- 10 Feb 2016 7:00 AM
Certainly not important enough to visit with an entourage of sixty or seventy people, including five cabinet ministers and about fifty businessmen. This was certainly the situation when the prime minister’s office announced on January 18 that Viktor Orbán would spend three days in Ulaanbaatar, Mongolia’s capital.
For Hungarians, Mongols will always be associated with the visit they paid to Hungary in 1241-1242, with devastating consequences. Their brief conquest of large parts of the kingdom is considered one of the many tragedies that have befallen Hungary over the centuries.
Otherwise, most Hungarians know little about the country, except perhaps that there are more horses than people in Mongolia.
This vast country has only three million inhabitants. Although 30% of the Mongols are still nomadic herders, in recent years the country’s extensive deposits of copper, coal, tin, tungsten, and gold have emerged as a driver of industrial production. Mining now contributes 22% to the GDP and agriculture only 16%. Yet Mongolia is a poor country where 22% of the population lives on less than $1.25 a day.
In 2011 GDP per capita was $3,100. Because of the boom in the mining sector, Mongolia had high growth rates in 2007 and 2008 (9.9% and 8.9%), but since then, with the world financial crisis and the commodity bust, its economy has slowed substantially. In 2015 GDP growth was only 2.3% and inflation was 8.9%. As for the future, analysts are not exactly sanguine.
They predict slower growth due to drought-affected harvests and tight monetary and fiscal policies. The country is riddled with corruption and graft is endemic. The judiciary is vulnerable to political interference. In brief, it is a country where Viktor Orbán would feel at home.
After the announcement of the impending visit of the prime minister to Mongolia, 444.hu reported that Viktor Orbán had signed an agreement for Hungary to lend $25 million to Mongolia through the state-owned Eximbank. The money will be spent on the reconstruction of the Songino Bio Kombinat, which apparently Hungarians built back in the socialist period.
The Bio Kombinat produces veterinary medicine, which is of vital importance to Mongolia’s livestock. This “financial assistance” package met with mixed emotions in Hungary. 444.hu wondered why Mongolia would need a loan from Hungary while others felt that this money could be used more profitably at home.
A quick look at Hungarian-Mongolian relations in the last couple of years indicates that the Orbán government has far-reaching economic plans as far as Mongolia is concerned. In October 2014 a Mongolian Cultural Institute was established at ELTE in Budapest, which was opened by President Tsakhiagiin Elbegdorj.
On January 1, 2015 Hungary reopened its embassy in the Mongolian capital, and in April President János Áder visited Ulaanbaatar. In May, after a visit of Péter Szijjártó to Mongolia, Magyar Hírlap triumphantly announced that “Mongolia will be Hungary’s new technological target country.”
On January 25 the large Hungarian delegation arrived at Genghis Khan Airport. The temperature, a bone-chilling -32C, didn’t prevent the usual military fanfare, part and parcel of a state visit, from taking place. After meeting with Prime Minister Chimedin Saikhanbileg, Orbán as usual was full of praise for both the host country and Hungary which, according to him, has been thriving in the last few years. In fact, it, along with other eastern European countries, is the engine of the European Union’s economic growth.
Both Mongolia and Hungary are successful countries which should join forces. “We have returned,” he said, referring to the earlier closing of the Hungarian embassy in Ulaanbaatar, because Hungary under his guidance has created an entirely new social and economic regime.
He specifically noted that 400 Mongolian students have studied in Hungary. I assume that this number includes those who spent time in Hungary during the socialist period. In turn, the Mongolian prime minister welcomed the reopening of the embassy, a gesture that shows that “Hungary considers bilateral relations with Mongolia important.” From his speech we learned that Hungary has doubled the number of scholarships to Mongolian college students, from 100 to 200.
On the surface, these conversations seem to have been dull, but we learned from Péter Szijjártó that Viktor Orbán and his foreign minister Péter Szijjártó wanted to achieve something more than expanding business opportunities in Mongolia.
They would like to use Mongolia as an intermediary between Russia and the European Union. While the two prime ministers talked about the economic successes of their countries and the advisability of cooperation, Szijjártó had a conversation with Foreign Minister Lundeg Purevsuren. After the meeting Szijjártó revealed that the two men had discussed the chances of “pragmatic cooperation” between Russia and the European Union. Mongolia could be a great help.
According to Szijjártó, it is in the interest of Europe to develop cooperation between the European Union and the Eurasian Economic Union. “The earlier concept of a free trade zone from Lisbon to Vladivostok was never more important than now.” Mongolia signed a partnership agreement with the European Union and is in the middle of negotiations with the Eurasian Economic Union (EAEU) for a similar partnership.
Therefore Szijjártó asked his Mongolian colleague to use his good offices between the EU and the AEEU. I consider this opening gambit by Szijjártó a naïve move leading nowhere.
As for the actual business deals, the results are meager. While Hungary lent $25 million to Mongolia, the Hungarians signed business ventures amounting to $40 million. But there were many future plans that may or may not materialize. Miháy Varga, minister of national economy, held conversations with the Mongolian finance and industrial ministers.
According to him, “decidedly good cooperation may develop in food processing, construction, transportation, alternative energy, and even in mining.” They specifically talked about selling Hungarian buses to Mongolia. Earlier attempts at increasing trade and business opportunities with other Central Asian countries brought no results. Perhaps Mongolia will be different, but I doubt it.
Source: Hungarian Spectrum
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