Guest Post: A BIT of Project Finance Arbitrage in Mongolia

By Kinnari Bhatt

As Jennifer Lander observed last week, RIO is getting out the big guns.

My new book – Concessionaires, Financiers and Communities: Implementing Indigenous Peoples’ Rights to Land in Transnational Development Projects, shows how investors like RIO use highly technical contractual terms to choose from different legal structures, systems, standardised debt and project documentation, insurances and layers of expensive security arrangements to create development project legal structures that protect investor rights over all others. The use of these structures is especially pertinent for developing countries and the international project financing of the Oyu Tolgoi mine is no exception. This is because they help to shield investors from the number of variables that can impact on financial return: taxation, political, legal changes, environmental and social risk, for instance. Investors will argue that any government seeking to increase regulation and change investment laws and policies will stymie FDI (Bhatt, 2013) and amount to ‘resource nationalism’.

In this context, the easy enforcement of contractual promises becomes a major concern.  In developing economies arbitration is deemed better than going to court because of its perceived efficiency, privacy and binding nature but also because of the anticipated ability of arbitrators (rather than judges) to understand the web of interrelated commercial and financial contracts. When disputes arise, arbitrators will, it is presumed, be better equipped to preserve the transactional unity of and ongoing relationships within a complex, mutliparty, contractual transaction that can last decades.

Of course, views over the necessity of these structures will differ. My aim is not to debate the morality of these mechanisms but to show their wider context and importance to the political economy of the project.

Living in an uncertain world

The risk landscape for investors has rarely been as challenging : the US- China trade war, Brexit, increasing recognition of dodgy deals that harm the environment, society and rights to development, international pressure around tax avoidance and now, a pandemic.

The Oyu Tolgoi mine provides, frankly, textbook illustrations of this landscape. The company and its project financiers came under fire for its resettlement practices, it has already reported a slowdown in copper concentrate shipments to China as a result of the coronavirus (no doubt it will soon be serving force majeure notices on its numerous contractual counterparts, as China has already done), and it has been persistently questioned around its taxation practices. These include its use of Dutch, Luxembourgish and BVI tax havens and clauses that stabilise the taxation regime at a specific moment in time -in this case, 2009: the date the Investment Agreement (IA) was signed.

RIO’s counter argument has consistently been that its arrangements are reasonable, balanced and legal.  Yet, taxation disputes have a habit of rumbling on. To resolve its dispute with the Mongolian Tax Authority that it owes around USD 155 million to the public purse, RIO has served Mongolia with a notice of arbitration under a bilateral investment treaty (BIT) – treaties between two countries that set up ‘rules of the road’ for foreign investment in each other’s countries.

What might the arbitration look like?

Answering this is, of course, a matter of speculation, but I make a few observations.

International Arbitration and Project Finance Contracts

RIO will benefit from the protection offered by the Mongolia Canada BIT which provides RIO with investment rights and protections protected under public international law. The treaty permits dispute settlement using international arbitration mechanisms, in this case UNCITRAL arbitration rules, and provides other protections such as freedom from indirect expropriation without compensation.

Peeling the onion

International economic law scholars tend to focus on treaty mechanisms, which whilst important, do not illustrate the full legal context and watertight quality of the negotiated deal. In the natural resources field, BIT protections are routinely supplemented through the types of contractual arrangements discussed in my book, like the specific protections within the IA. These arrangements are crucial as they move from the generic treaty provisions into project specific duties and obligations that give greater comfort to an investor. Having worked in practice, I have never come across an emerging market extractive project financing that relies solely on BITs. To do so would leave to much unsaid.

On the disputed tax liability RIO could argue the government’s tax claim amounts to an indirect expropriation. Rio’s lawyers can build their case on similar tax based claims but also the specific language of the IA entered into with the government.  It could present its underlying financial instruments to show how the interdependency of the IA with the debt instruments (there will be numerous cross references to other contracts) and RIO’s reliance on the functioning of these structures as contractually stabilised in the IA. An argument could run that any unforeseen tax payments would result in RIO’s inability to pay interest on its debt instruments, construction contractor invoices and ultimately sell copper, jeopardising its investment. Producing realms of confidential contracts that illustrate the highly structured technical legal foundations upon which its investment and property rights have been modelled, would be no issue given the private nature of arbitration.

Hotel Room Justice

Under UNCITRAL rules Mongolia will be able to choose one member of the arbitral tribunal. The problem here is that often, lesser developed countries do not have experienced arbitrators and will have to appoint foreign arbitrators from a relatively small group of people. Often, those arbitrators are male (the diversity gap has been reported), enable a revolving door system and are schooled in Western legal thinking that proritises sanctity of contract promises over all other values. Consequently, developing countries perspectives are not brought to bear on the decision making process.

The arbitration scene has been derided as ‘hotel room justice’, where arbitration hearings take place in private conference rooms of luxury hotels and result in awards requiring poor economies to pay hundreds of millions, sometimes billions, of dollars in compensation to multinational companies like RIO. Historically, Mongolia has not fared well in these rooms.

Whilst positive steps are being made to correct this imbalance: the drafting of arbitration rules for business and human rights disputes (albeit voluntary) and fledging technical assistance programmes, these initiatives do not do enough to plug the massive gaps in finance and technical knowledge needed by lesser developed countries to advise on contracts and fight these awards.

Nonetheless. advocacy and knowledge sharing about how these complex and confidential legal structures work can illuminate these issues and potentially result in systemic change towards a fairer international economic system.

About Kinnari Bhatt

Dr Kinnari Bhatt is a post-doctoral researcher at Erasmus University Rotterdam where she researches on the legal and political economy aspects of private and public-private financing for natural resource use, infrastructure and climate/conservation projects. Her book Concessionaires, Financiers and Communities: Implementing Indigenous Peoples’ Rights to Land in Transnational Development Projects (2020) was recently published with Cambridge University Press. Kinnari worked as a project finance lawyer with leading global law firms White and Case and Milbank, Tweed Hadley and McCloy in London and Asia and acted as a legal adviser to the Ministry of Mineral Resources in Sierra Leone. She advises NGOs on issues of equitable natural resource management and has taught courses on legal aspects of international finance and project finance at the University of East Anglia and University College London.

Posted in Canada, Foreign Investment, International Agreements, Kinnari Bhatt, Law, Mining, Mining Governance, Mongolia and ..., Oyu Tolgoi, Oyu Tolgoi, Research on Mongolia, Taxes | Leave a comment

Election 2020 – Updates

By Mendee J

Parties and Coalitions Submitted Platforms for Auditing

On March 25, the National Audit Office of Mongolia acknowledged the receipt of the election campaign platforms from 15 political parties and 4 coalitions. Parties and coalitions will have five days for revising and resubmitting the platforms if the National Audit Office finds the campaign platforms (1) violate the law on the parliamentary elections, (2) contradict with the national developmental concept, and (3) exceed the limits of the law on the financial stability. Then, by April 25, the National Audit Office will submit its auditing reviews to the General Election Commission.

Divided Views on the Election Postponement

On March 25, President Battulga made a public appeal to postpone the parliamentary elections. The key rationale behind the proposal is to re-allocate the election funds to overcome the inevitable economic crisis due to the novel coronavirus outbreak. Except the Mongolian Green Party, all other parties appear to be not supportive of the presidential appeal. A two days later, Prime Minister Khurelsukh (MPP Chairman) rejected the postponement of the elections since the epidemic outbreak has not been reached at the level, which require the postponement of the elections. In fact, under the current law on parliamentary elections, the elections could be postponed only when a state of emergency has been declared. Such power is vested only in the State Ikh Hural.

 

Posted in Elections, Ikh Khural 2020, Party Politics, Politics | Tagged | Leave a comment

Guest Post: Personal Experience of National Quarantine during COVID 19

By Zorigtkhuu B

Although there were some strict measures by the government to combat the deadly virus in Mongolia, it had been so nice to come back to my home country after a few years of being away. The capital city has changed a lot with new, tall and fancy buildings and business facilities. Surprisingly, there were not many traffic jams due to kindergarten and school quarantine. The most important thing I noticed was that the air quality has improved significantly, and people appreciate the government’s efforts towards air pollution.

In terms of the quarantine, it was clear that people were following the government and health officials’ instructions and guidelines very well. They did not seem annoyed or scared, instead, they were encouraging each other to wear facial masks, wash hands and not to spit. I had a sense of pride in how our people and government are working together to overcome this challenging period.

Measures Taken

Mongolia has a little less than 5,000 kilometers of border with China. Therefore, Mongolia is considered one of the highest risk countries that Coronavirus outbreak could cause significant problems. However, the government of Mongolia has been taking the risk of an epidemic very seriously from the start of the outbreak in China and has been implementing strict measures including borders closure with China, no travelers from China and checking the body-temperature of all travelers. In addition, the State Emergency Commission decided on the immediate closure of all kindergarten, schools, colleges and universities, and called off all public gatherings, conferences, entertainment events country-wide from January 27th to April 30.

Some media reports indicate that the situation became worse during the Chinese New Year, one of China’s most important holidays when millions and millions of people visit their families and relatives.  If Chinese authorities had acted three weeks earlier than they did, the number of novel coronavirus cases could have been reduced by 95 %. As a lesson, the government of Mongolia restricted its citizens in celebrating the Lunar New Year which is one of the biggest holidays in Mongolia. Fear and travel restrictions made citizens unable to travel in and out of the major cities and provinces. According to local media, most of the people appreciated the decision no matter how important the Lunar New Year is. Health officials also claim that the regular cold and flu rate was down 84% compared to last year due to the school and kindergarten closure.

The World Health Organization (WHO) commended the government’s precautions, efforts and measures to prevent its citizens. Based on my observation, between mid Feb until mid March in Mongolia, people were very responsible, avoiding shaking hands with each other, face-to-face interactions and wearing facial masks to protect themselves. Also, some companies allowed their employees to work remotely from home. All businesses and public service facilities require customers to wear masks, and hand-sanitizer was available everywhere in these facilities. Disinfection and sanitization works have been done sufficiently in public places and streets. In other countries, masks are not recommended unless the person has already an infection. Wearing a mask increases the chances of the person to touch his or her face. It increases possibility of catching the virus. However, in Mongolia, masks are highly recommended by health officials to date. The test results of all first contacts of the French citizen who carried the virus into Mongolia were negative. Even though he disregarded the two-week of self-isolation warning by Mongolian officials, he wore the facial mask all the time in UB, on the train and on the mine site. I believe the facial mask stopped the spread of the virus.

Politics and Coronavirus

2020 is a parliamentary election year, despite COVID-19 and the quarantine, the election will proceed. All parties and individuals are working actively on their platforms and preparing for the election. Given the challenges due to the coronavirus, president Kh. Battulga recently proposed to postpone this year’s election.

He claims that the election’s budget should be used to overcome potential economic crisis and the coronavirus escalation. He is being opposed by some lawyers arguing that his hidden objective is to gain more political power.

However, few MPs agreed that it might be better to postpone the election. In addition to the president’s proposal, some politicians seem they are taking advantage of coronavirus situation to gain public attention and support. For example, S Erdene, the democratic party leader said, “stop importing the coronavirus from abroad. The health of 3 million people is more important than 5 or 10 people who want to return to Mongolia. Instead of bringing back those who might import coronavirus, the government should focus on the health of 3 million citizens”. This message was addressed to his rival party leader, current prime minister (PM) U Khurelsukh. Because the PM is repeatedly expressing his position to bring back all Mongolians who are abroad and wish to come back. Hopefully, the announcement by Erdene was his personal view, not representing the whole democratic party. No matter if it has a political purpose or not, I am personally supporting the activities around bringing back Mongolians who wish to come to their home during the escalation of the novel coronavirus as I witnessed at the Istanbul airport that how hard it would be for travelers who are stuck in counties/airports where the majority of flights have been canceled and unknowing where to go.

(Istanbul Airport on March 19, 2020 fights are canceled and many stranded travelers and fully armed military and police patrolling)

The Power of Mongolian Grass-feed Meat, Vodka and Polluted Air

When the officials announced the test results of the first contacts of the French expat were all negative, people started speculating that Mongolians will not catch the virus. They say, “We have a good immune system because we consume organic meat that has about 800 types of medicinal herbs and good quality vodka ”. Some friends (who believe in science) also were making jokes that the novel virus is nothing compared to the polluted air in UB that we have been breathing for the last 20 years. It made Mongolians able to protect themselves from any kind of respiratory disease including the novel virus.

Ministry of Health, D Sarangerel made an announcement responding to criticisms that the government was spending a lot of money when Mongolians eat organic meat and drink good quality vodka thus would not catch the virus.

However, these kind of discussions ended when the next cases which were identified from  10 Mongolians who were repatriated by government-chartered flights from Istanbul, Korea and Germany. Good news is that these infected individuals are all isolated immediately and being treated very well in the medical facilities. Officials constantly announce that the spread of the coronavirus in Mongolia is under control, infected individuals are in a stable condition, and there is no one additionally infected. As of 26th of March 2020, there are 11 proven cases (10 Mongolians and 1 French) and 2197 individuals are isolated in different locations in Mongolia in addition to two Mongolians identified with coronavirus in Korea.

About the Author

Bat-Erdene ZORIGTKHUU currently lives in Vancouver, Canada. He graduated from MUST and is aiming to complete a Master’s degree at Norman B. Keevil Institute of Mining Engineering of the University of British Columbia. Zorigtkhuu’ research will focus on Mining Local Procurement (Local Content) in Mongolia.

Professional background: Zorigtkhuu worked for the biggest coal mining company (Energy-Resources) in Mongolia and an “International Medical Center (Intermed Hospital)” project that was jointly commissioned by MCS group in Mongolia

Posted in Elections, Health, Law, Media and Press, Politics, Social Issues, Zorigtkhuu Bat-Erdene | Leave a comment

Parties Competing in 2020 Parliamentary Election

By Mendee J and Julian Dierkes

We recently collated information about dates and procedures for the upcoming parliamentary election in June. Julian discussed some of the implications of multi-member majoritarian voting with his colleague Max Cameron in a podcast. Now, let’s turn to an outlook on political parties likely competing.

36 Registered Parties

As of late March, there are 36 parties registered at the Supreme Court of Mongolia. The new law on parliamentary elections requires any of these parties, wishing to participate in the upcoming parliamentary elections, to submit their election platforms to the National Audit Office before March 25 for the economic/financial feasibility review. So, most assume the election would go ahead as scheduled on June 24 – but, of course, the current coronavirus outbreak could necessitate delay or postponement. However, parties have few options – except to organize their meetings (congress, plenums, workshops) virtually.  This would be a new dimension for all parties – success will depend on IT expertise, infrastructure, and even personal skills – how to use them effectively, efficiently, and, of course, securely.

Usual Suspects – MPP, DP, and MPRP

The Mongolian People’s Party (MPP) is the current ruling party, which is in control of 65 out 76 seats of the parliament and running the cabinet (i.e., all ministries and agencies, state-owned enterprises). Since the MPP won in the local elections (i.e., capital city/districts, provinces/soums), the party leadership surely have influence over local party committees and their candidates will be favoured by local authorities. In the aftermath of the 2016 election, the MPP has experienced a power struggle between two major factions: one led by the incumbent Prime Minister Khurelsukh U and the other by former speaker Enkhbold M. In the end, the Khurelsukh faction got the upper hand by dominating the party secretariat and key organizational hierarchy as well as leadership posts at the legislature, cabinet, and local governments. Literally, Prime Minister Khurelsukh, as a party chairman, now controls the candidate list; therefore, Enkhbold’s supporters will probably follow his lead. Currently, the MPP has 63 MPs (12 female, 51 male) – two members were removed because of criminal investigations and one more could be sentenced in coming months in connection to the Small Medium Business Fund misappropriation/corruption. The MPP will conduct its online meeting (Governing Board) on March 22-23.  Note: the MPP claims 161,000 members.

The Democratic Party (DP) is a coalition of several opposition parties. After being a majority party in the 2012-2016 parliament, the party lost disastrously in the 2016 election mostly due to the party’s mismanagement of the government and divided/competing leadership. The DP was reduced to 9 seats (1 female, 8 male) in the 2016 parliamentary election. Interestingly, the party’s candidates won in the presidential elections since 2009: Elbegdorj Ts in 2009, 2013 and Battulga Kh in 2017. Because of deficient separation of power, the presidential post provides some power/influence over judiciary, foreign policy, and security apparatus and gives the power to securitize any matters presumed as national security importance thorough the National Security Council, the highest consultative body, which is chaired by the president. At the moment, the DP has lost two popular MPs (i.e., Batzandan and Bold) and appears to be in the middle of a fratricidal power struggle. Unless magic happens, the party has very little time to get organized and put forward a winning strategy.  The DP organized its first online conference (National Policy Committee) on March 14. Note: the DP claims 150,000 members.

The Mongolian People’s Revolutionary Party (MPRP) is the third party with one seat in parliament. The party was established on January 28, 2011, when the MPP changed its name to disconnect from its communist legacy.  But the name change provided unique opportunity for former president, prime minister, and speaker Enkhbayar N to establish a breakaway party for members and supporters who liked the old name. The MPRP merged with former Prime Minister Enkhsaikhan’s party which won a substantial number of seats in the 2012 parliamentary elections and played a game changer role between the MPP and DP competition in legislature and cabinet. In comparison to other smaller parties, the MPRP has some networks, which might challenge the MPP’s candidates in the countryside.  Earlier this month, the MPRP decided to establish a coalition with Civil Will Green Party (CWGP) and Green Party (GP). The CWGP has been regarded another successful, small party, which used to be led by Oyun S, a well-known politician, who is no longer connected to the party.  Note: the MPRP claims 35,000 members, CWGP 35,000, and Green Party 2,100.

Emerging Actors – The Right Person & The Electorate

The National Labour Party – or known as HUN party was established in November 2011, but failed to secure seats in the last parliamentary elections.  Some obvious factors contributing to this failure were: (1) leadership struggles, (2) limited resources (esp., funds), and (3) lack of popularity and organizational capacity. The party seems like it may have learned its lessons and has worked hard to publicize policy platforms and potential candidates since 2017. On March 20, the HUN party declared the establishment of a coalition with the Mongolian Social Democratic Party (MSDP) and newly established Justice Party (Зүй ёс) for the upcoming election.

The MSDP was one of earlier opposition parties in the 1990s, joined the DP in 2000, and then became a breakaway party from the DP. The Justice Party was established in June 2019. Interestingly, the core leaders and supporters (30-40) have been educated in Japan and joined together to promote key values (e.g., justice, rule of law, public interests, discipline, order, trust) by competing in the parliamentary election. The Justice Party is supported by the Association of Mongolian Alumni from Japan. Note: HUN party claims 1,024 members, MSDP 3,000, and Justice Party 2,000.

The Electorate Movement was established on March 28, 2019 to endorse the “right” candidates for the parliamentary election. The movement was initiated by well-known public figures, for example, former Prime Minister Sodnom D, former Finance Minister Byambajav E, former politician Oyun S, composer Jantsannorov N, Hamba Lama Choijamts D, and columnist Baabar (Bat-Erdene, B).  The 60 members of Electorate were elected on two criteria: public figures without (1) a bad reputation, and (2) without intentions of seeking political posts. The movement will declare their support for the right candidates before the election and concludes an ethical contract with candidates. The movement will not conduct negative campaigning against other parties and candidates and support only one candidate per electoral district. Last month, the Electorate Movement accepted requests of the coalition of HUN and MSDP and agreed to support their candidates. As having well-known figures like cosmonaut Gurragchaa J, former Foreign Minister Gombosuren, and composer Jantsannorov, the movement could definitely have an impact on voting.  Like 2012, the election will open opportunities for third parties especially when voters realize that two major parties are not effective in dealing with corruption.

Independents

The famous singer Javkhlan S has been the only independent member in the current parliament and we expect an increased number of independent candidates, but it is hard to speculate how many will be successful. Leaders of small political parties will probably have some chance to getting elected because of the majoritarian electoral system. Former civil society entrepreneur and DP member MP Batzandan J and long-time politician, former DP, MP Bold Lu established Joint Coalition Party of Just Citizens (Шударга иргэдийн нэгдсэн эвсэл нам) – or the party with a long name on September 2019. The Ger District Development Party (Гэр хороолол хөгжлийн нам) could get a seat through strong support from ger districts. The party was established in January 2019 and is believed to have connection to former mayor Bat-Uul E (DP). It is not hard to expect a successful election by the Republican Party Leader, Jargalsaikhan D, known as Buyan Jagaa. However, if any of them get elected, they would probably act as independent members.

In past elections, we have seen a large number of athletes run for political office. There is no reason to expect that not to be the case in the coming election. Likely candidates may be former Sumo star Dagvadorj, and Judo gold medalist Tuvshinbayar, but others may also emerge in the campaigning.  Above all, this may turn out to be the county’s first election which will be forced to use the virtual space from the planning, competing, and, of course, to electronic voting. It is quite timely for the Facebook sets up its mission (Facebook War Room) in Mongolia to make sure the fair competition gets on the Facebook.

Posted in Civil Will Green Party, Democratic Party, Elections, Ikh Khural 2020, Mongolian People's Party, Mongolian People's Revolutionary Party, National Labor Party, Party Politics, Politics | Tagged | Leave a comment

Coronavirus and Mongolia

By Bulgan B

[Updated on March 16, 2020]

Three more cases of covid-19 registered on March 16, 2020 (UTC +8 Mongolia). They were on the government’s chartered flight from Seoul to UB, and the ministry was aware of the health condition of those individuals. Despite the public discontent of bringing sick people with many others in the same plane, the ministry insisted that every Mongolian has the right to be protected by the Government. The close contacts of those three cases, 111 individuals are quarantined and the test is conducted on 61 individuals which are all negative, and remaining individuals are being tested.

The National Emergency Committee (NEC) also provided updates. The Bayan-Olgii province, which is locked down as a result of 192 citizens coming in through Tsagaan Nuur port. The majority of those were Mongolian students who were studying in Kazakhstan. They are isolated in medical facilities or in their home.  The government is sending chartered flight on March 18, 2020, to Istanbul to bring Mongolian citizens despite the risk of more cases of covid – 19.

____________________________________________________________

[Original post on March 15, 2020]

On March 10, Mongolia registered its first positive test for the novel coronavirus case. Given the geographical attachment and the economic intensity with China, the period that the country stayed without the coronavirus is impressive, to say the least.

The country has taken extensive steps to prevent coronavirus. Following the outbreak of the virus in Wuhan, China, Mongolia quickly took measures such as closing daycare and schools since January 27th, restricting and eventually stopping flights, trains and domestic and international travel. The country also celebrated this year’s lunar New Year, the biggest holiday celebration, on the small scale if celebrated at all due to the fear of transmitting the coronavirus to the elders.

Foreign Infection

This first positive case is a French citizen who was on a working visit to Mongolia. Disregarding the two-week self-isolation warning, he traveled and commuted extensively with direct contact with about 120 people and indirect contact with over 500, traveling to Dornogobi province on the public train from Ulaanbaatar. Currently, about 269 tests (National Center for Communicable Diseases of Mongolia’s update on March 15, 2020, see https://news.mn/) were carried out on those with close contacts and all came back negative. The French citizen was harshly criticized for bringing in Covid-19. Many people, including some public figures, expressed discontent, calling his ignorance of the self-isolation warning “a neocolonial attitude” towards so-called developing countries. This discontent was not the only reaction. The French citizen was quickly forgiven, and a lot of people started sending him to get-well letters, notes and a lot of support messages on social media while he is being treated at the National Center for Communicable Diseases.

(letter from a fifth grade student Oyuntsetseg N, in Orkhon province, who wrote to the French citizen that she does not believe that he spread this contagious disease intentionally, and she wishes him to fight with this sickness and get better soonest, and she wishes him and his family a long happy life.)

(A tweet by a Mongolian citizen that says “ours or not, he is a father of two, hope the Frenchman gets better soon, though he is still irresponsible”)

Impact

The current accessibility and availability of medical care could be another factor that people are diligent in observing the home-quarantine in addition to their care for their elders. In parallel, the government’s reaction in taking swift action to implement social distancing strategies has been helping the country to stay free of coronavirus. Though the economic impact could not be assessed at great depth and scale, right at this point, many small and even medium-size business owners are reporting that their business is facing difficulties in paying rents and paying salaries.

Another interesting observation is an increase in social cohesion among countries that are impacted by the covid19 pandemic. Although in Mongolia, there is only one active case of coronavirus, the increase in the degree of unity (against common threat) will have an impact on social behavior towards many polarising issues, including corruption.

Political Implications?

An interesting political discourse in relation to coronavirus has emerged surrounding the parliamentary election this year. Whether the government’s swift action secured some sort of confidence in political figures from the public or in the public service (distrust of political parties and public service is reported high). Political campaigns since the democratic revolution in 1990 have been growing more colourful and eventful in recent elections. However, with the outbreak of the pandemic covid19, the campaigns have not been active in the media. Although PR campaigns are overshadowed by current events, the pension loan write-off on December 31, 2019 by the President Battulga and student loan write-off proposal submitted on March 2, 2020 by the Minister of Education, Culture, Science, and Sports would have an influence on voters’ choice.

Currently, the Ministry of Health reported that since January 9, the country isolated and observed 1,328 individuals, and as of today there are 609 people in a medical isolation facility. According to Canada’s assessment, Mongolia falls on the third level, which that the Canadian government is advising to “avoid all non-essential travel”.

 

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Guest Post: Between a Rock and a Hard Place: Investor-State Arbitration and Mongolia’s Rapidly Shrinking Policy Space

By Jennifer Lander

On the 20th of February, Rio Tinto initiated arbitration proceedings against the Government of Mongolia at the United Nations Commission on International Trade Law (UNCITRAL) through Oyu Tolgoi LLC. The escalation of the dispute over the alleged “missing millions” of tax from Rio Tinto (USD 155 million) suggests that the multinational corporation’s patience is wearing thin.

What is international investment arbitration?

In the 1990s and early 2000s, many developing countries like Mongolia were sold the idea that entering into international investment agreements (IIAs) would help them attract foreign direct investment (FDI).

It has been shown since that the FDI-attracting potential of IIAs is largely a myth.

What IIAs do certainly provide is a backstop for investors to enforce their rights and preferences against national states, drawing on international investment norms of fair and equitable treatment, non-discrimination (i.e., national treatment) and protection from expropriation and nationalization.

For states like Mongolia which are heavily dependent on FDI, IIAs incentivise governments to adopt investor-friendly policies and regulations at the expense of other national priorities. This is known among international investment lawyers as “regulatory chill”.

Baby, It’s Cold Outside

My new book – Transnational Law and State Transformation: The Case of Extractive Development in Mongolia – argues that investor perceptions of instability and risk have thoroughly chilled Mongolia’s regulatory and policy environment over the past decade. Rio Tinto’s recent arbitration proceedings are the tip of the iceberg.

If you have been following Mongolia’s mining story in recent years, you will probably have noticed a changing narrative in the international business media about investing in this country. And Oyu Tolgoi has been at the centre of it all, as the ‘litmus test’ of Mongolia’s investment potential.

According to international media sources, the former ‘darling of frontier markets investors’ became a ‘pariah’ when Mongolia, ‘the 2011 Global Growth Generator’, attempted to renegotiate the Oyu Tolgoi Investment Agreement (OTIA) in 2012 under the provisions of the allegedly “nationalist” Strategic Entities Foreign Investment Law (SEFIL).

The collapse of FDI between 2012-2016, the ensuing debt crisis and international “downgrading” of Mongolia’s investment environment resulted in a major flip-flop in the country’s investment and mining laws, as well as mining policy.  SEFIL was pilloried by investors, international institutions and media outlets as an open display of “resource nationalism”, despite containing typical provisions used in most developed countries to prevent geopolitical takeovers of national resources (Scharaw 2018). These one-sided narratives hide the fact that Mongolia has capitulated to virtually every whim of foreign investors since 2014, despite election turnover.

The only thing Mongolia surely can’t afford to lose is the tax revenue owed from the country’s most significant mineral deposit.

Challenging Rio Tinto’s Victim Status

There are some good reasons to challenge the “pariah” narrative that has haunted the Mongolian government in the current tax dispute.

For a start, the OTIA reflects profoundly unequal legal expertise, knowledge and bargaining power between the parties. A 2018 report from the Centre for Research on Multinational Corporations (SOMO) details how the corporation has benefited enormously from major tax benefits and concessions, including tax stabilisation clauses, in the OTIA. Freezing tax in the face of a commodity boom was a particularly ill-informed concession by the Mongolian government.

On top of using “mailbox companies” in the Netherlands and Luxembourg to avoid tax payments to Canada and Mongolia in the past, Rio Tinto has also profited from new concessions in the 2015 Dubai Agreement, when Mongolia agreed to retroactively apply lower rates of withholding tax to the Oyu Tolgoi project (these concessions were part of an effort to restore Mongolia’s ‘lost credibility’ in the global market).

Furthermore, the OTIA makes the Mongolian government financially vulnerable in ways that they could not have predicted at the time of signing it. The framework of the agreement – with Rio Tinto holding a managing share of the Oyu Tolgoi Project – means that USD 2 billion in cost overruns incurred by  Rio Tinto increases government debt alongside Rio’s “management service fee” for these “investment costs” which has to be paid by the government (see Lander, 2014). The Mongolian government’s status as a minority shareholder in the Oyu Tolgoi project further affects its ability to recoup dividends until its debts to Rio Tinto (taken out to fund the government’s stake in the project) have been paid.

If it is true that Mongolia has lost close to USD 232 million in tax as a result of the OTIA’s complex tax framework and Rio Tinto’s advantageous use of international loopholes, it certainly puts the Mongolian government’s tax bill to Rio Tinto of USD 155 million into perspective, and explains why renegotiation was on the table late last year.

International Arbitration: Time to Get the Big Guns Out

The fact that Rio Tinto has initiated arbitration proceedings shows they want to get the issues with the OTIA settled once and for all. And Rio Tinto has a pretty strong hand in technical investment law terms, on the basis of fair and equitable treatment, indirect expropriation and discrimination.

Firstly, Rio Tinto can argue that the principle of “fair and equitable treatment” has been breached because of the government’s numerous attempts to renegotiate the tax framework and the OTIA itself. In international investment law terms, this sort of “regulatory instability” undermines legal certainty and legitimate expectations for investors.

Secondly, the ongoing tax dispute could be argued to have led to an indirect form of expropriation, as delays associated with the dispute have impacted economic returns from the Oyu Tolgoi Project. Unfortunately, indirect impairment of the value of an investment can “count” as a form of nationalisation. In its 2019 Strategic Report (page 29), Rio Tinto claims that it suffered USD 1.7 billion in ‘impairments’ last year, largely from the Oyu Tolgoi Project.

Thirdly, Rio Tinto will likely argue that they are being unfairly targeted by the government amongst other domestic and foreign investors (undermining principles of non-discrimination in international investment law). Rio Tinto claims to have paid all of the requisite taxes and would likely claim that they have been subjected to particularly hostile treatment because of the government’s direct interests in Oyu Tolgoi.

Seeing the Forest for the Trees

Unfortunately, arbitration tribunals care little for the political and economic context which shapes international investment agreements like the OTIA. The parties are treated “equally”, which is to say that the actual inequalities which shape their relationship remain unaddressed.

Somewhat ironically, just one day before Rio Tinto announced its intention to pursue arbitration, SOMO published an independent report which highlights how Investor-State Dispute Settlement ‘lock[s] Mongolia into a development trajectory emphasising a safe investment climate rather than benefits for its people.’

I am inclined to agree.

While I can certainly understand why Rio Tinto is frustrated on a practical level, the Mongolian government is not just another corporate partner, and Oyu Tolgoi is not just another mining project. The management of this deal will affect Mongolians for generations to come. And if it’s a bad deal, the government need to try and change it.

Let’s just hope the UNCITRAL panel can see the bigger picture.

 About Jennifer Lander

Dr Jennifer Lander is Lecturer in Law at De Montfort University in the UK, where she researches the intersections of international economic law and contemporary constitutional change. Her new book Transnational Law and State Transformation: The Case of Extractive Development in Mongolia was recently published with Routledge (2020). You can follow her for an occasional tweet about the law and politics of natural resource governance at @jennylander4.

Posted in Economics, Foreign Investment, International Agreements, Jennifer Lander, Law, Mining, Mining, Mining Governance, Oyu Tolgoi, Oyu Tolgoi, Policy, Taxes, Trade | Leave a comment

Comparative Electoral Systems

By Julian Dierkes

I am an avid listener of podcasts. Unfortunately, Mongolia only makes a rare appearance in English-language podcasts.

The fact that I have a colleague, Max Cameron, who has an interest in different electoral systems now has given me the chance to record a conversation about the upcoming parliamentary election. Dr. Cameron is a comparative political scientist who focuses much of his research attention in Latin America. He also currently serves as the Acting Director of the School of Public Policy and Global Affairs where I teach in the Master of Public Policy and Global Affairs. In Joshua Diemert, a 1st-year in the MPPGA program, we had a very competent host to that conversation!

And here it is: Our Podcast Episode.

For more about my colleague Max Cameron, see his talk:

A discussion of a book by Dr. Cameron and an opinion piece that he wrote.

 

 

Posted in Constitution, Democracy, Elections, Governance, Ikh Khural 2020, Party Politics, Podcast, Politics, Research on Mongolia | Leave a comment

Election Primer 2020 – Electoral System & Procedures

By Julian Dierkes and Mendee Jargalsaikhan

After experimenting the 2015 election law with integrated parliamentary, presidential, and local elections, in the 2016-2017 election cycles, the parliament agreed to pass separate laws governing each election. The integrated election law created more administrative and legal burdens than reducing the costs and streamlining the electoral process.

On December 20, 2019, the parliament passed the Law on Parliamentary Elections, which now specifies the regular parliamentary election for June and to enact relevant procedural decisions such as the election date and electoral boundaries by February 1 of the regular election year.

Election Date & Electoral Districts

Consequently, on January 31, the parliament decided to organize the 2020 parliamentary election on June 24 and allocated 24 seats for Ulaanbaatar, capital city districts, 52 for the provinces.

The MPP-dominated parliament simply returned to the multi-member majoritarian model – which was used in the 1992 and 2008 parliamentary elections. Starting from this year, the local elections for citizens’ khural representatives for provinces/soums and capital city/districts will be organized separately in October.

This is how the number of MPs will be distributed across multi-member districts:

Electoral Districts Number of Mandates (Seats)
Provinces
Bulgan, Gobi-Altai, Dundgobi-Gobisumber, Dornod, Dornogobi, Zavkhan, Umnugobi, Sukhbaatar 2 per province
Arkhangai, Bayan-Ulgii, Bayankhongor, Uvurkhangai, Selenge, Tuv, Uvs, Khovd, Khuvsgul, Khentii, Darkhan-Uul, and Orkhon 3 per province
Ulaanbaatar – Capital City
Bagakhangai-Baganuur-Nalaikh 2 for all three districts (combined)
Sukhbaatar, Chingeltei, Bayangol, Khan-Uul 3 per district
Bayanzurkh, Songinokhairkhan 5 per district

Source: General Election Commission of Mongolia

It remains unclear what number of votes voters will have, with some suggestions that the maximum would be three. Voters in 2- or 3-member districts would thus vote for all their members from their districts, while Bayanzurkh and Songinokhairkhan would somehow have to be split so that voters do not have five choices. To be clarified…

Update Mar 11: Confirmed that Bayanzurkh and Songinokhairkhan have been split into two districts with 2/3 seats each.

While the minimum threshold of 50% voter turnout per electoral district remains in place, there is no minimum threshold for an individual candidate within a district.

Key Dates

Both laws on public service and parliamentary election require public servants, including those holding senior posts at state-owned enterprises, to resign from public posts by January 1st of the regular election year if they have intentions to compete in the election.   However, those holding political posts, for example, ministers and vice-ministers, are excluded from the mandatory resignation requirement.

The registration of citizens’ residency change/transfer will be temporarily suspended from February 1 of the regular election year until the day after the regular election (June 25). This will reduce any attempts of voter transfers (known as ‘grasshopper voters’) during the election.

The General Election Commission will register political parties and coalitions 60 days prior to the election (Apr 25) after reviewing all relevant documents, including the election campaign platform along with audited reviews.

Parties and independent candidates will submit their candidacy nominations 38 days before the election (May 17) along with clearances from courts (e.g., debts) and taxation offices. The new legislation requires that parties will officially begin the candidate nomination process 45 days (May 10) before the election.

The new legislation permits candidates to begin their campaign 22 days prior to the election (June 2) after receiving their candidacy. Despite proposals from several lawmakers, the parliament and the General Election Commission have refrained from imposing any restrictions on social media use during the election.

Other

There are quite a few surprising changes in the election law and relevant procedural decisions. The new law requires parties and coalitions to allocate at least 20 percent of candidacy for each gender.

The upper threshold for monetary donations to campaigns has been raised: private donations from ₮3 million to ₮5 million and organizational (business entity) donations from ₮15 million to ₮20 million. The General Election Commission would continue to use the electronic counting system, however, 50% of electoral districts will be subject to random manual counting.

The new legislation increases the role of the National Audit Office [Үндэсний аудитын Газар] as it requires all political parties and candidates to have their election platforms audited prior to the registration by the General Election Commission. Moreover, as the Chief of the GEC claims, that the procedures and jurisdictional boundaries for courts, police, intelligence,  and two other government agencies (the Communications and Information Technology Authority and the Authority for Fair Competition and Consumer Protection) are now clearly drawn in order to resolve any election-related complaints and allegations in timely manner.

Posted in Elections, Ikh Khural 2020, Politics | Tagged | Leave a comment

Constitutional Reforms and Political Party Creation

By Julian Dierkes and Gerelt-Od Erdenebileg

The Mongolian Parliament has passed a number of constitutional amendments on November 14, 2019. Elements of this constitutional reform had been discussed by many political parties and politicians for the last twenty years.

Among the recently passed constitutional amendments is a provision that requires a minimum threshold of 1% of eligible voters to support a party to be registered to compete in elections. This is one of the amendments that may have far-reaching implications and it also seems to undermine some fundamental civic rights (assembly, political participation), albeit in a relatively mild way.

In the beginning of 2017, the Working Group on Constitutional Amendments began discussing the appropriateness of incorporating some party-related provisions in the Constitution that would support party maturation through internal democracy and transparency of political parties. But these discussions never focused on a party membership requirement.

When discussions got more concrete in summer of 2019, parliament considered a draft of in three phases of parliamentary and public discussions from June 6 to November 14, 2019. The first draft of the amendments did not include a provision for a party membership requirement.

But, President Battulga submitted his draft of amendments before the second constitutional debate on July 16, 2019. His draft contained one article requiring at least 50,001 citizens to join together to register a political party.

During the second discussion of the amendments, DP MPs suggested that political party registration would require at least 1 percent of citizens.  The MPP offered a proposal that parties shall be established by at least one percent of eligible voters joining together. This is the condition that was passed on Nov 14, 2019.

Current Situation

At the moment, newly forming parties have to have the party (name) registered with the Supreme Court. That has been perceived as a politicized decision in the past, leading to some friction, for example around the “re-invention” of the Mongolian People’s Revolutionary Party. It is also the reason why the XYH party that formed as a hopeful new force in 2016, took the shell of a pre-existing party, the National Labour Party, rather than registering a new party.

Currently, there are 35 registered parties. Six of those have a membership that would appear to exceed the 1% threshold of voters (approx. 21,000):

  • MPP 163,500 members
  • DP 150,000 members
  • MPRP 35,000 members
  • Civil Will Green Party 35,000 members
  • Republican Party (Монголын Бүгд Найрамдах Нам) 50,000 members.
  • Motherland Party (Эх орон нам) 150,000 members.

Other 29 political parties have less than 21,000 members.

Amendment

Article 191.2 in the newly amended constitution will read: “A political group who make up a minimum of 1% of Mongolian citizens who reached election age can establish a political party.” (Unofficial translation circulating)

The fate of independent political candidates under this system is unclear as it would be – presumably – specified by future election laws.

This provision (unlike other constitutional amendments) is specified to take effect as of January 1 2028, i.e. for the 2028 parliamentary election. It remains unclear whether parties registered already, or registered before December 31 2027 would be exempt from this requirement, i.e. “grandfathered”.

Proponents

Proponents of the amendment have made the case for it on the basis of avoiding political chaos. This is a familiar argument in discussions of democracy, it is certainly a familiar argument to a German like me (JD) as the multitude of parties is often cited as one of the fatal faults of the Weimar Republic.

MP Byambatsogt S, who is chair or State Committee Standing Committee of Parliament was one of the most vocal proponents of this provision. He referred to political parties “popping up like mushrooms after a rain shower” (“Өнөөдөр бол борооны дараах мөөг шиг олон нам байгуулагдаж байна.“) implying that they were too numerous. While a requirement of 50,001 citizens seemed overly rigid, 1% of the electorate seemed appropriate to him.

This argument often focuses on the inability of parliament to act when coalitions of multiple parties are unstable. There is also a suspicion that a large number of parties potentially leads to political polarization.

Criticism

We think that this amendment is anti-democratic and unnecessarily curtails the civil rights of Mongolian voters.

  1. Party registration is not representation in parliament. The number of parties that are registered and thus potentially running in elections is not directly related to the number of parties represented in parliament. A voters do not vote for that many parties; B most democracies (including Mongolia’s past elections) specify various minimum thresholds for election.
  2. Why? What is the harm (to democracy or in practical terms) of many registered parties? If you and I (imagining JD as a Mongolia voter and both of us as more handsome and/or charismatic) find that we agree on a goal or an agenda for government policy, why should we not be allowed to form a party to see whether we can gather enough like-minded people?
  3. The amendment is aimed at and fundamentally preserves the status quo, by freezing the current party landscape. There is no particular democratic argument to preserve the status quo that we are aware of.
  4. Party registration already has been a difficult issue in the past, often becoming politicized at the level of the Supreme Court where registration happens.
  5. When this requirement takes effect it will become more difficult to establish political parties, but why should voters in the future not enjoy the same ease in establishing political parties that current voters do?

Observations

Mongolian political scientists have largely tacitly accepted this amendment, perhaps because it is seen as supporting current office holders/parties and it is not always easy to speak out against governing powers.

In several workshops that we have been involved in, we have found that when describing a political party system from scratch, Mongolians often describe a “National Unity Party” of some kind. The agenda for that party is then described as “doing the best” or “doing the right thing” for the nation. This is a conceptualization of the role of political parties that seems to misunderstand the role of political deliberation and elections. Elections offer an opportunity for voters to participate in decisions about the future path of the country when these decisions involve value choices, i.e. when there is no one best solution to a given question. Currently, political parties do not offer such consistent value choices or ideologies and more parties thus seem to equal more chaos and disagreement.

  1. Minor parties do not have enough information about Constitutional Amendments.
  2. Third parties (MPRP, MNDP and some) want this provision of Constitution, which is an interest in becoming a powerful party integrate small parties.

Outlook

The 2028 date-of-effect leaves a lot of room for political mobilization around this issue until then, through four cycles of elections (UIX 2020, president 2021, UIX 2024, president 2027) which may drive perceptions of the role of new or rising parties.

About Gerelt-Od

Dr. Gerelt-Od Erdenebileg is a political scientist and the senior lecturer of political science at MNUE, Ulaanbaatar. I had managed Election project of UNDP, Mongolia and have been studying political party, electoral system, women’s participation and democratization in Mongolia since 2000.

Posted in Constitution, Democracy, Elections, Gerelt-Od Erdenebileg, Governance, Party Politics, Politics | Tagged | Leave a comment

Summer 2020 Field Schools

By Marissa J. Smith

Interested in educational travel to Mongolia this summer? We will be holding a webinar about field schools Wednesday, February 5, at 4 PM Pacific Time/Thursday, February 6, at 8 AM in Ulaanbaatar.

The American Center for Mongolian Studies is currently accepting applications for seven field school programs. The programs, organized by experienced researchers including Mongolia Focus contributor Marissa Smith, cover a range of topics, including environment, mining, pastoralism, Buddhism, music, and literature. Each of the programs will also take participants to one of several regions of Mongolia, including Lake Khuvsgul, the Gobi Desert, and the Khentii Mountains. The length of time in field will be up to two weeks, with a few additional days of programming in Ulaanbaatar.

Full details of the program are on the ACMS website.

The priority deadline for application is coming up on March 1, and the final deadline will be April 30. A significant amount of fellowship support is available, and applications received by March 1 will have priority consideration for fellowship awards and placement in the field school concentration area of their choice.

Posted in American Center for Mongolian Studies, Research on Mongolia | Tagged | Leave a comment

Fascist Symbolism in Mongolia

By Niels Hegewisch and Julian Dierkes

Recent attention to ethno-rock sensation The Hu has revived concerns about the (seeming) use of fascist iconography in Mongolian politics. While fascist symbols are immediately distasteful to Western observers, in Asia such symbols need to be placed in local contexts to understand their use. While it is important to call out rabid nationalism and xenophobia in Mongolia, not every ignorant embrace of fascist symbols is necessarily a sign of larger political tendencies. The challenge in distinguishing real worrisome political tendencies from context-specific symbolism, from purposeful provocation, or from plain ignorance can be seen in particularly stark relief with the rising popularity of The Hu.

Swastikas and Iron Crosses in The Hu Videos

The Mongolian folk rock band The Hu has become an international sensation (NPR | The Guardian | Foreign Policy). One of the crucial elements in their success may have been their striking, professionally-produced videos featuring rugged nature and nomadic Mongolian culture in rather bombastic fashion.

The band is popular in Mongolia itself in part because of their lyrics that offer thinly veiled jabs at the common fixation on material wealth and at politicians‘ populist nationalism.

However, some are casting doubt on this perception of the band as likable and principally critical. YouTube comments and various online discussions have focused their attention on close examination of one particular scence in the video for „Wolf Totem“.

The HU (Mongolian Metal) & The NeoNazis

At 5‘12“ in the video we see a hand wearing two rings. The designs of these rings suggest different interpretations some of which are clearly problematic.

The first ring shows a swastika and can be interpreted as a Nazi symbol or the Buddhist symbol for good fortune. The ring also features the symbol of the Mongolian state, the Soyombo, pointing toward “good fortune for Mongolia” as a possible interpretation. Swastikas (including the clockwise-turning version commonly associated with fascism) appear commonly in Mongolia in official as well as casual settings. They adorn government buildings, picture frames, and bumper stickers. Unfortunately, the Nazi version is sometimes portrayed as cool or fashionable as well, often out of apparent historical ignorance. Whereas Nazi symbolism is unambiguous in a European context, use of similar symbols in a Mongolian context is much less clear in representing any kind of association with fascism.

The second ring in the video displays a symbol of the Mongolian Choppers Brotherhood. This includes the German “iron cross”. The Brotherhood is well-established in Mongolia and generally perceived as an apolitical grouping of motorcycle enthusiasts. As such it is one of several similar clubs. The Brotherhood is particularly well-known for joining with the city of Ulaanbaatar in organizing the Steppe Wind music festival. The Hu performed at the 2019 festival and the opening motorcycle parade was led by Prime Minister and Harley-Davidson-enthusiast U Khurelsukh.

Mongolian motorcycle clubs largely look toward North America to model their activities and representation on. That is how the iron cross has most likely come to be incorporated into Mongolian symbolism as well. The iron cross has its origins in Prussian military decorations, continued to be awarded by the German army under Nazi rule, is still in use by the German Bundeswehr, and has had a surprising currency in usage in pop culture. Motor cycle gangs in North America are known to incorporate the iron cross into their iconography as a symbol of rebellion. The iron cross today also shows up in very different contexts like some extreme sports, where it appears to be in use without any political associations. The context of the use of such symbols is thus of particular importance. The care in interpretation would also apply to comments on a possible explanation for photos of a Brotherhood Facebook page that was only active in 2014 and is frequently mentioned by critics of The Hu. Photos on this page appear to show Brotherhood members showing off various Nazi symbols. While these photos in particular are provocative and disturbing, they do not appear to be reproduced in other Brotherhood materials, so any political leanings of the Brotherhood remain ambiguous.

Ambiguous Meanings

The rings that appear in the video can be interpreted as a reference to historical and contemporary fascism, but they can also be placed plausibly in an Asian context of Buddhist symbolism and North American motorcycle culture. In their public statements, the band has not hinted at any affinity with fascist ideology. The band webpage offers a derivation of their name from the Mongolian word for “person”. The band emphasized that Mongolia should not only be known for its military leaders and soldiers in an interview with The Guardian. They noted civilian accomplishments like the creation of a transcontinental postal system, the development of trade routes and the introduction of diplomatic passports.

Obviously, a clear statement from the band disassociating itself from fascism and its symbols would clarify much of the debate that has sprung up. There have been responses from people close to the band who emphasize that any symbolic connection to fascism is not intended by the band, nor should it be taken as an endorsement of political extremism. Instead, the band is explicitly and critically grappling with contemporary society and politics. Symbols that appear in their videos are metaphors for the current situation of nomads in Mongolia. Nevertheless, as the band continues to gain international recognition, they would be well-advised to recognize the context in which they will be performing in Europe or North America and to recognize the harm that a political misinterpretation of symbols can do to any messages they are trying to convey or any popular success they hope to have.

Jan 21 Update:

Alert Reddit readers have pointed out that The Hu have responded specifically to the appearance of the swastika in the video:

Nationalism in Mongolian Politics

Some of the reaction to The Hu in Europe and North America seems to be an unfortunate confluence of ignorance of the Mongolian context on the part of some observers, and lack of awareness of the inflammatory nature that is ascribed to symbols in other countries on the part of the band. However, even a more context-aware interpretation should acknowledge that Mongolian society and even more so Mongolian politics has a massive problem when it comes to a heightened and non-reflexive nationalism that can lead to racist and even anti-Semitic statements and can also lead to the use of Nazi iconography. Just recently such symbolism was visible in demonstrations by the short-lived “National Mongolian Front”.

Western journalists are prone to fall victim to the apparent provocation of the embrace of Nazi symbolism and this kneejerk search for Nazi symbolism has been extended to The Hu. While the provocation is real particularly in terms of rhetoric, its substantial relevance for contemporary politics is so far extremely limited.

It is important to emphasize that even vaguely coherently nationalist or fascist organizations like Tsaagan Khas do not play a significant political role in Mongolia. They may appear in public at demonstrations or rallies, but they have not wielded any influence in elections either in terms of shifting debates or frames of reference or in achieving any kind of electoral success at all. Such overtly nationalist or even fascist groupings will not shape the 2020 parliamentary election either. This is in clear contrast to virtually all of Europe where right-wing populism seems to have established itself firmly in national legislatures.

About Niels

Niels Hegewisch is a political scientist and the Mongolia country representative for the Friedrich-Ebert-Foundation, a German political foundation that is dedicated to global promotion of freedom, justice and solidarity. The Foundation has been active in Mongolia since the early 1990s.

Posted in Music, Music, Nationalism, Niels Hegewisch, Politics, Pop Culture, Populism, Protest, Social Issues, Society and Culture | Tagged | Leave a comment

Guest Post: Gender Mainstreaming in Public Administration

By Oyuntuya Shagdarsuren

At a glance, Mongolia may seem like a ‘paradise for men’ given the high status of men or a ‘paradise for women’ given the country’s high rankings on human development indices. Yet, the gender equality situation remains a mystery that requires an exploration into a complex set of considerations. This post briefly investigates the un/changing notions around gender roles and gender equality in Mongolia with a focus on public administration.

Un/changing roles of women and men in Mongolian society

Given the nomadic pastoralist background of Mongolian people, women have been traditionally seen as mothers and wives and men as heads of households with the leadership and decision-making roles both within the family and in social life. After the transition to market economy in the early 1990s, women in Mongolia have taken over some of the breadwinning roles and gained more decision-making power within their household. In a 2001 study, women reported that they didn’t want to depend on their husbands and emphasized independence. They placed importance in increasing their education and finding their status in life before creating a family (Batjargal 2006). Mongolia’s current reverse gender gap in the education sector makes it one of the few, distinct countries in the world where males are less educated than females and the young generation of the postsocialist period is less educated than their parents (Steiner-Khamsi and Stolpe 2006). However, men have always outnumbered women in decision-making positions across public service as well as in business and politics. Mongolian feminist activist Undarya Tumursukh (2018) argues that the post-socialist period and transition to neoliberal market economy has lowered living standards and the status of women because women were forced out of politics with the arrival of democracy.

Government policy on gender equality and gender mainstreaming

The government of Mongolia has undertaken mandatory duties to promote gender equality through internationally agreed documents such as the Convention on the Elimination of all Forms of Discrimination against Women (1979), the Beijing Declaration and Platform for Action (1995) and the UN Economic and Social Council’s agreed conclusions on gender mainstreaming (1997)  committing to take action to eliminate any (public or private) behaviour that is based on the inferiority of women and superiority of men. In other words, the Mongolian state has devoted to look into its gender-based power structures and eliminate the root causes of gender inequalities. One of the main ways to achieve this is by adopting a gender mainstreaming policy which is commonly understood as “integrating a gender perspective into all areas of policy and decision-making” (UNDP 2007, 4). Gender mainstreaming (jyenderiin medremjtei bodlogo, tölövlölt) is believed to have a transformative effect by changing attitudes in the public and private institutions and structures towards greater equality between men and women, boys and girls.

The Law on Promotion of Gender Equality (LPGE) was enacted in 2011 and mandates the principle that the state is responsible for ensuring equality of men and women and that the laws and state policies, programmes, plans and projects should include gender concepts (Art. 5.1.3 and 5.1.4).  As a result, a Gender Consortium (Jyenderiin konsortsium) and a National Gender Experts’ Group (Jyenderiin ündesnii shinjeechdiin buleg) were created to carry out gender analysis and to provide training and education. The national statistical office started generating sex disaggregated data on 49 indicators which are available online (UN 2016). An active operational structure exists that consists of branch gender councils (Jyenderiin salbar zövlöl) based at 13 ministries, 31 branch gender committees based at 21 aimags and 9 districts of Ulaanbaatar which receive guidance from the National Committee on Gender Equality (NCGE). The NCGE supports the development of gender strategies for all sectors of Mongolia. So far, gender strategies have been developed in the environmental (2014), finance (2016), construction and urban development (2017), education, culture, science and sports (2017), population, labor and social welfare (2018), food, agriculture and light industry (2018), geology, mining, petroleum and heavy industry (2019) sectors. All 21 provinces have adopted gender equality sub-programs.

Implementing gender mainstreaming through MERIT Project

One of the major donors supporting gender equality initiatives in Mongolia is Global Affairs Canada. Its flagship project named “Mongolia: Enhancing Resource Management through Institutional Transformation” (MERIT) is being implemented since 2016 with an aim to stimulate sustainable economic growth in Mongolia by strengthening the capacity of public institutions and local communities to effectively manage the resource sector.

By engaging in gender analysis and training on gender mainstreaming concepts and methodologies, key partners from the Ministry of Environment and Tourism (MET), Ministry of Mining and Heavy Industry (MMHI), the Mongolian University of Science and Technology, the Institute of Geography and Geo-ecology of the Mongolian Academy of Sciences and the Governor’s Offices in Dornod, Sükhbaatar, Töv and Dundgovi provinces recognized the importance of gender mainstreaming in their work and started integration of gender concepts into their policy and technical documents and organizational workplans. A series of Public Sector Leadership Symposiums co-organized with the Institute of Public Administration of Canada (IPAC) trained directors, managers and senior officers from partnering organizations on introducing flat organizational models and human-centred design in the public sector.

The Leadership Symposiums opened doors for the decision-making personnel to start making important changes. One was to establish a Gender Community of Practice in March 2018 with an aim to enhance skills and knowledge of civil servants on gender mainstreaming. Subsequently, Dornod aimag organized a public sector management conference engaging 700 local civil servants and messages were delivered about gender-sensitive planning and reporting in March 2019. The Aimag Governor is actively working to develop women- and youth-owned start-up businesses. The province recently announced an anti-alcohol campaign while establishing a health clinic for men. Governor of Töv Aimag issued a decision in April 2019 regarding a “Family Day” to support parents working in civil service. Schools and kindergartens were advised to organize school-parent meetings on the first Friday of each month to align with civil servants’ work schedule to allow for more family engagement. Moreover, civil servants were given a paid one-hour leave between 5.00-6.00pm every month to attend their children’s school-parent meeting. Dundgovi Aimag Governor showed leadership and commitment by financing a gender situational analysis from the local budget in 2018 whereas most of the provinces received a central government or donor funding for this work. Sükhbaatar aimag’s male gender focal point is actively reaching out and working with planning and M&E officers to train civil servants at soum level on basic concepts of gender and gender-sensitive planning and reporting. The partner ministries at central government are equally active. A senior officer of strategic policy planning at MMHI used a results-based and a gender-sensitive approach when developing the implementation plan of the new petroleum policy. She developed gender indicators that serve as a model for a gender-sensitive, technical planning document. The management team at the MET has completed a six-months-long “Leadership and Gender” training program with 50 percent female representatives. Overall, an opportune moment is arising in Mongolia to advance the women’s status and promote greater equality among women and men.

About Oyuntuya Shagdarsuren

Oyuntuya Shagdarsuren is a PhD candidate at the Center for Development Research (ZEF) and the Department of Mongolian and Tibetan Studies, University of Bonn, Germany. She is also a Visiting International Research Student at University of British Columbia, Canada and a Senior Advisor with MERIT Project.

Posted in Gender, Oyuntuya Shagdarsuren, Public Policy, Public Service, Social Change, Social Issues | Leave a comment

2019 Mongolia Focus in Review

By Julian Dierkes

Our blog is in its 9th year. We smashed through our 600th post this year. Most notably we were recognized through a Public Outreach Award from the Central Eurasian Studies Society. Mendee defended his PhD. I’d say, we’re going strong!

Blog Readers

Google Analytics is an endless fountain of detailed information, it’s also a potential time sink, so here are some highlights of our readership in the past year:

Outlook

In the past, we have been very active during national elections and these activities have brought significantly more readers than in non-election years. The 2020 parliamentary election promises to be quite interesting, especially in terms of any expressions of voters’ frustration for example by supporting new political movements, but also in terms of the evolution of party structures (will the DP implode? will the MPP actually see a generational turnover?). We are hoping to continue to build on our track record of research-rooted, non-partisan analyses and commentary in this coming year.

Posted in Reflection, Research on Mongolia, Social Media | Tagged | Leave a comment

New to Ulaanbaatar December 2019

By Julian Dierkes

I’ve been keeping lists of things that are arriving to/disappearing from central Ulaanbaatar: June 2019 | April 2019 | December 2018 | August 2018October 2017June 2017 | May 2016 | December 2015 | May 2015 | May 2014 | October 2013 | October 2011. More informal versions of these observations also appear in the /ulaanbaatar/change/ category.

I’ve copied the 2014-19 lists here and am adding to it. New items since previous posts appear in italics. Since this list has been growing, I’m also beginning to delete some items that I’ve had on the list for some time. Strikethrough means that these items will be off the next list.

What has arrived?

  • yoga
  • pet dogs on and off leashes
  • Sunday morning joggers and bikers
  • wheelchair accessibility
  • the “#замчөлөөл” hastag, a city campaign to shame property owners about their infringement of public space. Seems – quietly – very successful when you look at many photos posted.
  • large-scale BBQ extravaganza on the banks of the Tuul river, particularly near the ASEM Road. On summer weekends, so many cars parked right on the riverside, BBQs planted right next to them, families camping out, some literally
  • drive-home service for drivers who have been drinking. You call the service, they drop off a driver who drives you home in your car and is then picked up again. Given – fortunately – much stricter enforcement of drunk driving laws, a great service!
  • bike lanes and bike parking, being shooed off bike lanes by riders (though not in December!)
  • street names and signs in the city
  • fat tire bikes
  • home air filtration systems that everyone is talking about
  • airport road is getting ever fancier, now there’s a giant overpass under construction just before crossing the Tuul on the way into town. Lots of fancy on/off-ramps popping up everywhere on roads. While I dread the opening of the new airport, construction of the (real) highway out there is under way
  • Canadian cold weather brands, Canada Goose and Arc’teryx are everywhere, fake or not
  • fully electric cars, charging stations
  • electronic payment systems. There is the transit card and a number of apps issued by Mongolian banks. There are some QR-code based payment systems. Often credit card payment is approved via a fingerprint reader.
  • coffee roasting. Not only is instant coffee being beaten back (it obviously still reigns in the country-side), but beyond mass market chains, small roasters are now appearing in the market. Some Mongolians are speaking of a new coffee addiction.
  • surveillance cameras. I recall seeing these first at large intersections, presumably to monitor traffic. Now, every other buildings seems to have haphazardly attached a CCTV camera to its facade. I do wonder how many of these are operational and where the feeds lead and if any of them are monitored.
  • street art (several years now, but I hadn’t noted this before) and newly commissioned public art
  • many more food and agricultural products from Mongolian sources available now
  • in April there had been a lot of concern about the lack of snow in the winter and the likelihood of drought. June brought some heavy rains and Ulaanbaatar turned quite green, almost lush.
  • convertibles
  • streetlights in the ger/khashaa districts
  • audible pedestrian crossing signals
  • green license plates for electric vehicles, yellow for natural gas vehicles
  • suddenly, there seem to be a whole lot more young people wearing reindeer boots, they seem to have supplanted Uggs as the fashionable choice for winter boots
  • awareness of plague of small water bottles in all meetings and in homes

  • Prius-based delivery services around downtown for online orders, food, etc. Just like informal taxis, lots of Priuses (?) roaming central Ulaanbaatar to pick up/deliver orders

  • construction of new road to Nalaikh completed in Nov 2019

What has disappeared, or at least nearly?

  • stationary 80s-office-phone-looking old-granny cell phone booth
  • for-pay scales (actually, they seem to be hanging on)
  • free WiFi on Sukhbaatar, er Chinggis Khaan, er, Sukhbaatar Square, er, Chinggis Khaan Square
  • street kids (they seem to come and go)
  • packs of dogs
  • smoking
  • hillside Chinggis visible from the city centre as more tall buildings are constructed
  • stiletto heels
  • outdoor billiards tables
  • Natural History Museum, gone one week after photo below

  • small denomination bills.

What will appear in the future

  • navigation systems
  • mental maps shifting to street names/addresses instead of landmarks
  • new airport, apparently opening in 2020. I drove by there in summer 2017. Oh my, it is far from the city!
  • subway (really, I wish they had selected light rail instead, but who knows whether either will come)
  • urban renewal and historical restorations embracing district north of government house (National University of Mongolia, German embassy, etc.)
  • road signs in the countryside (and not just the very random, very occasional ones that can be found now)
  • network of cross-country riding (bike and horse) trails (though not in central Ulaanbaatar)
  • parking (meters), electric charging in parking spots/lots
  • Combined Heat and Power Plant #5 (yeah, right!)
  • hipsters discovering УАЗ (minivan and jeep)
  • giant hole blown into Bogd Khaan mountain to “drain” polluted air out of the valley (that actually is a proposal, but it will not appear! There also seems to be a proposal to blast away mountains on either end of the valley to let bad air escape!)
  • some kind of traffic routing system with overhead displays
  • Mongolia-themed coffee travel mugs

What will disappear in the medium-term future

I’m going out on a predictive limb here… 2-3 years is what I mean by “near future”.

Actually, since I have been predicting this as “near future” change for some years now, I guess I was wrong with all these predictions, and have changed the listing to medium-term future.

  • stretched-out hand to signal for a car ride
  • that awkward extra half-step on most stairs
  • whitening make-up.

What will disappear in the long-term future

I mean around 7 years or so. None of these seems to be coming true quite yet, so I’ve changed the name of this category from medium-term to long-term.

  • new (to Mongolia) cars that are right-hand drive
  • the neo-classical Ministry of Foreign Affairs building, with its Stalinist (if that’s an architectural style) spire [Tough call to make as the MFA building is now dwarfed by its own annex]
  • deels in the city [actually, they seem to be making a bit of a fashion comeback among young people]
  • some of the downtown university campuses
  • buildings of 4 floors or less in the urban core
  • Russian minivans (УАЗ452)
  • the Winter Palace. It won’t disappear entirely, but it is more-and-more surrounded by a very urban and very tall landscape making it look somewhat forlorn, a fate it shares with many other buildings
  • heritage buildings

Posted in Change, City Planning, Curios, Fashion, Heritage, Museums, Social Change, Ulaanbaatar | Tagged | Leave a comment

Back to the 2008 Future in Voting?

By Enkhtsetseg D and Julian Dierkes

After toying with the idea of a mixed electoral system, in which 50 seats were to be distributed based on the FPTP system and 26 seats to be distributed proportionally from an open party list, the ruling MPP took many by surprise this week with a new proposal to use the block vote system. 

The Case for Block Voting

The system, otherwise known as the plurality-at-large voting, or multiple non-transferable vote, has been previously used twice in Mongolia, 1992 and 2008 parliamentary elections – of course, 2008 was the only election to result in post-election violence in Mongolia’s democratic history. As the Election Law is anticipated to go to a final vote later this week, surprisingly the Democratic Party and other smaller parties appear to support this system. Reasons cited by different parties justifying the use of system include:  

  • campaign costs will decrease
  • less vote buying 
  • less vote-padding by moving voters from one constituency to another
  • it is easier to understand for voters
  • less pork barrel politics
  • no risk of a constitutional challenge on elements of proportional representation

Some have argued this option is the lesser of two evils, as the 2016 Constitutional Court ruling rendered any form of proportional element impossible to adopt, leaving only two options: majoritarian ridings or this  block vote. 

It is unlikely that campaign expenses will decrease under this system. In fact campaign costs have continued to increase from one election to another and the 2008 election was not an exception: 

Election Campaign Expenditure and GDP

Parliamentary Election Expenditures (parties and candidates, in MNT millions) GDP per capita (MNT thousands)
1992 13.7 25.9
1996 209.3 326.6
2000 1,841.8 490.6
2004 1,558.4 858.0
2008 7,978.3 2,480.2
2012 36,863 5,876.8
2016 34,360.2 7,642.9

Source: C Burcher and F Casal Bértoa. 2018. Political Finance in Mongolia – Assessment and Recommendations. Open Society Forum and International IDEA, p. 19

Opposition to Block Voting

Plurality-at-large voting is rare in national elections, though a little more common in local elections across the world. The main criticism of block voting is that the results poorly reflect voters’ intentions.

For parties, it is also very challenging to make strategic decisions about support for candidates. If adopted for the 2020 election, it is likely that DP, MPP and MPRP will run full slates of candidates, but smaller parties may only run single candidates in multi-member districts to avoid cannibalizing their votes.

There are some who oppose the proposed system, citing the memory of the tragic events following the 2008 election. Counting tabulation is not an easy task for this system, especially if manual counting is in practice. As mentioned in the UPR report submitted to the OHCHR by Mongolian NGOs in 2010, “During the 2008 Parliamentary elections, polling station election committees worked continuously for a total of 87 hours with actual vote-taking lasting 15 hours and counting of ballots 72 hours. It is clear that with such a workload, both efficiency of the committee and reliability of vote counting results become questionable.” The 2008 election is the reason why Mongolia turned to automated vote counting in 2012, which has remained in use ever since despite suspicions and distrust often voiced by different parties when it is close to elections.  While the ballot scanning technology might help Mongolians avoid the same problems that surfaced in 2008, it is worth remembering that according to the current draft law on State Great Hural elections, electoral audit or manual vote counting is supposed to take place in 50 percent of all polling stations. 

Among the other justifications cited by those who oppose the proposed Block vote system include: 

  • it is not conducive to promoting representation of women, youth and less known candidates 
  • it will fuel intra-party competition, further weakening the institutionalization of political parties 
  • results are not proportional
  • it is confusing to voters

On the matter of representation of women in particular, note that the women’s caucus had proposed raising the female candidate quota from 20% to 30% but this was rejected in parliament.

The Folly of Last-Minute Selection of an Electoral System

There are no perfect electoral systems. All of them have their (dis)advantages. That does not mean that they do not make a difference, it just means that the choice has to be made deliberately to maximize particular goals.

In Mongolia, the choice of an electoral system has been made in haste for at least the past 3 parliamentary elections. There is no principle harm in this choice (although the block vote is rather unusual to be used in a national election and there are good reasons why that is), but the process is not conducive to careful deliberation of the (dis)advantages of that choice.

As can be seen in the rejection of an increased women’s candidate quota, it is too easy to make a hasty decision on the electoral system when this is left to the very last moment.

About Enkhtsetseg

Enkhtsetseg is an election and governance specialist with a particular expertise in political finance and election-related issues and regulations in Mongolia. She is currently working as governance program manager at Open Society Forum Mongolia. 

Posted in Elections, Enkhtsetseg Dagva, Ikh Khural 2020, Politics | Tagged | Leave a comment