India in China's Backyard: Part II

India’s trip last month to northeast Asia focused on solidifying partnerships with South Korea and Mongolia. While in South Korea, Indian President Pratibha Patil agreed to strengthen New Delhi’s relations with Seoul on civil nuclear trade, defense and people-to-people ties. The second part of the trip centered on building up India’s growing relationship with Mongolia.

Over the past several decades, Indo-Mongolian relations have been consistent if not robust. One of the recent high watermarks of the bilateral relationship came in 2005, when Mongolia formally offered its support to New Delhi’s bid to be included as a permanent member of the United Nations Security Council. India reciprocated with the provision of considerable amounts of foreign development assistance and a series of diplomatic visits.

While the most recent overture from the Indian government was sprinkled with soft undertones, it was fundamentally grounded around real objectives in the areas of energy security, trade and defense cooperation. New Delhi continues to be hungry for new energy sources and this was one of the main themes of discussion between the two sides in Ulan Bator. Patil and Mongolian President Tsakhia Elbegdorj agreed to bolster bilateral energy relations in the nuclear energy and mining sectors by looking at new opportunities for investment and cooperation.

This builds on a joint statement in 2010 in which both countries agreed to “operationalize” civil nuclear cooperation and look at potential joint ventures in the uranium mining sector. While the India-Mongolian pact lacks the scope and commitment of the agreement earlier last month with South Korea, it nonetheless demonstrates that New Delhi is determined not to be left behind competitors in Mongolia’s nascent uranium market.

Patil and Elbegdorj also agreed to strengthen defense ties between their two countries through the signing of a bilateral defense cooperation agreement. The pact is not overly comprehensive though as Mongolia remains cautious about getting too cozy with India on defense issues. India however seems keen to enhance defense ties even more and Patil noted this to the Mongolian press. The rationale behind this is simple - New Delhi believes that it will be more competitive in the mining and trade sectors if it diversifies its engagement with Mongolia in order to morph from investor to strategic partner.

India has done its research and recognizes the potential benefits of investing in the Mongolian market. According to figures from the World Bank, the Mongolian economy is set to grow by 22.9 percent in 2013, making it not only the fastest growing economy in Asia, but the entire world. Patil noted that such predictions are “staggering” and that the Indian government and business community “must take due notice.” Of primary interest to India is Mongolia's mineral sector, including significant reserves of coal, copper, gold and uranium.

Patil sweetened this package of agreements by committing to invest approximately $20 million USD towards the set up of an India-Mongolia Joint Information Technology, Education and Outsourcing Center based in Ulan Bator. India also expressed its desire to improve the connectivity of the two nations through media exchanges, people-to-people ties, student exchanges and increased tourism.

These soft power overtures can be expected to help India develop its relations with a rising energy power in Central Asia and lend influence in a region led by Chinese investment and influence. Moral of the story: while China looks west, India looks east.

(Jonathan Berkshire Miller has worked a specialist for the Canadian government in foreign affairs, security and defense. He has also worked with private think tanks researching international nuclear issues. The views expressed are his own.)