July 1, 2011 on:

Is Russia blackmailing Mongolia?

It is now over a month since the Diesel shortages have started in Mongolia, Russia claims that those shortages are due to their own supply problems and that this cannot be helped. There seems to be no other proof or indication of why Russia would be having diesel shortages as production has remained unchanged and no new demand has come up. On the other side it also seems a bizarre coincidence that this fuel shortage comes as the Mongolian Parliament is set to announce the winners of the Tavan Tolgoi bid and Roscoft is negotiating a deal to install a 100 fuel station across the Mongolian territory. At the time when Diesel shortages have started to appear across Mongolia, the Mongolian Government has assured the people that shortages will not impact the supply of A-92 Fuel across the country yet we have recently seen signs that supply of A-92 Fuel has started being constrained. Limited fuel vouchers for the fuel were being issued yesterday while some petrol stations now only serve regular customers who carry loyalty cards and do not accept new customers. Further to this, a black market supply of fuel has started on street side stands where people are now selling bottles of petrol and diesel for a 50% margin on normal fuel prices. The ministry of transport has warned that the supply of fuel might be unstable up to next September. As a background to this situation, Russia has yet again pulled out its trump card of supposed "unpaid debts" remaining from the subsidies Mongolia received during the Soviet days. Mongolia denies the debt or rather the enormous size of it but it is still a strong argument in favour of Russia. The question of course on every one's mind is "will the Mongolian government cave in and be subjected to Russia's blackmail or will they be able to retain the upper hand.


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