Battle for Mongolia's soul

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SOUTH of the great bend of the Yellow River a newly built four-lane expressway cuts through the scrub-covered semi-desert of the Ordos plateau. It is a bleak landscape. Overgrazing, intensive farming and the ravages of mining have taken their toll. Legend has it that Genghis Khan stopped to admire the area's lush grasslands and herds of deer as he and his warriors passed through on a mission of conquest eight centuries ago. If today he were to follow the signs to his mausoleum, just off the motorway, he would not be so impressed.

Members of a Mongolian tribe said to have been appointed by Genghis to take on the hereditary task of guarding his mementoes are certainly not pleased with what is happening on their ancestral land near Highway 210. The few hundred Darkhats, as they are known, are among some 4m Mongols living in Inner Mongolia, a province of China. The Mongols are vastly outnumbered by ethnic Han Chinese who, encouraged by the communist leadership, have migrated to Inner Mongolia in recent decades to work in factories and turn pastureland into farms. The Darkhats are happy enough that the new motorway brings more free-spending tourists to the mausoleum. What they resent is that much of their land has now been appropriated by the local government for the development of a Genghis Khan theme park next to it. To add insult to injury, they say, a Han Chinese businessman is running it.

China's economic boom is spreading wealth into parts of the country that until a few years ago were impoverished backwaters. Thanks to soaring demand for its natural resources, Inner Mongolia is notching up faster economic growth than any other region of China: nearly 22% in 2005 (albeit from a low base). The rush to exploit coal and natural gas reserves around Ordos City, about 60km (40 miles) north of the mausoleum, is turning it into a boomtown of lavish hotels and restaurants and grandiose new government buildings.

Where there is money in China, theme parks are often quick to follow. The Genghis Khan theme park is run by the Donglian Group, a privately owned conglomerate of construction, property and education businesses based in Ordos City. With the help of the city government it acquired 80 sq km (31 square miles) of land for its project. On this it has built a luxury hotel, including a vast banqueting hall in the shape of a round Mongolian felt tent, or ger, where visitors can watch a song-and-dance re-enactment of Genghis's life over a meal. The theme park itself includes what is described as the world's largest Genghis Khan museum (though with pitifully few exhibits), surrounded by hundreds of giant cast-iron figures of warriors on horseback and their camp-followers.

Local Darkhats complain they have been ill-compensated for the loss of their land. They are particularly incensed by tourists being diverted to the theme park, which obscures the mausoleum in a separate enclosure behind it. Many Darkhats earn their money as mausoleum guards or selling horse rides or trinkets to tourists. They say a road built by the Donglian Group linking up the two sites has covered a sacred spot where the mausoleum once stood before the communist government built a much grander one on the present site in 1956.

Across the border in Mongolia, the plight of the Darkhats is being noted. Mongolia itself was ruled by China for some 200 years until the early 20th century. After declaring its independence in 1921 it fell under the control of the Soviet Union. But despite the brutal purges that followed, Mongolians often quip that the Soviets' grip at least helped them preserve their independence from China and avoid the fate of Chinese-ruled Inner Mongolia or Tibet. Now, with the Soviets gone, many Mongolians watch China's growing economic might with concern. Though China brings badly needed money to their tattered economy, some are beginning to fear that Mongolia might eventually go the way of Inner Mongolia, the only difference being that instead of swallowing Mongolia, China will in effect rule it by controlling its economy.

The symbol of stirring nationalism in Mongolia is Genghis Khan. This year the impoverished country has poured millions of dollars into celebrating the 800th anniversary of Genghis's unification of the Mongol tribes into a single state which became the biggest empire the world has ever known, stretching from Beijing to the Balkans. Under the Soviets, commemoration of Genghis was taboo because it reminded Russians of the humiliation of living under the Mongol yoke. But now the government, led by Mongolia's former communist party, is sponsoring a cult of Genghis, elevating him to the near-divine.

From cigarette packets and vodka bottles to bank notes and the capital's recently named Chinggis Khaan (the usual spelling of his name in Mongolia) Airport, Genghis's benign-looking image is everywhere. An equestrian statue of him is being constructed in front of the parliament building in central Ulan Bator. His face in chalk looks down on the city from a hillside. He is rarely portrayed as the bloodthirsty slaughterer of Western imagination. Genghis, say Mongolians, was a bringer of peace who encouraged trade and the flow of wealth, technology and ideas across vastly different cultures. Indeed, he all but invented globalisation.

In a country of only 2.7m people scattered over an area four times the size of Germany, national heroes are few and far between. This makes it all the more galling that Genghis is claimed by China too. Unlike the Russians, the Chinese have got round their subjugation by the Mongols by insisting he was one of their own. Genghis's grandson, Kublai Khan, founded China's Yuan dynasty in the 13th century. That, in China's view, makes Genghis himself an honorary Chinese emperor. China's Mongols are one of the country's 56 officially recognised ethnic groups, which in theory at least makes them just as Chinese as the ethnic Hans who constitute 93% of the population.

Don't mention the bloody conquests

China has been feeling a little uneasy about Mongolia's anniversary celebrations. If Genghis Khan's bloody conquests have been somewhat sanitised for public consumption in Mongolia itself, they have been all but eradicated from Chinese histories. He is glorified for uniting China, but his armies' forays as far as the Rhine and his butchery of Muslims are never mentioned. The Chinese government worries that recalling such episodes might reinforce Western fears of a resurgent China and its military potential and undermine its cosy relations with the Islamic world.

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For all China's professed admiration of Genghis, little official attention has been paid to this year's anniversary. Zhu Yaoting, a Beijing academic who wrote a biography of Genghis published in 2004, says his book was the first popular history in communist China to provide more than cursory details of Genghis's Western expeditions. But a screenplay he wrote for a television series about Genghis's life had trouble getting past the censors. The 30-episode production, which cost nearly $10m to make in 2001, was not cleared for broadcast on state television until three years later. The censors insisted on substantial cuts to avoid references to conquered regions with which modern countries might associate themselves. In Mongolia, however, an uncut Mongolian-language version of the series played this year to an enthusiastic audience.

With the approach of the Genghis Khan anniversary “deep historical animosities” were being exposed

In the city of Darkhan, a grim place next to Mongolia's north-south railway line some 220km north of Ulan Bator, a golden bust of Genghis peers from a cabinet in the quiet office of the deputy director of the Darkhan Metallurgical Plant. Things in Mongolia's only steel plant get busier at night-time when more power is available and the plant operates at full tilt. And if the deputy director's dreams come true, they should get much busier still when the plant starts making steel from iron ore instead of diminishing piles of rusting Soviet-era scrap.

Darkhan has been a battleground for the nationalists, who fret that foreigners are taking control of the country's mineral wealth and shipping it out of the country with little benefit to Mongolians themselves. In recent years multinationals have poured into Mongolia to extract everything from coal to gold, copper and iron ore. The mining business accounts for most of the country's reasonably healthy-looking annual growth rate of 6-7% in the past three years. The streets of Ulan Bator, desolate at the time when communism collapsed 15 years ago, are now clogged with cars, including many luxury four-wheel drives. A large settlement of squalid shanties and gers has sprung up on the city's edge as former herders flock to Ulan Bator in search of a share in this prosperity.

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Worryingly for the nationalists, it is largely demand from China that is fuelling this boom. The Russian, Canadian, Australian and American companies digging up minerals in Mongolia see profits to be made not in their own markets but from selling to the Chinese. In April this year hundreds of nationalists staged a series of protests in Ulan Bator against the planned exploitation of large copper and gold deposits by Ivanhoe Mines, a Canadian company. The demonstrators attacked what they saw as foreign domination of Mongolia's resources.

To the horror of the multinationals, the government capitulated. A windfall tax was imposed in May on profits from gold and copper extraction when prices reach specified levels. Under a hastily introduced new law the government is entitled to own 34% of privately discovered deposits of “strategic” minerals (a vaguely defined term).

Whose ore is it?

Chinese companies are not yet big direct investors in Mongolia's mining business. Among the largest confirmed Chinese investments is a 51% stake in a zinc mine in south-eastern Mongolia, valued at $38m in 2004. But their interest is growing fast. Deep in the rolling hills north of Darkhan is a potentially much bigger project (though still much smaller than Ivanhoe's). At the Tumurtei iron-ore deposit, Chinese workers have been digging out rock and sending it to China in dozens of trucks a day for the past couple of years, say locals; mainly to Baogang, China's largest iron and steel company.

Tumurtei is thought to be one of Mongolia's biggest iron-ore deposits. But to the consternation of nationalist politicians, the state in the late 1990s granted exploitation rights to a consortium of Mongolian and Chinese companies, assisted by a $12.5m preferential loan from the Chinese government. Your correspondent was forbidden access to the mine. But a Chinese manager at the remote site says the Chinese employees get on well with the locals, despite language difficulties. “Mongolia used to be part of China, so they think a bit like us,” he says.

There has hardly been a meeting of minds on the Tumurtei deposit. Activists in Darkhan alleged the mining licence had been sold to the Chinese-Mongolian consortium illegally by an official at the metallurgical plant that had originally owned the exploitation rights. They accused the consortium of harming Mongolia's processing industry by sending the ore to China for refining. But then Mongolia has no facilities for processing iron ore. However, Darkhan's state-owned steel plant was trying to attract investment for a $1 billion upgrade to allow it to handle ore and end its dependence on dwindling scrap.

The Chinese had seen the trouble coming. An article on the Chinese commerce ministry's website—subsequently removed—noted that with the approach of the Genghis Khan anniversary “deep historical animosities” were being exposed. The potential fallout for the iron-ore mine was “not to be underestimated”. In late August, the Mongolian government agreed that the mining licence had been sold illegally and declared it owned the deposit. But it lacks the money to explore and exploit its minerals by itself.

The Mongolian government has already suffered the downsides of economic nationalism. By law, all gold output is supposed to be sold to the Bank of Mongolia, the central bank. This year the amount sold has fallen by half even though production has continued to rise, says the central bank's former governor, Ochirbat Chuluunbat. He blames a windfall tax that has encouraged small producers to sell gold on the black market rather than to the bank. Most black-market gold is smuggled across the 4,677km border with China. Taxes have also done little for Mongolia's cashmere industry, once one of the country's biggest export earners, which has been severely damaged by cheaper competition from China.

Nationalists may worry about China, but it helps to keep many Mongolians in work. South of Darkhan some of the country's many thousands of unlicensed prospectors tunnel for gold (for sale through black-market middlemen to China) in the hills. They are called ninja miners, after the green plastic bowls they carry on their backs in which they sift crushed rock for specks of the metal. Dozens of them live in gers next to the narrow shafts they have dug deep into the hillside. They stoically deny that anyone has been hurt while digging, or that anyone has fallen sick from the mercury-laden chemicals used to separate gold from ore in a makeshift processor nearby. But the Mongolian media report frequent deaths and injuries, suggesting that this is dangerous work. Still, even Mr Chuluunbat says the government “should be thankful” for the employment created by the ninja mining. Despite its various drawbacks, trying to ban it would be “a very bad solution”.

Close to the Tumurtei iron mine, some locals complain that the facility has provided few job opportunities. Just as Ulan Bator's construction boom has provided employment for many labourers from China (who are said to be less costly and more disciplined than Mongolians), many of the workers in the mine are Chinese. But in the county capital, Huder, residents are grateful for any jobs available. Communist-era buildings that used to house workers at an animal-feed factory, now abandoned, lie ruined and gutted. A Chinese entrepreneur who last year set up a small factory in Huder to turn the local birch trees into chopsticks (for export via China to Japan) provides welcome employment. The county chief says he is sad about the loss of the trees for the chopsticks, but they may get a reprieve. The businessman, Lan Taochang, says making a profit in Mongolia is so tough that he may pull out soon.

For all Mongolia's nationalism, the government remains acutely aware of the dangers of upsetting its powerful southern neighbour. Officials studiously avoid criticism of China, which provides vital port facilities for Mongolia's exports.

This year Mongolia allowed the Dalai Lama to visit for the first time in four years. (Mongolia's main religion before the Soviet-backed government all but stamped it out was Tibetan Buddhism, which is now making a tentative recovery.) But in deference to the feelings of the Chinese government, which objects to any overseas trips by the Dalai Lama, the invitation was issued by Ulan Bator's main Buddhist monastery, and news of the impending visit was kept secret until shortly before the eminent guest arrived.

Genghis, say Mongolians, all but invented globalisation

In order to avoid falling under the sway of either Russia or, particularly, China, Mongolia pursues what it calls a “third neighbour” policy. This involves remaining on good terms with its giant neighbours but also reaching out to countries such as America and Japan (Mongolia's biggest aid donor). America has been delighted by Mongolia's support for its military operations in Iraq, including the dispatch of some 200 support troops. This is the first time Mongolian troops have been stationed in Iraq since Genghis's grandson, Hulagu, conquered Baghdad.

That engagement, too, has provided some Mongolians with a frisson of national pride. A Mongolian general, given warning by an American counterpart of the dangers of operating in Baghdad, is said to have quipped: “I know. We've been here before.” When it comes to their country's relations with a resurgent China, however, Mongolians have no interest in seeing history repeated.