Mongolia and the United States: A Diplomatic History

Chapter 4: Partnering on Development

“WithoutUSAIDandassistancefromAmericancompaniesintheenergy sector, they simply would not have survived the winter of 1992–93 with an operating heating system.” The United States Agency for International Development (USAID) launched its first program in Mongolia in November 1991, almost five years after the official opening of bilateral relations between the two countries. More than two decades later, US assistance programs continue to promote useful partnerships between the United States and Mongolia, as rapid expansion in the country’s mining sector is dramatically changing Mongolia’s economic prospects for the future. During the period 1991 through 2011, the total USAID grant funding to Mongolia exceeded $220 million, with approximately half of this amount for economic growth. A further $31 million has been targeted on democracy and good governance. Additional funding allocations include $48 million for emergency energy assistance during the 1990s and $5 million on emergency food and disaster assistance, primarily in the 1990s. Apart from emergency relief, specific areas of USAID interest over the years have included small business development , financial sector reform, rural development, and environmental concerns. Cash transfers have figured into the aid equation only rarely, although USAID did provide $10 million directly to Mongolia in 1991, when the country was struggling with the sudden cutting off of Soviet aid. It also provided another $10 million cash grant in 2009, following the global financial crisis. Remaining USAID grant allocations to Mongolia have largely been allocated on a project basis and have covered a number of areas, including several environmental activities. Chapter 4 Partnering on Development 62 Mongolia and the United States Overall USAID funding levels to Mongolia over the past two decades have been relatively modest, averaging around $10 million annually, lower than that of other bilateral donors such as Japan and Germany during that same period and much lower than that of international financial institutions such as the World Bank, Asian Development Bank, and European Bank for Reconstruction and Development (EBRD). Focused assistance combined with good relations with key partners have assured a significant impact in some sectors. In addition, other US departments and agencies have forged effective partnerships with Mongolian individuals and institutions over the years—starting with the US Department of Agriculture (USDA), but also including the Departments of Treasury, Energy, Interior, and Labor, the National Science Foundation (NSF), and the National Institutes of Health (NIH). In particular, USDA programs have funded research and supported rural development, while Treasury programs provide technical advice to major Mongolian institutions such as the Ministry of Finance and Central Bank. The NSF and NIH support partnerships of Mongolians and Americans that aim to research and better understand a variety of health and environmental concerns. In December 2010, Colorado State University received a $1.5 million NSF grant to study the impact of climate change on Mongolian pastoralists. The launch of a Millennium Challenge Corporation (MCC) program in Mongolia in September 2008 more than doubled US assistance levels to Mongolia while also introducing new approaches that have further strengthened the US-Mongolian development partnership. The MCC is itself an innovative concept, developed to support countries that have demonstrated a commitment in three essential areas—market-led economic growth, good governance, and investments in people. As one of the first countries to qualify for MCC funding worldwide, Mongolia effectively demonstrated its performance and commitment in all three areas. At this point, the MCC program in Mongolia is valued at $285 million in grant funds over five years and is scheduled to conclude in September 2013. * * * * * * * In the beginning, USAID programs in Mongolia concentrated largely on shortterm emergency relief, while also providing modest assistance to help build Partnering on Development 63 and strengthen democracy. Launched against a backdrop of economic collapse and uncertainty following the withdrawal almost overnight of Soviet assistance during the early 1990s, the intent was simply to provide the supplies and equipment needed to keep major power plants running and buy critically needed materials, equipment, and supplies. The initial USAID effort during late 1991 and early 1992 reflected this focus and consisted of a $10 million cash transfer and $2 million in equipment and training.Thenextyear’sprogramretainedasimilarfocus,stressingtheemergency response needed to shore up Mongolia’s rapidly decaying energy infrastructure. By 1998, USAID had provided nearly $50 million in supplies, equipment, and technical assistance to strengthen and sustain Mongolia’s crucially important power plants. Other early programs emphasized health and emergency food supplies , including funding to buy 30,000 metric tons...