ULAN BATOR (Reuters) - A Mongolian neo-Nazi group has rebranded itself as an environmentalist organization fighting pollution by foreign-owned mines, seeking legitimacy as it sends Swastika-wearing members to check mining permits.

Ariunbold Altankhuum, founder of Mongolian neo-Nazi group Tsagaan Khass, stands next to a statue of Chingunjav, a Mongolian national hero (unseen), in Ulan Bator June 22, 2013. REUTERS/Carlos Barria

Tsagaan Khass, or White Swastika, has only 100-plus members but it is one of several groups with names like Dayar Mongol (Whole Mongolia), Gal Undesten (Fire Nation) and Khukh Mongol (Blue Mongolia), expanding a wave of resource nationalism as foreign firms seek to exploit the mineral wealth of the vast country, landlocked between Russia and China.

From an office behind a lingerie store in the Mongolian capital, the shaven-headed, jackbooted Tsagaan Khass storm-troopers launch bizarre raids on mining projects, demanding paperwork or soil samples to be studied for contaminants.

“Before we used to work in a harsh way, like breaking down doors, but now we have changed and we use other approaches, like demonstrations,” the group’s leader, Ariunbold Altankhuum, 40, told Reuters, speaking through a translator.

On a patrol to a quarry in grasslands a dusty two-hour ride from the capital, members wore black SS-style Nazi uniforms complete with lightning flashes and replica Iron Crosses.

They questioned a mine worker against the sound of machinery grinding stones about paper work, opting to return in a week when the owner had returned.

“Today our main goal is to save nature. We are doing things to protect the environment,” Altankhuum said. “The development of mining is growing and has become an issue.”

The group, founded in the 1990s, says it wants to halt pollution in the landlocked former Soviet satellite as foreign companies dig for gold, copper, coal and iron ore using cheap labor from neighboring China and nearby Southeast Asia. But a lot of the pollution is caused by local, illegal miners working individually.

“We used to talk about fighting with foreigners, but some time ago we realized that is not efficient, so our purpose changed from fighting foreigners in the streets to fighting the mining companies,” Altankhuum said.

Foreign-invested mining companies contacted by Reuters either were unavailable for comment or did not want to comment.

Mongolians fear foreign workers are taking up scarce jobs in an economy where nearly 30 percent of the population lives below the poverty line, according to the Asia Development Bank.

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“Mining is important because it’s 90 percent of our economy,” said political commentator Dambadarjaa Jargalsaikhan. “But the unequal channeling of this revenue, the inequality in this country, that’s the major issue.”

Not helping the Tsagaan Khass environmental credentials among mainstream observers, apart from the uniforms, is Altankhuum’s reverence for Adolf Hitler.

“The reason we chose this way is because what is happening here in Mongolia is like 1939, and Hitler’s movement transformed his country into a powerful country,” he said.

ENJOYING THE ATTENTION

Because of comments like that, some observers dismiss groups such as his as self-serving and irrelevant.

“Mongolia’s neo-Nazis have been receiving too much attention from global media, and they’ve obviously been enjoying it,” said Tal Liron, a PhD candidate at the University of Chicago who specializes in national identity. “They do not, however, represent Mongolians as a whole, any more than neo-Nazis in Britain represent the Brits.

“...Mongolians are cosmopolitan, savvy and perfectly capable of adapting many foreign ideologies and fashions to their context. For example, they have since 1990 thoroughly and vibrantly embraced representative democracy, just as they embraced socialism before 1990. I think that’s the real story here: Mongolians are not and perhaps never were a remote, isolated people. And they’re also quite capable of understanding irony, especially in regards to their contemporary condition.”

Resource nationalism has been a major election issue in Mongolia, where the largest foreign investment is the Oyu Tolgoi project, 66 percent owned by global miner Rio Tinto and the rest by the government.

Oyu Tolgoi is expected to boost Mongolia’s economy by about a third by 2020. Annual output in its first decade is expected to average 330,000 tons of copper and 495,000 ounces of gold.

But Rio has said since February it will not begin exports from the mine until it resolves disputes with Mongolia over royalties, costs, management fees and project financing.

“They are saying they have signed contracts on it and are giving some percentage of that to the people,” Dorjgotov Purev-Ish, a 39-year-old manual laborer, told Reuters, describing government assurances of the advantages to flow from Oyu Tolgoi.

“But our family hasn’t received any benefit.”

Incumbent president Tsakhia Elbegdorj, who wants more controls on foreign mining investment, won a second term last week, riding concerns over the faltering economy and the growing role of foreign firms.

Colonel Tumenjargal Sainjargal of the National Police Department said the right-wing phenomenon began 15 years ago when young people grew angry at the appearance of foreign languages on signs and made threats against business owners.

“They said it was too much, that it looked like a Chinatown,” Sainjargal said.

“There are complaints that some foreign-invested companies hire Mongolian employees and cheat them, use violence, over work them, or refuse to pay money owed to them. Afterwards, some of these Mongolians call the nationalist groups. There have been a few incidents with nationalists coming to companies for violent reasons to resolve the conflicts in their own way.”

It seems unlikely Tsagaan Khass’s new green thinking will be enough to repair its reputation after accusations of violence, such as shaving the heads of women it claimed were prostitutes serving foreign customers.

“We didn’t shave the heads of the women, we just cut their hair,” said Altankhuum. “But today we are changing. That was crude. That time has passed.”