Monthly Archives: June 2014

Russian Tank Probe in Ukraine Confirmed with US Official

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Journal of Political Risk, Vol. 2, No. 6, June 2014.
Anders Corr, Ph.D.
Publisher of the Journal of Political Risk
T-72 Tank reportedly destroyed by Ukrainian forces in Snizhne, Ukraine, June 12, 2014. Source: Twitter.

T-72 Tank reportedly destroyed by Ukrainian forces in Snizhne, Ukraine, June 12, 2014. Source: Twitter.

The Ukrainian Interior Minister, Arsen Avakov, accused Russia of allowing three tanks on June 12 to cross  from Russia to Ukraine at a rebel-controlled border crossing. The Journal of Political Risk confirmed a tank movement from Russia to Ukraine with a US official who wishes to remain anonymous.

The small tank column is likely a probe to assess the potential reaction of Ukraine and the West to a larger tank invasion that may be under consideration by the Russians. This comes after Russian troops pulsed the border on April 24 in an “exercise” that also served the military intelligence function of testing Ukrainian tactical reaction.
The Russian tank probe in Ukraine comes at a time when President Obama is showing less military restraint than a few months ago. In June he ordered resumption of drone attacks in Pakistan, and he has not removed the possibility of US air strikes in Iraq against Al Qaeda terrorists making territorial gains on the outskirts of Baghdad. With sagging approval ratings in part due to a public perception of weakness in international affairs, President Obama is likely to react to the Russian tank probe with greater rigor, including increased economic sanctions against Russia, and troop build-ups in Eastern Europe. This would put significant downward pressure on the Ruble and MICEX index of Russian stocks.
JPR Status: Report.

Nationalism, Pastoral Nomadism, and Political Risk to Natural Resource Investments in Mongolia: Case Studies of the Aluminum Corporation of China Limited (Chalco) and Rio Tinto

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Journal of Political Risk, Vol. 2, No. 6, June 2014.

From right to left, Shaft #1, #2, and #5 at Oyu Tolgoi, a copper mine in extreme southern Mongolia, 2013. Oyu Tolgoi, also known as Turquoise Hill is a combined open pit and underground mega mine project in Khanbogd in the south Gobi Desert. The site was discovered in 2001 and is being developed as a joint venture between Ivanhoe Mines, Rio Tinto and the Government of Mongolia. The mine is scheduled to begin production in July 2012. The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia’s history and is expected upon completion to account for more than 30% of the country’s gross domestic product. Copper production is expected to reach 450,000 tonnes annually and Gold production is estimated to reach 650,000 ounces per year. Source: Wikimedia Commons.

Jamian Ronca Spadavecchia [1]
Founder and President of Oxbow Advisory

Mongolia stands at a critical juncture between the rewards of natural resource development and the challenges of modernization. On the one hand, it offers abundant opportunities in the natural resources sector and is located near growing and resource-starved industrial nations of East Asia. At the same time, the presence of autocratic neighbors impose international instability on this democratic and market-oriented economy.

This article considers two underanalyzed political risks that are necessary for understanding the future of the Mongolian economy: nationalism and pastoral nomadism. In doing so, it proffers an improved analytical framework for resource investors to better assess and mitigate their Mongolia risk.

Finally, the analysis uses selected case studies to demonstrate how nationalism and pastoral nomadism might impact natural resource investment. For nationalism, a study of the proposed acquisition of SouthGobi Resources (SouthGobi) by the Aluminum Corporation of China Limited (Chalco) is offered. The Chalco study is emblematic of the link between nationalism and two dominant trends in Mongolia: resource nationalism and increasing geopolitical risk in the natural resources sector. The section also looks at how pastoral nomadism poses a risk to Oyu Tolgoi, Mongolia’s premier copper and gold mining project, by examining a dispute between Rio Tinto and indigenous communities of Gobi herders that threatened Oyu Tolgoi’s project financing. Continue reading →