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Mongolia's uncertain future

MONGOLIA IS A country of extremes. Landlocked between its two former colonial rulers in a landmass some three times the size of France live just 2.6 million people. A dwindling, ageing one-third of the population ekes out an increasingly precarious living as nomadic herdsmen on Mongolia's vast steppe facing up to the world's widest extremes of temperature.

Another third - a group that is rapidly increasing - seeks a marginally better life in Mongolia's capital, Ulaanbaatar, whose infrastructure creaks as it takes the demographic strain. With unemployment doubled since 2000, an economy of just $1 billion and external foreign debt of at least the same amount, Mongolia faces an uncertain future.

"Mongolia was the second to join the communist system and the first to leave," says Pete Morrow, CEO of local commercial bank Ag Bank. "Democracy has come fast but a free market is going to take longer."

The government has not stood idly by. Its state property committee, for example, has been busy privatizing state assets. First to go were the two largest banks, Trade Development Bank (TDB) and Ag Bank. Last month, oil and gas distributor NIC was successfully sold. Mongolians are not xenophobic: controlling stakes were sold to foreign buyers.

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