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Global Economics

Charlie Rose Talks to Mongolia's Prime Minister

What do you expect Mongolia's growth rate to be over the next five years?
Despite losses in agriculture—we had a very hard winter and lost almost one-fifth of our [livestock]—we're still anticipating almost 8 percent GDP growth this year. And according to World Bank and IMF estimates, for the next five years we are expected to have growth above 10 percent per annum.

I just interviewed the President of Chile. Its largest market isChina—especially for copper. Give us a sense of what the market is for minerals in Mongolia.
We are already the No. 4 exporter of coal to China. We are a quite serious exporter of copper to China, and with our copper and gold project with Rio Tinto (RTP), we would easily double and triple [copper] exports to China. There is huge potential. On top of that, we have new commodities to export to China—iron ore, zinc—and we do have some prospects for oil and gas and important reserves of uranium. But we are a landlocked country...and transit costs equal almost 10 percent of GDP. So with encouragement from my government, we are [looking beyond the export of raw materials] to adding value in processing and putting more priority on industrialization, which will create jobs.

Are you entertaining the idea of nuclear power?
Not at this moment, but we are working closely with France, the U.S., Japan, Russia, and China, because we have so many reserves of uranium. We have lots of other sources of energy. Mongolia is, interestingly enough, the world's richest wind tunnel.

So wind power could be a huge?
Wind power could be a major opportunity for Mongolia and for export to China.

You're opening a national bourse that I think will be managed by the London Stock Exchange.
It's not decided yet...but the London Exchange is one of the strong candidates because it is a mining-specialized exchange. That decision will be made by an independent board.

Here's what I hear you saying. You have a country the size of Western Europe, a small population, lots of mineral resources, a developing market system, and predicted double-digit growth in GDP. What's the problem?
The big problem is: How do we manage this wealth? We have about 4 or 5 percent unemployment. That is the official number, but a substantial segment of the population is not registered yet. And the poverty level is above 35 percent. So we need to channel this wealth to combat poverty.

And eliminate the possibility of social tension?

What's the economic model? Is it more like the U.S. or China? Or is it some hybrid?
After 20 years of transition, we're trying to define which would be the best model for us. And we have seen the Chilean model, because Chile is a mining country. We are looking now at Canada and what it has achieved because although there are big differences in development and other things, there are a lot of natural similarities between Mongolia and Canada. We're cold countries with vast territories, smaller populations relatively, and mining and agriculture are key. And we're next door to major neighbors like the U.S., China, and Russia.

Do you have influence with North Korea?
To say influence is a little difficult. What we have are very good relations. We have an embassy in Pyongyang; they have one in Ulan Bator. We have cultural-exchange events on a continuing basis. And we even have economic and trade commissions that work together. We try to keep this channel warm.

Do you have any national security concerns?
We do have a standing army in a certain limited way. But we do not have major political and territorial problems with our neighbors, China and Russia.

So when you're not running the country, what's the most fun thing to do in Mongolia?
For me, the fun is probably sports. I like playing basketball and tennis. The fantastic thing is to go out to the countryside and see how beautiful my country is, how different the landscape is because it's a vast land. This is one of the most untapped and wildest countries in terms of nature. On top of that, we still maintain the traditions of our nomadic culture.

Any golf courses over there?
Yes, we have one.

Watch Charlie Rose on Bloomberg TV weeknights at 8 p.m. and 10 p.m.

Emmy Award-winning journalist Charlie Rose is the host of Charlie Rose, the nightly PBS program.

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