 30 years in India alone has forced more than 30 millionmostly indigenous people from their homes, destroyed theirlivelihoods, and devastated ecosystems (Roy, 2012). Thedoctrine’s global menace is emphasised by the fact that

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pastoralists occupy up to 45% of the planet’s land surface(Pearce, 2012). Mongolia of course is a particularly striking case of commonsvulnerability, as about 80% of its vast geographical space -equivalent to half the size of India or three times the size ofFrance - is devoted to pastoralism. Livestock productioncomprises about a third of GDP, and up to 50% of Mongolians stilldepend at least partly on pastoralism for their survival,probably the highest percentage of any country in the world(UNDP, 2011; Vernooy, 2011). The exploitation of the mineralwealth that lies beneath these lands can only be achieved withsignificant disruptions to the pastoral way of life and damage tothe environment upon which it depends.The assault on the commons in Mongolia began in earnest with thedecollectivisation of the rural economy in the early 1990s, whenMongolian pastoralists became subject to the new property regimeimposed under neoliberalism. Since then, community-held land inMongolia increasingly is a resource available for privateownership and the award of private mining concessions (Sneath,2012). To the extent that the latter adversely affects theenvironment upon which rural communities depend for theirlivelihoods and impairs their enjoyment and sustenance of it(e.g., Breckenridge, 2012; Padilla, 2012), the CDA policydevelopments outlined in this paper, and moves towards resourcenationalism which it is hoped they will encourage, can be seen asa ‘microcosm of the general defence of the commons...part of aglobal uprising against the violent neoliberal assault on thepopulation of the world’ (Chomsky, 2012a).

Setting and BackgroundMongolia is at a watershed in its development, its main hallmarkbeing a likely long-lasting wave of strong economic growthfuelled largely by gains from the nation’s rich endowment ofmineral resources. It is a watershed marked also by a crescendoof powerful external influences that in the last twenty yearshave been brought to bear on a hitherto relatively shelteredMongolian society - influences like foreign investment,neoliberal ideology and design, consumerism, and global popularculture. Governance of the Mongolian state, in the interests of

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social justice and the maintenance of national sovereignty andcultural identity, is severely constrained by these forces. Mining, then, is clearly crucial to Mongolia’s development, butit also makes it vulnerable to international commodity priceswings and other ‘resource curse’ risks.3 Such vulnerability isheightened in the short term by the fact that most of theindustry’s ‘golden eggs’ will be produced by a single andmajority foreign-owned copper and gold mine (Oyu Tolgoi - OT).4

Once in full production in 2014, OT will be the main contributorto what could be by 2018 a tripling of national per capita GDP(International Monetary Fund, 2012). Not far behind is a worldclass coal deposit at Tavan Tolgoi in the south of the country,where production is gathering momentum (Li, 2012; Mossman, 2013).But mining is crucial as well because the management of thecountry’s mineral resources by government – with OT (justifiably)as the touchstone of this - is closely and, we would suggest,legitimately tied to public perceptions of social justice and ofnational sovereignty5 and identity, as it is in some othercountries (e.g., Breckenridge, 2012; Padilla, 2012).6 Such promising economic prospects must be tempered further,however, by the legacies of the ‘shock therapy’ (Klein, 2009)administered by the IMF in the 1990s, which have left Mongoliawith the tell-tale scars of chronic high levels of poverty(around 35%) and unemployment and growing inequality. Theseconditions stoke popular resentment of foreign corporatepredation and mistrust of government (Rossabi, 2013; Saint Maral

3 Blunt (2014) argues that many such risks and their bad effects are not, as is conventionally supposed, primarily the fault of the developing country victim, so much as they are preordained by neoliberal design.4 Oyu Tolgoi LLC is owned 66% by Ivanhoe Mines Ltd. (Canada) and 34% by Erdenes Oyu Tolgoi LLC, a Mongolian state-owned company. Ivanhoe is 51% owned by Rio Tinto (International Finance Corporation, 2013). The vulnerability referred to arises also from Rio Tinto’s bad track record in other developing countries, such as Papua New Guinea (e.g., Loewenstein, 2013). 5 Natural resources...form part of ...a nation's 'right to self-determination'– see United Nations General Assembly resolution of 1962 [(GA RES 1803 (XVII)].6 More than 85% of Mongolians believe that Mongolia should own at least 51% ofits strategic mineral deposits, which currently is not the case (Sant Maral Foundation, 2014).

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Foundation, 2014). In addition, environmental damage associatedwith mining has provoked protest and conflict, and communityoutrage at the patchy implementation of relevant legislation, or‘the law with long name’, persists (Li, 2012; Simonov, 2012).Mining therefore carries a heavy burden of both development andpolitical expectation and responsibility.

International Trends towards Resource NationalismAny discussion of mining-related community development occurswithin a socio-economic and environmental framework whoseprincipal features increasingly are defined by resourcenationalism. The Mongolian Mining Journal (September 2013, p. 99)refers to resource nationalism as ‘the attempts by ownercountries to extract the maximum value and developmental impactfor their people from their finite natural resources’. Arguingthe need for greater ‘nuance’, Bremmer and Johnston (2009)identify four types of resource nationalism: on the one hand,‘revolutionary’ and ‘legacy’ and, on the other, the morecorporate-friendly, ‘economic’ and ‘soft’. Economic resourcenationalism entails the redistribution of revenues ‘frominternational to domestic hands’. Whereas the ‘revolutionary’form, attributed to countries like Russia and Venezuela, isassociated among other things with ‘broader political and socialupheaval... (and the) rollback of privatisation in strategicsectors.’Evidence of an international trend towards resource nationalismincludes recent mass protests against foreign ownership ofnatural resources in Thailand (Cartalucci, 2013) and in Mexico(Matalon, 2013), and deadly conflict between mine workers andcorporations in South Africa (McClenaghan & Smith, 2013). Nolonger the exclusive preserve of developing countries such asBolivia and Ecuador, protests in favour of resource nationalismincreasingly are intermingled with popular antagonism towards theausterity programmes of neoliberalism in countries like Greece,Spain, Ireland, and India (Mossman, 2014; Roy, 2012; Salafia,2013; Ward, 2009).

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Responding no doubt to the writing on the wall, mining industryimpression management7 is at pains to present a public face thatis understanding and supportive of these developments: ‘In ourview, there’s nothing wrong with resourcenationalism...governments are correct to want to extract as muchas they can for the benefit of their countries and peoples out ofwhat are finite resources....it’s actually the duty of governmentto see that a country’s natural resources benefit its people’(Creamer, 2013). Perhaps inconveniently to the establishment, in Europe, thestrongest and most conspicuous case for resource nationalism isNorway’s. Its main principles require that the country’s naturalresources be exploited sustainably and that they ‘belong to thepeople, and must benefit society...rather than...a small andselect group who become steadily richer at the expense of thewider community’ (Norwegian Petroleum Directorate, 2012). Closer to Mongolia, Kazakhstan has adopted a strong form ofeconomic resource nationalism (Domjan & Stone, 2010; Kennedy &Nurmakov, 2010). Bremmer & Johnston (2009, p. 151) put Mongoliain the same category, anointing its corporate-friendliness:‘Mongolia recognises that its rebalancing efforts in rewritingcontracts and legislation governing natural resources cannot beso punitive that international companies exit the country’.The CDA policy developments outlined in this paper are integralto resource nationalism in Mongolia and discussion of them shouldtherefore take account of these international trends andcommentaries. To reiterate, CDAs can provide modest compensationfor damage to livelihoods and to different features of thecommons and, under ideal circumstances, for the partial recoveryof community-commons interdependence. They can also contribute totolerance of mining activities by affected communities, reducingthe likelihood of costly disruptions. However, the discussion that follows suggests that the clarity ofCDA benefit for foreign investors can be obscured whenestablishment hackles are up or neoliberal defensive passions are7 According to Newman (2009), impression management is an ‘act of presenting afavourable public image of oneself so that others will form positive judgments’ (p.184).

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aroused, and it shows that community benefits count for little insuch circumstances.

Muddled OppositionIndeed, this was one of the more notable, and strikingly ironic,features of the CDA policy development process. The resistance itencountered and the retribution dealt out by its opponents topolicy advocates and their supporters in many respects rancounter to their own vested interests. That is, the resistancewas unhelpful to the perpetuation of the prevailing neoliberalorder and to the ‘conducive investment climates’8 and corporatepredation that neoliberalism cultivates the grounds for soassiduously (e.g., Blunt et al., 2013; Chomsky, 2011). It wasunhelpful because CDAs can distract attention away from some ofthe more ‘sensitive’ questions of resource ownership and oftaxation and royalties (Blunt, 2014), considerations that Bremmerand Johnston (2009) attribute to revolutionary resourcenationalism. In addition, if, as they should, CDAs makesignificant contributions to community development andlivelihoods, they can also reduce the likelihood of violentconflict between miners and mining-affected communities and theycan enhance political legitimacy at all levels of government. For these reasons, CDAs are among the finer instruments ofneoliberalism, an inference reinforced by their endorsement as‘win-win’ by the World Bank (Dansereau, 2005) and by miningindustry sources like Creamer (2013); and hence their designationin Blunt (2104) as being a politically safe subject for research.The opposition to CDAs encountered in this case can therefore beseen as self-inflicted interference by certain elements of theestablishment to the achievement of its own ends. The case showsthat this came about because neoliberal opposition to policydevelopment can come in different shapes and sizes and levels ofsophistication. For some, any additional corporate expense isseen axiomatically as being detrimental to profitability andhence to the attractiveness of investment climate. Much of theresistance and retribution encountered during the policydevelopment process discussed below appeared to be so inspired. 8 Chomsky (2011, p. 47) notes that ‘as a country improves opportunities for investors to extract resources…, foreign aid goes up’.

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Serendipity The spark that lit the fuse of the policy development process wasa chance meeting (at a cocktail party) between the first andsecond authors of this paper, the latter being an independentMember of the Mongolian Parliament well known throughout Mongoliafor his strong advocacy of social justice, of clean government,of state sovereignty, and of fair returns to the state frommining, or resource nationalism (including strong and sustainedcriticism of the OT agreement) (see Sainkhuu, 2014).9 Themeeting, which took place on Friday 11 October, 2013,10 wasinstigated by a national professional member of staff of the SDCGovernance Team, who said to the first author: ‘You must come andmeet Ganbaatar Sainkhuu. I have told him about you and the bannedCDA paper and that we (the SDC Governance Team) think that thepaper is in the national interest and should be made public, andhe is keen to talk’. As a prelude to the discussion thatfollowed, it was made clear that any assistance concerning CDAsprovided by the SDC Governance Team would have to be informal andpro bono and done out of hours, and should not be linked in anyway to SDC, as SDC was strongly opposed to the ideas and hadbanned the CDA research report and was insistent on beingdisassociated from it.The meeting referred to above was entirely serendipitous, but sotoo was its timing. On Monday of the following week (after theFriday ‘cocktail-party meeting’), a working group of theMongolian parliament was due to finalise discussions of a draftof the Policy, which would then work its way through the relevantparliamentary processes. Written comments on the draft policy andsuggestions for revisions and inclusions had to be finalised byMonday. Such inclusions in the Policy were crucial toestablishing a basis for subsequent legislative change concerningCDAs.An informal policy team – comprising the second author and hisadvisers and the SDC Governance Team led by the first author -emerged from the cocktail party encounter. Its first meeting was9 Over 80% of Mongolians are concerned about inequity and social injustice andgovernment’s inadequate response (Sant Maral Foundation, 2014).10 The dates provide baselines for the brisk pace of policy development and the swiftness of seeming retribution that occurred, which are discussed later.

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a Sunday lunch preceding the parliamentary working groupdiscussion scheduled for the next day. This was the first of aseries of such meetings, whose purposes were to review progressof the discussions taking place in parliament and to agreedefensive tactics and arguments to be employed by the secondauthor in relation to them. In embarking on this course of action, the policy team realisedthat advancing the cause of CDAs by itself ‘would leaveunaffected the “enabling environment” and other conditionsgoverning mining and the economy in general that incline Mongoliatowards a resource curse fate similar to that experienced byother resource-rich developing countries’ (Blunt, 2014, p. 14).Nevertheless, the policy team’s strategy was to do some localgood and to stimulate public debate of resource nationalism.

StealthThe need for stealth arose from SDC opposition and suspectedsurveillance. This created an atmosphere of trepidation among themembers of the SDC Governance Team, and a somewhatconspiratorial, cloak and dagger undertone in the policydevelopment process. The atmosphere was charged also by fears ofretribution from SDC – fears that for some subsequently turnedout to be well-justified. Meetings were therefore heldclandestinely, signifying the degree to which anopportunistically ‘friendly’ foreign presence in a sovereignstate can constrain open debate among its citizens (includingmembers of parliament), debate that in this case was clearly inthe national interest, just as the banned CDA research reportdiscussed in Blunt (2014) had been. At the same time, SDC was presuming to advise the Government andpeople of Mongolia about – and to assume the moral high ground inrelation to – the usual range of democratic ‘freedoms’ and of‘good’ governance, thereby lending weight to Roy’s (2009, p.1)conclusion that such notions have been ‘hollowed out and emptiedof meaning…and have metastisised into something dangerous.’

Resistance The policy team’s first reading of the draft policy documentrevealed that it went to considerable lengths in providing

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safeguards to the environment and entrepreneurial activity, butwas completely silent on safeguards for mining-affectedcommunities and on matters of social justice. The second authorof this paper was a lone voice in relation to such questionsamong the members of the parliamentary working group and wasintent on filling the social lacunae in the Policy. The policy team therefore drafted a new section for inclusion inthe Policy, entitled ‘Safeguarding Community Interests’. Thesection contained a number of paragraphs, the first two of whichstated: (1) ‘Local communities will be consulted beforehand aboutextractive industry activity within their jurisdictions and willbe empowered to influence decisions concerning permissibleactivities, including the possibility of powers of veto’; and (2)‘Mining corporations will be obliged by law to engage in localdevelopment activities that make a significant contribution tothe well-being and livelihoods of affected communities, so thatsuch livelihoods can continue and be sustained after the resourcehas been exhausted and mining has stopped. The intention here isto create conditions in which mining-affected communities becomeself-sustaining and are able to maintain a reasonable standard ofliving from livelihoods that do not depend on mining. The formalbases of such local development activity will be communitydevelopment agreements (CDAs) entered into by mining corporationsand the local governments and the communities that theyrepresent.’ These two clauses were augmented by detailed specificationsconcerning the preferred character of CDAs and supportinglegislation. The deliberate intention was to start ‘strong’ inthe expectation that concessions would have to be made – forexample, in relation to the possibility of community ‘powers ofveto’, in relation to legal requirements for ‘significantcontributions’ by corporations that could be ‘sustained after theresource has been exhausted and mining has stopped’, and inrelation to the detailed CDA specifications. The policy team’sstrategy was to be left with sufficient direction in the Policyto legitimise the subsequent development of detailed andunequivocal legislation requiring CDAs, that is, to be able tocontest the detail on another day and on a firm basis of policy.

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There was vigorous debate of these matters at all stages (workinggroup, standing committee, and plenary session of parliament),meaning that community and commons-friendly clauses wereconstantly at risk of being deleted altogether or significantlyweakened. Resistance in parliament had two main sources: first, a distinctmining-lobby group of MPs that had been influenced or co-opted bythe mining sector; and second, those persuaded by establishmentneoliberal convictions ordaining that anything that threatenedcorporate profits would damage ‘investment climate’ and ‘investorconfidence’, and would result in ‘capital flight’, and so on.Even so, the pace of policy development was brisk. From astarting point two and a half months earlier, by the time of itsapproval in late December 2013 the community safeguards that hadbeen inserted in early drafts of the Policy had been reduced to ashort section containing two clauses: Clause 3.5.1. ‘Beforestarting extractive operations, the investor and localcommunities should establish an environment of mutualunderstanding. It is the responsibility of local governments toexplain the social and economic significance of mining projects.’And Clause 3.5.2. ‘During extractive operations in order toprovide for social development the investor and local governmentshould enter into a Local Development Agreement (LDA) in atransparent and participatory manner.’Clearly, Clause 3.5.1 constitutes a substantial retreat from whatwas first put to the parliamentary working group in mid-October,removing completely any suggestion of community decision-makingpower over mining activities and introducing in its place theequivocal and corporate-friendly language of ‘mutualunderstanding’. As noted earlier, this was an anticipatedconsequence of significant corporate-lobby, and related,resistance applied at every step of the way. Roy (2004b, p. 105)explains why: ‘Today corporate globalization needs aninternational confederation of loyal, corrupt, preferablyauthoritarian governments in poorer countries, to push throughunpopular reforms (and to resist popular ones), and quell themutinies. It’s called “Creating a Good Investment Climate”’(parentheses added).

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However, Section 3.5.2 is clear and unequivocal about therequirement for LDAs to be entered into, thereby achieving theminimalist position hoped for at the outset by the policy team.

RetributionOutside of parliament, the main non-corporate oppositioncontinued to be SDC. This manifested itself most noticeablymidway through the developments described above (mid-November,2013) when the first author’s contract with SDC was peremptorilyterminated (with pay in lieu of notice), the pretext being anirreconcilable difference of opinion concerning the ‘strategicdirection’ of the SDC Governance and Decentralisation Programme(GDP) managed by him. However, during the contract terminationmeeting, the newly-appointed SDC Country Director made it clearthat had he been in position when the banned CDA documentreferred to in Blunt (2014) had been produced, he would have‘brought things to an end then’. This admission suggested acausal correlation between, on the one hand, the policydevelopment process and other events discussed in this paper and,on the other, the contract termination. In the circumstances,retribution seemed the most plausible explanation. Such plausibility was strengthened by two subsequent events.First, the first author’s work visa was immediately cancelled bySDC, giving him about two weeks in which to leave the country orto make other arrangements. Second, a few days later, a seniornational member of the SDC Governance Team was interrogated bySDC management about matters connected with: (1) the banned CDAdocument; (2) another research report produced by the SDCGovernance Team, discussed below (Blunt, 2013); and (3), aYouTube video depicting the involvement of the Swiss-basedGlencore corporation in the exploitation of Zambian copper,referred to in Blunt (2014) (see Guldbrandsen, Veileborg &Fraser, 2013). In relation to the latter, the national staff member had (afterhours and pro bono) written Mongolian sub-titles for the video sothat it could be broadcast on Mongolian TV. She had done this atthe (indirect) request of the Mongolian Minister of Mining, whohad seen the video and thought (like she) that other Mongoliansshould too, in order for them to learn about such matters as

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transfer pricing and fraudulent investment inflation and aboutapparent collusion between corrupt mining officials andgovernment.11 Despite the fact that the video was freelyavailable on the Internet and its clear relevance to Mongolia(see Blunt, 2014), the Mongolian SDC staff member was grilled bySDC management about her motivation and made to feel that her jobwas at risk by virtue of what she had done.These events coincided with the release in early October, 2013 ofanother research report, which questioned the development-effectiveness of important elements of SDC’s GDP (Blunt, 2013).This report also incurred the displeasure of SDC management,especially the Deputy Country Director who had designed the GDP,who had the final say in relation to it, and whose wife wasemployed by one of its principal implementing agents. While thispaper was not banned by SDC, about ten days after the paper’spublic release, the SDC Governance Team was instructed by SDCmanagement not to make presentations of the paper to government.But this direction came too late to prevent the premier Mongolianpublic administration journal from publishing it in Mongolian,clearly signifying that local intelligence was persuaded of itsrelevance to matters of local governance and development inMongolia. The interrogation by SDC management of the senior national SDCstaff member, mentioned above, included accusatory questioningabout the translation and distribution to local governmentofficers at a meeting in Ulaanbaatar in late October 2013 of thatpaper (Blunt, 2013). This, despite the fact that the paper’sbibliographic details included the words ‘SDC/GDP DiscussionPaper’, presumably making it a document intended for publicdiscussion. Neither SDC’s proclivity for doublespeak nor itscavalier disregard for freedoms of information was diminished byits contemporaneous promotion of ‘horizontal learning’.Were it not for their potentially serious negative effects onrural communities and the commons, such blatant hypocrisy, suchmuddled thinking, and such clumsy and disproportionateretribution could also be seen as faintly comical, as their11 These features of the Zambian case may well apply to OT and Rio Tinto (Sainkhuu, 2014).

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effects clearly ran counter to the very self-interests that theystrove so frantically to defend and conceal. The failure torecognise the simple logic that shows that CDAs can makesignificant and low-cost contributions to stable political andconducive investment climate conditions suggests that donor pettyofficialdom is quickly out of its depth, and founders, inanything other than the safe and shallow waters of its ownneoliberal rhetoric and development platitude. The ensuingthrashing about in response to real or, as in this case, imaginedthreat enables it to accomplish the quite tricky feat of beingunhelpful to all sides at the same time – to mining-affectedcommunities, to government at all levels, to local businessinterests, and to international corporate investors and theirnational progenitors.In this somewhat theatrical, but no less combative, atmospherethe minimalist aims of the policy team concerning CDAs werelargely achieved. They constitute a small and necessary, but notsufficient, step towards providing for mining-affectedcommunities reasonable and sustainable local developmentprospects, and some measure of defence against the assault on thecommons. They could also help to promote greater and betterinformed demand for resource nationalism from the general publicand from within government, with the hope of achieving what Blunt(2014) refers to as ‘a thorough investigation and re-evaluationof the bigger questions surrounding mining in Mongolia, leadingto a fairer distribution of the proceeds to the nation and itscitizens and to avoidance of the otherwise seemingly inevitable“resource curse”.’ The next, and greater, challenge will be to convert the clausesconcerning CDAs that are now a part of the Policy into bindinglegislation. This phase has begun and is likely to be subjectedto just as fundamental and fierce resistance as that encounteredin this case, and from the usual suspects. But even ifsuccessful, such hard-won progress, cannot guarantee that goodlegislation will be put to the uses for which it is intended orimplemented without fear or favour.

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ConclusionThis case exposes the different forms that resistance can take toreal or imagined threats to private control of mineral resourcesand the commons in Mongolia and the scattered and muddled, but noless effective, nature of such resistance. ‘Effective’, even ifthe results are perverse, or serve to eradicate or weaken policythat could be in the corporate interest as well as for thegeneral good. Among the most striking revelations was the breathtakinghypocrisy and arrogance of development assistance, evident in thelengths to which it would go in defence of its interests,including brazen contempt for conventional rules of goodgovernance. It was as if to say ‘it is for “us” to make therules, and to follow them or not at our convenience, and forothers – poorer, lesser mortals - to abide by them or break themat their peril’. This of course is a form of hypocrisy ordoublespeak that has become the stock-in-trade of power’s conductof international relations, as anyone who watches the news on TVwill know – and as exemplified most recently by events in theUkraine.Apart from this, the forms of resistance illustrated most vividlyin the case comprised, first, corporate-co-opted and neoliberal-sympathetic oppositions within parliament targeted precisely atcommons-friendly policy development. And second, vitriolic‘intellectual baton charges’ (Roy, 2001) and other sanctionstargeted just as unerringly by development assistance at localsources of commons-friendly policy advice over which it had someauthority. The character of the resistance and retributionimplied that any perceived threat to corporate control or short-term profitability was regarded as something to be stamped outwithout hesitation, suggesting for some ignorance or mistrust ofthe potential benefits to corporate interests associated withCDAs, for others perhaps simply befuddlement in the fog of war. Such direct forms of resistance and retribution were reinforcedby several forms of background resistance. First, relevantprofessional literature is dominated by apologias for theneoliberal status quo in mining, or as close to it as it ispossible to get in the face of what is seen by the establishment

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as the gathering storm of resource nationalism. Such corporatesympathies are clearly evident in Bremmer and Johnston (2009, p.150) who refer in grand sweep to the ‘dangerous effect(s) oninternational resource companies’ of ‘revolutionary’ resourcenationalism, mentioning as examples Venezuela, Russia, andBolivia, but conveniently omitting the less-readily discreditedNorway. The same authors ‘warn’ that ‘ownership of prized assetsmay be wrenched away through forced negotiation..., usingperceived historical injustice or alleged environmental orcontractual misdeeds by the companies as justification.’ Anyonenot afflicted with power’s (or its servant’s) convenient sense ofhistorical amnesia (Chomsky, 2009) or selective attention andrecall will of course wince or grit their teeth at such remarks. ‘Revolutionary’ resource nationalism is contrasted unfavourablyby Bremmer and Johnston (2009, p. 151) with the corporate-friendly ‘economic’ variety, which dutifully steers clear ofquestions of project ownership, concentrating instead on a‘rebalancing’ of benefits. Unsurprisingly, Mongolia is praised(or patronised and flattered to deceive) for realising that‘without the deep pockets and technology of the miningmultinationals, the Oyu Tolgoi riches would likely remain in theground.’ The account given of ‘soft’ resource nationalism, itsmildest form, is just as revealing of allegiances and attitudes.Described as being ‘rampant’ in the OECD countries, it at least‘avoids tearing up existing contracts and using arbitrarytactics’ (Bremmer & Johnston, 2009, p. 152). To have theirdesired effects, such observations must clearly rely either onhost-government insecurity and ignorance or indoctrination orhost-country elite connivance or some combination thereof.Drawing on such literature, the second form of backgroundresistance comprises corporate-controlled media, which faithfullyamplify the alarms. Their importance as agents of control inMongolia is signified by the facts that, first, for its smallpopulation (about 2.8 million), Mongolia has an unusually largenumber of media outlets (550+); and, second, as in India (Roy,2012), political party and corporate influence or outrightownership dominate (Redl & Nielsen, 2006).

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A third form of background resistance arises from the Mongolianintelligentsia, the younger generations of which (since 1990) intheir education abroad have been indoctrinated to conceive ofdevelopment exclusively in neoliberal terms (Chomsky, 2012b),views that now predominate in the Democratic Party majority ingovernment.This panoply of resistance, this dense cloud of opposition, inthis case proved impossible to evade and difficult to counteract.Although the strength, sophistication, and acrimony of thedifferent elements can be expected to vary according to acountry’s natural resource profile and other local circumstances,such resistance and opposition is likely to be encountered in allresource-rich developing countries. In these conditions, thetiniest pinprick of real or imagined challenge to corporateinterests is unlikely to escape notice or avoid retribution. Thetheatre of opposition choreographs by dint of a combination ofcorporate and donor-supplied material inducement, institutionalthreat, and the binding strength of the ruling neoliberalparadigm and of ‘normal science’ (Kuhn, 1970). Accordingly,without conscious arrangement between them, such – bullied,bought, (Roy, 2004b) or merely indoctrinated - ‘prisoners of theparadigm’ (Blunt, 1997) can mount attacks from different angleseither in concert or opportunistically, thereby weakeningchallenge significantly or extinguishing it altogether. The wayin which the policy proposals outlined in this case weresystematically whittled away and the manifold pressures to desistthat were brought to bear on policy proponents and theirsupporters are evidence of this. Our discussion of ‘economic’ and ‘soft’ resource nationalismsuggests that they are formations in an orderly corporate retreatin the face of a global offensive towards more fundamental formsof resource nationalism, a retreat that attempts simply to decantthe old wine of mining industry business as usual into newbottles. The plausibility of this interpretation is strengthenedby the fact that it is nearly impossible to tell whether underthe milder forms of resource nationalism host-country governmentsare getting a better deal than they did before. This is becausethe detection of legislative or contractual breach and, if

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detected, the proper application of legal sanctions are alwaysproblematic and are subject to informal influence. As Mossman(2014) points out, transparency in mining does not necessarilyensure accountability (both sides of the equation areproblematic), perhaps suggesting that when it comes to misleadingand deceptive conduct mining corporations and complicitgovernments have few peers in what has become a highlycompetitive neoliberal-sponsored race to the bottom (e.g.,Loewenstein, 2013). Kazakhstan’s version of resource nationalism recognises this asit pays close attention to tax evasion, particularly transferpricing. The gravity of the problem is conveyed by the fact thatKazakhstan’s Ministry of Finance has accused more than 100extractive corporations of having used this device. Legislationin Kazakhstan therefore specifically prohibits transfer pricingand imposes heavy penalties for transgressors (Kennedy &Nurmakov, 2010). There is good reason to suppose thatKazakhstan’s experience in this regard is representative of whatobtains in other resource-rich developing countries, includingMongolia.The events recounted in this case and our analysis of ‘economic’and ‘soft’ resource nationalism suggest that a successful defenceof the commons and of mineral resources – in Mongolia andelsewhere - is unlikely without a complete paradigm shift thatentails rejection of fundamental aspects of neoliberalism, alongthe lines of countries like Venezuela, Bolivia, Russia, andNorway and, to some degree, Kazakhstan. Norway, for example,‘wishes to ensure national ownership and control of the country’sextensive natural resources...State ownership of Statkraft(hydroelectric power) and Statskog (forestry) helps ensure thatsuch resources are exploited for the common good. Partialprivatisation of these companies is… out of the question’(Norwegian Ministry of Trade and Industry, 2011). Accordingly, ofthe variants outlined above, a form that draws on ‘revolutionary’and ‘legacy’ resource nationalism seems to us to have the bestfit and to hold the brightest prospects for rural communities inMongolia and for the Mongolian state.

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We say ‘legacy’ because, first, like Mexico and Kuwait, whichBremmer and Johnston (2009, p. 151) use to define this category,polls suggest that public opposition to foreign ownership ‘runsdeep’ and wide in Mongolia; and because, second, resourceownership is ‘central to national political and culturalidentity’. Mongolia is also unusually ethnically homogeneous(more than 90% Mongol) and Mongolians are indigenous to theirland. Indeed, one might say that in Mongolia, as in countrieslike India, Brazil, Ecuador, Papua New Guinea and Bolivia, ‘theminerals, the environment, and the indigenous people are allstacked up, one on top of the other’ (Roy, 2012). Everywhere it is indigenous peoples who are taking the lead inconfronting the crisis of the commons, in resisting ‘the landgrabber’s charter’ known as the tragedy of the commons (Pearce,2012). It is they who are fighting the hardest to uphold theCharter of the Forests, as in Bolivia, which ‘has taken thestrongest stand’ (Chomsky, 2012). This might explain why, inMongolia, despite the strength and pervasiveness ofneoliberalism’s grip, the natives continue (perversely) to berestless. Within parliament and among the general populationthere is significant support for the renegotiation of the OTagreement, (perhaps unknowingly) following precedents set bycountries like Norway and the UK (Murrell, 2013). Growingassertiveness from the Mongolian side is evident in theprotracted negotiations concerning costs, benefits, andenvironmental protections surrounding the development ofunderground mining at OT. These negotiations have lasted for muchlonger than expected and will extend well into 2014. And, as wehave said, the polls clearly show that ordinary people arestrongly in favour of Mongolian majority ownership of itsminerals. Our own position on this is clear. Like Murrell (2013),we take the view that ‘a Mongolian negotiator would be lettingdown his side if he silenced the resource nationalists who arenow stirring the pot.’ We can but hope that these sentiments areexpressed just as or more strongly in defence of the pastoralcommons in Mongolia and that the policy developments discussed inthis case, and the debate surrounding them, may serve toencourage both ambitions.

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