What is Harper’s ‘real interest’ in Mongolia?

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John Baird was given a ceremonial welcome in Ulan Bator, and invited to try a bow-and-arrow at a festival in the Jargalant Valley. The Foreign Affairs Minister is on a trip to Asia, visiting big powers China and Japan. But last week, his first stop was in a sparsely populated nation of three million.

Stephen Harper's government is taking a particular interest in, of all places, Mongolia. Why?

Mongolia's Foreign Minister, Luvsanvandan Bold, called Canada an important part of his country's foreign policy. Canada just put Mongolia, a middle-income country, on its list of "countries of focus" for foreign aid.

Yes, there's potential mining trade. But there's also an invitation that the Harper government finds alluring: to help a little democracy maintain its independence from its two authoritarian neighbours, Vladimir Putin's Russia and the People's Republic of China.

"The Prime Minister has taken a real interest in Mongolia," Mr. Baird said in a telephone interview.

Mr. Harper long ago turned from strident China critic to pragmatic trader with a rising economic power, but he still views its global influence darkly. And Mr. Harper has been a vocal critic of Mr. Putin's actions in Ukraine: He's called the Russian President a "throwback" to the Soviet Union.

Mongolia was once under Soviet sway, and it's wary of being pulled back into the orbit of either of its two powerful neighbours. So it's actively trying to show Moscow and Beijing it has a group of other friends in middle powers like South Korea, or Germany – and Canada. They call it a "third neighbour policy."

Mongolia was a Soviet satellite until 1990, and current President, Tsakhiagiin Elbegdorj, was a leader of the pro-democracy movement of that era. But there's still a legacy of deep Russian ties.

The influence of its other powerful neighbour, China, has grown, too. It is Mongolia's largest trading partner. Beijing is interested in Mongolia's resources, and Mongolia wants investment capital. But they also want to guard their independence, and that appeals to the Harper Conservatives in Ottawa.

"We've seen a country about the size of Quebec, in terms of geographic area, but with a smaller population, really make extraordinary progress in terms of democracy and open markets, in a pretty challenging part of the world," Mr. Baird said.

Suddenly, Canada is making Mongolia a higher priority for foreign aid. That's not because it's one of the world's poorest countries. Mongolia's per-capita GDP is higher than that of Morocco, or Indonesia, or the Philippines. The Conservatives have made the country an aid priority – funding projects to improve governance – to further Canadian mining interests and to provide political support to a government it admires in Ulan Bator.

That is itself a controversial change under Mr. Harper: overtly using foreign aid to serve political and commercial goals. Mongolia is a prime example.

Canada's mining interests in Mongolia used to be more pointed. The giant Oyu Tolgoi mine, expected to account for a quarter of Mongolia's GDP when it is in full production, was once owned by Canada's Ivanhoe Mines, but control of the mine has since been sold to international mining firm Rio Tinto.

But there are other Canadian miners active in Mongolia, or looking at projects, and they're still concerned by the kinds of issues that have delayed the Oyu Tolgoi mine.

Mongolia set demanding conditions for mine exploitation when copper prices were high, which were aimed at steering a bigger portion of mining revenues to the government. But prices have fallen, and foreign investors have balked at going ahead with projects unless the government reconsiders the terms. And Canada is also pressing for an investment-protection agreement to provide legal assurance for investors.

All that is part of the hard-interest motivation for the Canadian government. But the high-level political interest in Ottawa wouldn't have followed if Mr. Harper and his Conservatives didn't see a post Cold War cause themselves – helping a little democracy surrounded by Russia and China.

Of course, Mongolia isn't the main avenue of Canada's foreign policy. It's a side road. But it's one chosen by Mr. Harper – and it provides a glimpse of where he likes to go when he has his druthers.