Guest Post: Erdenet Update 100%, Again Contested

By Marissa Smith

At the close of the fall session of the Ikh Khural, Mongolia’s Parliament, the body voted to invalidate the sale of the 49% shares of Erdenet carried out in summer 2016, which transferred the ownership of the 49% from the Russian state enterprise Rostec to the recently created Mongolian Copper Corporation. As of March 29th, the Erdenet enterprise has now been registered as 100% government-owned. The Spring Session of the Ikh Khural opened on April 5th. Though, as reported, no direct references in session have yet been made to the matter of the Erdenet 49%’s “taking by the government” at the close of the fall session, the month of March and beginning of April have seen several relevant events.

The legality of the Parliament decision to revoke the sale 49% of Erdenet shares is being reviewed by the Tsets, Mongolia’s constitutional court, an event that has been lightly covered and may stretch out for a long period of time .The event that I see as most important to discuss at this point in time and which I will focus on in this post, however, is the removal of MCC board members and their replacement with members of government ministries, and the re-entry into discourse of the Erdenet “100%,” which has previously been associated with former Prime Minister Saikhanbileg’s much contested assertion that the sale of the 49% to MCC constituted Erdenet’s transformation into a “100% Mongolian” enterprise.

Increased Government Control, to What Ends?

The three directors of the board associated with the Mongolian Copper Corporation (MCC), the CEO of the Trade and Development Bank (O. Orkhon), long-time politician and proponent of market liberalization and reform (D. Ganbold) [See Morris Rossabi, Modern Mongolia: From Khans to Commissars to Capitalists, Berkeley: University of California Press, 2005.], and M. Munkhbaatar (http://www.news.mn/r/314463), have been replaced with members of the government from the energy ministry (Z. Mendsaikhan), mining and mid-sized industry (D. Davaadorj), and Committee on State Property (A. Dagvadorj). It appears that the central government in Ulaanbaatar may be moving to wrest at least more control of Erdenet from the largely separate group who have been involved with the enterprise since the Tsedenbal period.

The ousted board members – with the exception of former TDB CEO Orkhon — are speaking out and calling the events “highway robbery” (deerem), and Ts. Purevtuvshin, the twenty-something director of the MCC has emerged and been giving interviews and press conferences.

The new members of the board are obscure, so it is hard to say now how the central government may or may not  be seeking to further change the relationship with Erdenet, and there would be other forces of resistance to its actions than free-market logics and those espousing them, domestically and internationally. The silence of O. Orkhon about his removal suggests that these forces may be moving, however.

In terms of the other forces, the position of Russian actors in relation to these three groups of Mongolian actors continues to be important. Through intermediaries who must also be taken into account, the Erdenet enterprise requires continued access to Russian electric power and gasoline, as well as replacement parts for equipment. With Mongolia’s railway continuing to be a Mongolian-Russian joint enterprise, the feasible transport of copper and molybdenum concentrates also requires Russian cooperation. In March Erdenet’s general director, reportedly visited Russian mining equipment manufacturer Rudgormash.

Director, A Long-time Mining (but not Erdenet) Insider, Under Threat

But most lately, Badamsuren is at the center of a storm of controversy about his salary and other benefits (a story also just appearing in Russian-language news outlet asiarussia.ru). Though he was appointed director after the sale of the 49% to MCC, Badamsuren is associated more with the late socialist-era engineering technocracy that also characterizes the administration of Erdenet, rather than Western-oriented business and finance circles (though like members of the Erdenet establishment, Badamsuren studied at the Colorado School of Mines in the 1990s).  Is he (along with the MCC management) being particularly targeted for replacement, possibly for seeking contracts with new or, the wrong, new suppliers? Badamsuren was previously associated with Mongolrossvetmet (the very little discussed Mongolian-Russian mining enterprise, which produces Mongolia’s world-leading levels of fluorspar among other nonferrous metals and minerals, whose shares were also sold last summer) and appears to be an outsider to Erdenet and its networks.

In any case, public discourse is continuing in much the same form as Mongolian news outlets have released many, many stories about the salaries, consulting fees, and somewhat luxurious possessions of Erdenet’s directors (on Wednesday, April 5, a half-hour long press conference on this topic was held and webcast by the State Property Committee). Concern over taxes is also populating the Mongolian press and social media, and conversations (and protests) about offshore accounts are back with a vengeance.

Unfortunately, these stories and conversations miss and lead us away from examining the structural conditions underlying the difficult situations and justified outrage that generate and make attractive simplified narratives of corruption. Similarly, and we may expect the discourse to be increasingly structured along these lines with presidential elections drawing closer, the matter of the 49% is not one involving and to be decided only by two sets of actors facing off, as in alignments between those seeking privatization, the MCC board members, and Democratic Party on the one hand and those supporting government ownership and management and the Mongolian People’s Party on the other, or alliances between government members across party lines (“MANAN”) and other “oligarchs” versus the rest of the Mongolian people.

In particular, in this and my other writing about Erdenet I have sought to highlight the character of Erdenet as involving a largely separate group of actors or “establishment,” with their own sets of networks not only in Mongolia, but also abroad. Though much focus has been placed upon the “taking” of the 49% from the MCC, attempts to take Erdenet from the people who have been operating the enterprise and the networks that keep it running for forty years has been little discussed, and would in many ways prove much more difficult, as has been evident with similar cases involving many large post-Soviet enterprises across Eurasia over the past two and a half decades.

About Marissa Smith

Marissa Smith obtained her PhD from Princeton University’s department of anthropology in 2015, after defending a dissertation about Erdenet and its position in local, national, regional, and international contexts. She currently teaches at De Anza College in Cupertino, California. 

Posted in Corruption, Erdenet, Marissa Smith, Mining, Mining, Mining Governance, Policy, Politics | 3 Comments

Guest Post: The Long Journey – Towards a Broadcasting Law in Mongolia

By Toby Mendel

Broadcasting laws are important

Most democracies, and quite a few non-democracies, have adopted broadcasting laws. At their best, these laws can promote a number of important social and human rights objectives. They can establish independent bodies to regulate broadcasting, so that this is not done by a ministry or another body which lacks independence from government. They can put in place a fair, competitive processes for obtaining broadcasting licences, ensuring a level playing field and promoting various public interest objectives through licensing (such as controlling undue concentration of ownership of broadcasters). They can establish various mechanisms to promote diversity in the broadcasting sector. And they can put in place appropriate systems for addressing harmful content in the airwaves or, put differently, for promoting professionalism among broadcasters.

Mongolia, however, is an exception in this area, since it does not have a broadcasting law. This is not for lack of trying and both advocates and officials have spent many years promoting the idea of a broadcasting law, so far without success. As far back as 2002, I was a co-author of the publication Mongolia in Transition: Analysis on Mongolian laws Affecting Freedom of Expression, produced by Globe International and ARTICLE 19, which, among other things, recommended the adoption of a comprehensive broadcasting law. In 2009, the Asia-Pacific Institute for Broadcasting Development (AIBD) worked closely with the Mongolian National Broadcaster (MNB) to prepare a broadcasting law, but the resulting draft was never adopted. Following this, in 2013-14, the Asia-Pacific Broadcasting Union (ABU) worked closely with the Communications Regulatory Commission (CRC) to draft a broadcasting law which, again, was never adopted. In both cases, I was the international expert on the team.

Mongolia does have a Law on Radio Waves, passed in June 1999, and a Law on Communications, passed in October 2001. The former establishes a general system for licensing the airwaves for both broadcasting and telecommunications activities, while the latter creates the CRC. However, CRC is not independent of government among other things due to the fact that the Prime Minister appoints the Chair and other members of the Commission, on the basis of nominations by the Minister responsible for communications. Furthermore, neither law provides for specific rules on broadcasting. As a result, these laws fail to promote the important potential objectives of a broadcasting law, noted in the first paragraph of this blog.

The perils of not having a broadcasting law

In many respects, Mongolia represents an almost classical study of what happens in a country which, while a reasonably progressive transitional democracy, lacks a proper legal/regulatory framework for broadcasting. Because the regulator, the CRC, is not independent, it is not regarded as a legitimate decision-maker. This, in turn, seriously undermines its ability to make hard decisions. For example, a competition to determine which television stations would get access to the national, digital transmission network, held over one and one-half years ago, has still not been decided. The result is that the six legacy (historical) channels remain on the national network rather than this having been decided in a fair, competitive manner.

More generally, instead of holding competitions for a limited number of broadcasting licences, based on what the country can reasonably support, licences were, at least in the past, issued to every bidder who met minimum technical standards (the so-called “fit and proper” test). Although some brakes have been put on this recently, the result has been a massive oversupply in the number of channels, many of which operate at a loss and with tiny audience shares. This, in turn, fractures advertising revenues and otherwise creates serious market distortions, making it very difficult for even the most popular channels to invest the resources that are needed to produce quality content.

The lack of independence of CRC, combined with an inadequate legal framework, also makes it almost impossible to regulate content, whether in the form of enforcing positive obligations (such as a requirement for all channels to carry 50 percent Mongolian content) or professional standards (such as not to broadcast hate speech or content which is inappropriate for children during the daytime). This has significantly exacerbated the problem of low standards in broadcasting.

Another problem is the absence of effective rules to promote diversity in the broadcasting sector. One measure which has been put in place is to require so-called “cable channels” (i.e. those which, in accordance with their licences, are distributed exclusively over cable networks) to concentrate 80 percent of their programming in the specialized area indicated in their licence, such as history, culture, education, news or sports. Even this rule, however, is widely ignored and rarely enforced. Otherwise, there are no rules limiting concentration of media ownership, promoting diversity through the licensing process or supporting the establishment of community broadcasters, all key diversity mechanisms in more developed broadcasting systems.

Moving forward, albeit with some headwinds

In an important breakthrough, at the end of December 2016, the CRC did place a draft Broadcasting Law before parliament. This is significant because it represents a real opportunity to move forward on this issue. At the same time, as a recent Analysis of the draft Law by the Centre for Law and Democracy shows, there are significant problems with the draft.

The first and perhaps most significant problem is that the draft Law does nothing to enhance the independence of the CRC. Indeed, it says nothing at all on this subject. Despite this, the draft Law grants very significant powers to the CRC, including to license broadcasters and to undertake the very sensitive task of applying content rules. The problems with independence do not stop there. The draft Law creates a Development Fund for National Broadcasting, with the worthy goals of improving the quality of Mongolian content, and funding priority and more costly content production. However, the draft Law also calls on the government to collect and set the rules for disbursing the Fund, both very politically sensitive tasks.

The failure to promote the independence of the regulator is exacerbated by the fact that the term for broadcasting licences is set at the unrealistically short period of three years, whereas in almost every other jurisdiction this is at least seven years. The result is that every broadcaster will have to apply every three years to the politically controlled CRC for licence renewal. The draft Law also fails to establish even a framework of rules to ensure that licensing processes are fair, transparent and assessed on the basis of pre-established and legitimate criteria. The draft Law is also silent as to the question of how television stations get access to the highly coveted national distribution system, for how long and so on, leaving this to the sole discretion of CRC.

In terms of diversity, the draft Law does include basic rules on concentration of ownership of broadcasters, although it fails to establish analogous rules regarding cross-ownership between the broadcasting and print media sectors. It also includes a very general call for quotas for Mongolian, local and licensee produced content, but the specifics are to be set by the CRC. While positive, it would have been preferable for the Law to include more detail on these important matters. Significantly, the draft Law entirely fails to recognize community broadcasting, which is never even mentioned. For example, the definitions recognize public and commercial broadcasting, but not community broadcasting.

Finally, the draft Law establishes a number of direct content restrictions and then appears to leave enforcement of these rules to the CRC, mainly through the licensing process (i.e. by suspending or revoking licences for breach of the rules). Better practice in this area is to grant the regulator the power to adopt and then apply a detailed code of conduct for broadcasters, and to provide for a graduated system of sanctions, including warnings, a requirement to broadcast a statement acknowledging the breach and fines before the more serious measures of license suspension or revocation are invoked.

To be fair, it is very positive that Mongolia appears to be moving forward with the adoption of a broadcasting law and, despite its shortcomings, the draft Law does contain a number of positive features. At the same time, given how long Mongolians have waited for this, it would be a lost opportunity if greater effort were not spent trying to improve the existing draft. The Analysis by the Centre for Law and Democracy provides a good starting point for such improvements.

About Toby Mendel

Toby Mendel is the Executive Director of the Centre for Law and Democracy (CLD), a Halifax, Canada based international human rights organization that focuses on foundational rights for democracy (freedom of expression, the right to information, freedom of association and assembly and the right to participate). He has worked on these issues globally and in countries around the world at CLD and, previously, with ARTICLE 19, for some 20 years. He also works with a range of inter-governmental organizations – including UNESCO, the World Bank, the OSCE and the Council of Europe – on these issues.

 

Posted in Law, Media and Press, Public Policy, Social Media, Society and Culture, Toby Mendel | 2 Comments

Funny Thing Happened Last Week: John Oliver, Dalai Lama, Mongolia

By Julian Dierkes

One of the reasons I encourage graduate students to be strategic about communicating their research results is that you never know when and on what topic the public comes knocking on your door.

Sometimes the public comes in the form of a John Oliver interview with His Holiness the Dalai Lama, viewed more than 4.5 million in the first five days since it was posted.

Obviously, the Dalai Lama is well-known for his sense of humour, so perhaps not surprising that he would be interviewed for a comedy news show.

In this vein, perhaps it is also not so surprising that he ended up talking about fermented mare’s milk in Mongolia. Hey, why not?

And as Tsogtbaatar B says (more about that below),

Well, who am I to judge Dalai Lama?

Sudden Interest in Alcoholism in Mongolia

Obviously, when the Dalai Lama mentions something, and even more when he does so in response to a John Oliver question, the world appears to get interested.

In the case of our Mongolia Focus blog, that means the world suddenly got interested in a post that Mendee wrote in 2012: “Mongolia – Without Vodka, Cheers with Milk“.

Now, as blogs are organized chronologically, a 2012 post is buried pretty deeply on our blog. We have written over 450 posts in the 5 1/2 years of operation of our blog until today (March 2017), so it is highly unlikely that anyone would find this blog post by clicking on <next post>.

But, somehow, someone found the post and posted a link on a scientific skepticism site. I can’t quite figure out whether it is this post that has driven traffic, but more than 500 people read that post in the days after the John Oliver segment aired.

Just to put this in perspective, apart from election coverage when we see huge spikes in readership, a regular blog post does well when it gets over 100 readers in the first couple of days after posting. There are exceptions, like Marissa Smith’s recent guest post on the Erdenet NoSale which has been read more than 500 times since it came out already, but 500 readers for a 2012 post is a very big number, even in the grand scheme of things, i.e. the over of a quarter million page views that our blog has had since we started writing.

In the world of blogging about Mongolia, that’s about as viral as you’re going to get, even if it is only 0.01% of the viewership of the John Oliver video.

And then, the Media

Not surprisingly, as John Oliver’s brand of news comedy seems to be popular with journalists and the public, this mention of Mongolian alcohol abuse also caught the attention of journalists.

And sure enough, some days after the interview, a post showed up on U.S. National Public Radio’s Goats and Soda blog: “Looking into the Horse Milk Story that the Dalai Lama Told John Oliver“. An aside: the name for this health blog “Goats and Soda” apparently derived from some travel in Africa where goats and carbonated sugar water seemed ubiquitous, but obviously, any blog that has “goats” in the name seems an appropriate place for writing about Mongolia.

Since Pres. Elbegdorj’ office didn’t respond to a request for an interview (perhaps, the Dalai Lama remains too controversial a topic for officials following the recent spat with China over HHDL’s visit in November 2016), NPR’s Angus Chen turned to blogging experts on Mongolia. The story thus cites Mendee J, co-founded and frequent contributor to this blog, but also Tsogtbaatar B. Not only was I a member of Tsogoo’s dissertation committee, but he has also written for this blog in the past while now serving as the director of the Public Health Institute of Mongolia. Since his work is directly related to this story, I hope that the sudden media attention raises awareness of public health issues Mongolia is facing in Mongolia itself and abroad.

Who Cares?

Allyson Seaborn along with many other people most likely, was somewhat annoyed by the John Oliver-HHDL hoopla after a few days.

I will note here that the substance of the Oliver-HHDL interview is not really quite worth commenting on.

Of course, the Dalai Lama did not cure alcoholism. Of course, horse milk is typically consumed as airag, i.e. fermented, and thus alcoholic. Of course, Mongolians and many other people have been consuming fermented mare’s milk for many centuries. And of course, Oliver and HHDL both capitalize on the exoticization of Mongolia as “Outer Mongolia” and of fermented mare’s milk.

But the fact that Mendee’s very old blog post has found hundreds of readers is of interest to me. Some of those readers were hopefully interested in other blog posts. Maybe some of them even got more interested in Mongolia than an initial “oh, how exotic way”. That is often not easy to achieve when you’re offering analysis of contemporary Mongolia.

Conclusion

As researchers, we should be ready to leverage the attention that sometimes random connections might bring, to raise awareness of our analyses and the issues we care about.

Posted in Curios, Dalai Lama, Health, Media and Press, Pop Culture, Social Issues, Social Media, United States | Tagged | Leave a comment

Anti-Chinese Attitudes in Mongolia through Generational Imprinting

By Mendee Jargalsaikhan

A few years back, Julian introduced me the concept of generational imprints and pointed out the work of Karl Mannheim.  Mannheim (Essays on the Sociology of Knowledge. Routledge: 1952) defined a generation as a social creation and argued that each generation receives imprints from the social and political events during their formative age.  Fascinated with this work, I did a little brainstorming for my MA thesis.  I am still hoping that the study of generational aspects could lead to more insightful examination of anti-Chinese attitudes in Mongolia instead of over-emphasizing its persistence among general public. Here is a bit long excerpt:

Logically, all generations talk differently about China, Chinese people, and their culture, because they have collective memories of significant events based on their first-hand or second-hand learning experience. Without rigorous interviews and analysis, it is impossible to prove generational aspects. Nevertheless, I will advance the following speculations to dis-entangle overall claim of persistent anti-Chinese attitudes in Mongolia a little further. Table 9 correlates seven generations, their sources of foreign education and orientation, experience (either first or second hand) of events, and political status to speculate potential attitudinal outcome in regards with China, Chinese people, and culture. If a generation received all sources of schemas, their attitude toward China may be neutral. In opposite, if a generation is only exposed to negative schemas during their formative age and has limited interactions with China, their attitude towards China could be mistrusted. And, even if they are exposed to positive and neutral schemas after their formative ages, their attitude to China may be cautious. At the same time, attitudes of generational cohorts also may alter significantly overtime due to dramatic changes such as start and end of Cold War and democratization.

 

A cohort born in 1930 would have seen high-level exchanges of Sino-Mongolian leaders, a visible presence of Chinese workers and their families in Ulaanbaatar, unique Chinese goods (e.g., silk, fruits, and tea), and culture (e.g., song and table tennis), and heard about Mongolian participation in the Liberation War in northern China during their formative years (17-25 years). Many of those who were educated in the Soviet Union would have interacted with Chinese students in Moscow and a few might have had opportunities to study in Beijing. The generation would have also lived through a period of three decades, when all these interactions would have ceased. They would have seen a good China (providing assistance to Mongolia) and a bad China (cultural revolutions, political struggles, and the Tiananmen incident). This group of people might have played a crucial role in resuming normal relations with China at the end of the 1980s, since most members of the Political Bureau of the Mongolian Communist Party had been born in the 1930s.

The second cohort, born in the 1940s, witnessed some friendly Sino-Mongolia relations. But the students abroad in the Soviet Union would have had few interactions with Chinese people in Mongolia, because the Chinese workers in Mongolia were strictly guarded and influenced by the extensive propaganda and anti-Chinese attitudes. They would have been mostly aware of the images of bad China, and would have interacted closely with Russians in Mongolia and abroad, from their formative years, starting from the 1960s. As Mongolia transitioned into a democracy in 1990, the political elites from this cohort would have dominated most of the leadership posts.

The third cohort, born in the 1950s, would have had first-hand experience with anti-Chinese attitudes, but would not have interacted with Chinese until the 1990s. They were brought up under the “China threat” atmosphere and would have fulfilled their extensive military and civil defense obligations. Although they would have had first-hand experience of the Soviet-Mongolian brotherly relations, and been knowledgeable about the Soviets and the communist world, their views on China would be one-sided, since they would have lacked any exposure to neutral or positive views about China. This group has been a driving force for the democratic movements, and abhorred the Chinese and Romanian repressions of democratic movements.

The 1960s generation had experiences that were similar to those of their previous generations, though Sino-Soviet tensions had been reduced and the cohort began questioning the need to have military and civil defense obligations. During their study in the Soviet Union and Eastern Europe, the members of this generation would have had first-hand experience with the negative images of the Soviets in Eastern and Central Europe, and been exposed to liberal ideas and anti-communist discourses. They would be attracted to the ideas of democracy, market economy, and developments in the capitalist world. Their knowledge about China would have been influenced by the negative views; they would have disliked the Chinese repressions of 1989. On the other hand, this generation enjoyed free access to Chinese markets and infrastructure. This cohort is becoming the most influential group in Mongolian politics today.

The 1970s generation has mixed views about both China and Russia. They would have first-hand experience of the anti-Chinese propaganda, strained relations with Russia (withdrawal of Russian military and the anti-Soviet attitudes), and increasing interactions with China. They would likely have similar feelings about the Tiananmen incident and the growing Chinese economy, as would earlier cohorts. Nevertheless, Russia would no longer be the window through which to see the world, as it was for earlier generations. Cohorts from the 1940s and the 1960s were more familiar with Russia, its people, and culture, since 32,000 Soviet civilian workers with their large numbers of dependents, and 80,000 Soviet troops were in Mongolia in the 1970s and 1980s. The Russian language was a mandatory second language for thousands of Mongolians who were studying in the Soviet Union, from the time of their elementary school. This was not the case for generations, from the mid-1970s and afterwards.

Logically, generations of people, who were born in the 1980s and 1990s, will likely have the most neutral view of China and be rather cautious and mistrusting of Russia. They have not experienced the anti-Chinese (pro-Soviet) propaganda, and are able to have multiple views on most issues, links with the West, and access to vast amounts of information (from the Internet, cable TV, and newspapers). The most significant events they are likely to recall are the winning of two gold medals by Mongolians at the Beijing Olympic game, rather than second-hand knowledge about the Tiananmen incident and bad images of China from the 1960s. The increasing number of Mongolian students in China and China’s sustained projection of its soft power policy (e.g., visa waiver, granting access to Chinese infrastructure and medical facilities, developmental aid, and assistance) for Mongolia will certainly affect the attitudes of future generations in Mongolia. However, the results from AsiaBarometer (2005) and Asian Barometer (2006) yield interesting outcomes. First, all generations tend to hold neutral and negative views of China in both polls. Although there was no significant deviation between generations of 1930-40s and 1950-70s, younger generations (1980-90s) have slight positive impression of China in the Asian Barometer study. But younger generations in both polls were overly polarized while other generations have more neutral views (about 28-36%). Second, there are noticeable correlations between view of China and gender along with educational level of younger generations. Male participants and people with low educational levels hold more unfavorable view of China. The question will remain why views of younger generations are polarized and holding similar negative views as older generations.

These barometer studies are not likely reveal attitudinal shifts of generations. First, number of the sample, questions, conducting organizations, and timeframe of two barometers were different. For instance, when AsiaBarometer (2005) asks about Chinese influence, Mongolians responded in more negative while more positive as Asian Barometer (2006) asks about impressions about China. Second, each poll had a single question on China and one possible response. More insightful examination of anti-Chinese attitudes would need a specific set of questions. For instance, questions whether a person allow his children marry to Chinese, live next to a Chinese neighbor, or work in Chinese-Mongolian run business may help us to understand emotional components of anti-Chinese attitudes. Moreover, degree of awareness of Chinese culture (e.g., language, literature, religion, customs, and traditions), history, contemporary Chinese politics and socio-economic situation as well as Sino-Mongolian relations need to be examined by a carefully-designed questionnaire will contribute to our understanding of anti-Chinese attitudes. In addition to variables like age, gender, geographic location, it might be possible that other variables such as personal income, social status, and degree of interactions with Chinese people could correlate person’s attitude to China.

Without further study, it would be difficult to make firm conclusions about the anti-Chinese attitudes of different generations and their key generational imprints. Nevertheless, it is fair to speculate about the existence of lingering impacts from the artificially-consolidated past schemas on the younger generations, since the past schemas have not been de-constructed in historical textbooks, the literature, entertainment, or the political leaders’ discourses in post-communist Mongolia. A handful of empirical studies suggest that Mongolians generally hold unfavorable views about China, and the intensity of the anti-Chinese discourses in the media, blogosphere, and public domain is apparent.

Note:  this excerpt is directly taken from my graduate thesis, Anti-Chinese Attitudes in Post-Communist Mongolia (2011), pp. 34-38.  Here is the link to the full thesis.

Posted in China, Nationalism, Politics, Social Issues | Tagged | 1 Comment

PS: Constitutional Reform & Double Deel

By Julian Dierkes

Constitutional revision remains under consideration in Mongolia. If the MPP wins the presidential election in June 2017, there may be less pressure toward a revision of the relative power of president and parliament (most recent discussions in Mongolia would assign more power to parliament, but somehow I don’t think that M Enkhbold would be so excited about that should he win the presidential election).

One of the issues that keeps coming up over and over is the “double deel” (давхар дээл), i.e. concern about members of parliament also serving as members of cabinet.

Previously, I have used examples from Canadian and German state/provincial parliaments to argue that other parliaments of comparable size have not been concerned about this challenge.

As it turns out and as I have learned in the context of debates of constitutional reform in Berlin, I was at least partly wrong about that.

The Green Party of Germany, for example, has long argued for a separation between a seat in parliament and an office (Trennung von Amt und Mandat), though this has been focused primarily on party offices.

In Spring 2017, the Berlin parliament (Abgeordnetenhaus) is debating a proposed constitutional amendment to prevent the double deel. I hesitate to offer this link, in part because it leads to the proposal by the Alternative für Deutschland, a rightist-populist party. However, as the example of rules against the party double deel in the Green Party show, this is a debate that other parties are open to.

The case in the Berlin discussions includes the following elements:

  • separation of power: the German constitution does not adopt this as a principle, instead preferring interlocking powers (Gewaltenverschränkung)
  • weakening of parliament: this is in part a numbers argument (i.e. every member that joins the cabinet no longer operates as a member of parliament, but also an argument about the role of parliament as endorsing and controlling the government
  • salary: the Berlin parliament is defined as a half-time job (surely not realistically so), members of cabinet (Senatoren in the case of Berlin) thus draw salaries as such AND as members of parliament
  • examples: the two other German city states, Hamburg and Bremen, both have separated membership from parliament from membership in cabinet

While the Greens have practiced this separation for some time, it has also been advocated for by parts of the Social Democrats.

Given similarities in the issues and challenges identified, perhaps there are opportunities for an exchange between Berlin and Mongolia around this topic.

Posted in Constitution, Democracy, Germany, Governance | Tagged | 4 Comments

Addendum: Paying Bribes

By Julian Dierkes

I recently wrote that year-over-year changes in the Corruption Perception Index for Mongolia didn’t mean much, and also tried to benchmark corruption in Mongolia against post-state socialist countries, resource economies and democracies.

Now, Transparency International offers some more information in their “Asia Pacific – Global Corruption Barometer“.

Methods

First – as I do often – a quick note on methods.

Figures reported in the GCB are based on face-to-face surveys conducted in Mongolia in December 2015 (Nov 25 2015 – Jan 2 2016). 1,500 respondents were interviewed.

A number of reported measures come with caveats, often involving Mongolia. For example, questions regarding whether corruption had become better or worse were not asked in Mongolia and no explanation was given why that might have been the case.

“TNS” is listed as having conducted the survey in Mongolia.

Results

Reports of Bribes Actually Low for Mongolia

At the broadest level, the survey reports that 20% of Mongolians report having paid a bribe. That is remarkable and worth noting.

World Bank country manager Jim Anderson notes this right away:

It is worth looking at this regional comparison a bit more closely. Transparency International colours its map by deciles, i.e. 0-10% reporting paying bribe, 11-20%, etc.

Alternatively, let’s group countries with very low corruption, i.e. under 7%: Japan (0,3%), Hong Kong 2%, South Korea (3%), Australia (4%), Taiwan (6%). I imagine that Singapore and New Zealand would also be in this group had they been included.

Then there is a jump to Sri Lanka (15%), Mongolia (20%), Malaysia (23%) and China (26%).

After that, reported figures jump to nearly a third of respondents (Indonesia 32%), and rise all the way to over two thirds of Indians reporting having paid a bribe.

Note that all the low-corruption countries are the Asian OECD countries plus Taiwan and Hong Kong. The very high figure for India, on the other hand, suggests that levels of bribe-paying are not necessarily strictly related to per capita GDP.

What could we best call Mongolia’s group of 15-26% reported bribe paying? Moderately corrupt? Not bad company for Mongolia to be in, but clearly this points to a lot of room for improvement.

Perception of Government Efforts

One of the areas where the Mongolian results are much less encouraging is the perception that the government doing badly in combatting corruption. At 61% of Mongolians responding with this assessment, the sense in the population is obviously that the government is part of the problem, not the solution. This is especially discouraging as the survey was conducted at a time of a DP government. The DP and especially President Elbegdorj has always laid claim to anti-corruption as a central differences with the MPP. The electorate is obviously not impressed by these claims.

It should be noted that the same countries where citizens report low levels of bribe-paying also report high levels of dissatisfaction with government measures against corruption. Along with Mongolia that is South Korea (76% “government doing badly”), Malaysia (62%), Japan (60%). This assessment is also high in some countries where corruption is rampant, for example Cambodia with 56% saying the government is doing badly with 40% reporting having paid a bribe.

Clearly, the relationship between paying bribes, perception of corruption, and government action is in no ways a direct/linear one, as I have long suspected for the CPI and other measures.

Adding to this negative perception of government efforts is Mongolians’ sense that “ordinary people” have limited impact in the fight against corruption. 51% of Mongolians disagree with the statement “Ordinary people can make a difference in the fight against corruption”. That is the highest figure across the region except for Pakistan (67%). Note that on this question as well, Mongolia is similar to Japan (51%) and Malaysia (55%).

I still believe that corruption has a lot of potential for mobilizing Mongolians and also for causing some major shift in party politics, along with air pollution as an issue. My belief in this regard does not seem to be confirmed by these figures, however.

Where do Mongolians Pay Bribes?

Mongolian respondents clearly identified the police and public hospitals as places where they paid more bribes than in schools or for registration and other administrative tasks. Note that Mongolians were not asked about utilities or the courts.

The identification of the police as a weak link in anti-corruption efforts seems fairly common across the Asia Pacific region.

Conclusions

Corruption is a complex challenge. Talking about it more is not a cure-all and, ironically, the case of Mongolia perhaps demonstrates that greater awareness of corruption may go hand-in-hand with lower prevalence (or vice-versa).

The complex causal relationships around perception and actual prevalence of corruption, as well as the efficacy of anti-corruption efforts, to me suggests that even more than with other global indices, the various measures used by Transparency International are of very limited meaning. At best, they may be pointing to trends over time, at worst, they seem to be subject to popular mood swings and really suffer from a lack of country-to-country comparability.

But, at the same time, corruption is a scourge on Mongolia and there are no significantly better ways of measuring it available in a consistent manner.

Posted in Corruption, Global Indices | Tagged | 2 Comments

Benchmarking Corruption

By Julian Dierkes

In January, Transparency International released the most recent instalment of its corruption perception index. I’ve already commented that Mongolia’s drop in the CPI rankings was not very meaningful. The more I’ve looked at the CPI over the years, the more I have questioned its validity and meaningfulness given that it is/has become largely a meta-index of expert judgments. This does not strike me as a great way to assess corruption and the fact that the fluctuations in Mongolia’s ranking do not really seem to be related to government policy, nor to prominent corruption cases, reinforces my sense of the overall utility of the CPI on an annual basis.

What global indices are good at, however, is to provide some kind of trend line relative to other countries that are similar in some way, be it there starting position, their policy responses to corruption or some other factor.

Given that it’s been five years since I last placed Mongolia’s ranking on the CPI in a context, let me return to that exercise here.

Mongolia’s Performance over the Past Five Years

Before I look at the index here, I would recall that corruption has been talked about a lot during this period in Mongolia. The DP has always embraced this as an important topic in its campaign, but the other parties are equally dedicated to corruption, as least rhetorically. On the policy side, some measures have been introduced and strengthened, like parliamentarians’ obligation to disclose assets, and the EITI, for example. The fate of the Anti-Corruption Agency has been more mixed during this point. While it has gained in prominence, it has also seemingly been instrumentalized by various political actors during this time period. The “Offshoreleaks” and “Panama Papers” cases have renewed public attention to corruption, as have the recent discussions around the purchase of 49% of Erdenet Mine from Russian investors.

With all this activity in the policy space and the public eye, few people seem to express a sense that much has changed about corruption, it is generally seen as still endemic.

The Asia Foundation’s  2016 Survey on Perceptions and Knowledge and of Corruption, does show that corruption is no longer seen as urgent a “major problem” as other issues, like unemployment for example. The proportion of respondents speaking of corruption has thus declined from nearly 30% in 2006 to under 10% in the last several years. At the same time, the assessment that “corruption is a common practice in our country” has not budged, in fact it has been rising since 2014, with roughly 2/3 of Mongolians agreeing with that statement. The regularity of the SPEAK survey allows us to compare its results to CPI rankings.

2012 2013 2014 2015 2016
CPI Score 36 38 39 39 38
Proportion: Agree with “common practice” 64.4% 62.7% 64.6% 65.7%

Mongolia Compared to Other Groups of Countries

TI itself offers a regional comparison, including Mongolia in the Asia Pacific grouping. The logic behind the regional approach is that perhaps there is some kind of a contagion effect that has an impact on corruption. When the CPI is constructed in Berlin, that may make a lot of sense, especially given the extent to which the EU radiates some of its policies and practices Eastward. But for Mongolia the regional grouping that includes as disparate and unconnected cases as Japan and Mynamar, with no meaningful regional interactions, this grouping makes less sense to me.

Substantively, I would be most interest in comparing Mongolia to a) post-state socialist countries, b) democracies, c) resource economies.

Mongolia and Post-State Socialist Countries

Let’s look at post-Soviet countries in Eurasia first.

In this group, I would include Armenia (AM), Azerbaijan (AZ), Belarus (BY), Georgia (GA), Kazakhstan (KAZ), Kyrgyzstan (KG), Mongolia (MN), Moldova (MD), Russia (RU), Tajikistan (TJ), Turkmenistan (TM), Ukraine (UA), and Uzbekistan (UZ).

Just like was the case in 2012, Georgia stands out in this group with a 2016 score of 57 that is far better than Belarus (40), Mongolia (38), Armenia (33), Azerbaijan and Moldova (30), Ukraine, Russia and Kazakhstan (29), Kyrgyzstan (28), Tajikistan (25), Turkmenistan (22) and Uzbekistan(21).

In this group comparing 2012 scores with 2016 shows some improvement (BY + 9, GA + 5, TK +5, KY +4, UZ +4, AZ +3, TJ +3, UA +3, MN +2, AM +1, RU +1, KAZ +1). Only one country shows a decline in its 2012 vs 2016 score: MD -6. In this grouping then Mongolia’s long-term trend is not very impressive.

Emerging Resource Economies

What countries could we group with Mongolia as an emerging resource economy for 2012-2016?

A place to start might be data on % GDP derived from mineral rents. Then let’s select countries where this percentage has been above 8% for the period 2011-15 (no data for 2016 from the World Bank yet.

Burkina Faso (BF), Chile (CL), Dem Rep of Congo (CD), Guyana (GY), Liberia (LR), Mali (ML), Mongolia, Suriname (SR), Togo (TG), Zambia (ZM).

That seems like a reasonable comparison group, though Chile is hardly “emerging” at this point and the % of GDP from mineral rents has not increasing in any of these countries.

CPI scores increased in: SR +8, BF +4, GY +6, MN +2, TG +2, ZM +1. The score stayed the same in the CD and declined in: CL -6, LR -4, ML -2.

Again, Mongolia’s performance here is middling at best. Take Suriname as an example. Mongolia and Suriname were very close in scores in 2012 (36/37, respectively), but the difference had widened to 7 (38/45). Why I don’t know anything about this improvement in Suriname, even with doubts about the CPI generally, this seems like an important comparison for Mongolia.

Guyana has also made rapid progress to almost reach the score of Mongolia. Generally, African countries with large resource sectors have fared worse than Mongolia.

Democracies

To find some comparable democracies for Mongolia, let’s start with the Freedom House ranking of 1.5. Countries at that level are: Israel, Ghana, Mongolia, Belize, Croatia, Latvia, Grenada, Mauritius, Poland, France, Lichtenstein. Of these Croatia, Grenada, Latvia, Poland became democratic around the same time as Mongolia.  They all have much higher corruption scores than Mongolia. This is a pretty amorphous group, however, and it would be more useful to somehow find a grouping of countries to compare to that is defined similarly, perhaps around constitutional forms, i.e. semi-presidential democracies? I’m not sure where I might find such a listing.

Some Conclusions

Rather than focusing on year-on-year changes in the CPI score, I’ve tried to compare Mongolia in the medium-term trend in the CPI to countries that are characterized by similarities with Mongolia in terms of history and economy. This comparison suggests that Mongolia’s performance on the CPI criteria has been moderately positive. There are examples of similar countries who have performed much better, and examples of countries where corruption is perceived to have become much worse.

Posted in Business, Civil Society, Corruption, Mongolia and ... | Tagged | Leave a comment

Guest Post: Label of Erdenet ‘Nationalization’ Misleading

By Marissa Smith

Many Fear Mongolian Government Decision Heralds Another Privatization, Securing of the Status Quo Possible

Last week during an extra session after the final day of its fall session, Mongolia’s Parliament voted that the state acquire the share of the Erdenet Mining Corporation held by the Mongolian Copper Corporation.  The share, 49% of the Erdenet Mining Corporation, had been sold by Russian State Corporation Rostec at the end of June. Investigations by the Parliament’s Standing Committee on Law as well as international journalists and scholars (The Diplomat, Mongolia Focus, Jargal DeFacto) allege that the Mongolian Copper Corporation is a shell company, its purchase of the 49% financed almost exclusively through the Trade and Development Bank, Mongolia’s oldest and one of its largest, most internationally-held private banks, as well as the state Bank of Mongolia, partly with Chinggis Bond revenues earmarked for development projects.

Bloomberg and the Associated Press have run headlines over stories about the action prominently featuring the label “nationalization”. However, while the Mongolian People’s Party, which took power after the sale and whose members are leading the charge to revoke it, may be often taken by foreign observers to be devotedly following the example of the Mongolian People’s Revolutionary Party that governed Mongolia during over six decades of state socialism, their members have long demonstrated their willingness to participate in privatization. A major reaction by the Mongolian public to the latest moves has been that the 49% has been taken away from the Mongolian Copper Corporation by the government in order that it be given to other businessmen and corporate actors, ones with ties to politicians (of both major parties) currently in power. That is, the government’s taking of the 49% from the Mongolian Copper Corporation is widely viewed as the opening move in another example of the kind of corruption they accused the June sale of (see Mendee J.’s comments), made while the sale was being contested in Parliament earlier on, and summary of Lhkagva E.’s interpretation and comments by Julian Dierkes about Mongolians’ suspicion of collusion across party lines. On Tuesday the Mongolian People’s Party said at a press conference that it is discussing forming an openly traded company though it is unclear as to whether this would include the 51% owned by the Mongolian state as well as the 49% ordered to be taken from the Mongolian Copper Corporation.

(“Who is going to take the milk of the spent old cow?”)

As President Elbegdorj noted in his address to Parliament (in which he urged the assembly to not approve the measure to take the 49% from Mongolian Copper Corporation, warning that such a move would deter foreign investment), the Erdenet Mining Corporation involves and directly benefits tens of thousands of Mongolians. As President Elbegdorj suggested, the loss of Mongolia’s “Milk Cow,” arguably the nation’s commodity most easily converted to cash, if the 49% were mismanaged would likely result in a political backlash. Erdenet has been the nation’s largest taxpayer and produces at least around half its copper concentrates. Elbegdorj noted plans for further development of Erdenet, including a long-proposed copper refining plant. The last serious such proposals at a national level have been to build the refinery at Sainshand, on the Trans-Mongolian Railroad, located between Erdenet and Oyu Tolgoi, a project now dormant.

The grades of copper sulphide ores in Erdenet’s forty-year-old open pit have sharply decreased as the mine has aged, though its oxide ores could be exploited with new processing plants.

Mongolia and Russia

The political situation is precarious. Mongolians are watching on-going Romanian anti-corruption protests much as they did in 1989 (media outlet Mongolia Live posted posted a statement of solidarity with Romanian protestors on February 1, saying that “corruption is extremely high in both countries”).

The matter of the Erdenet 49% remains mired in an ongoing crisis, in which the failure of public benefits to be realized by other operations, here the Oyu Tolgoi and Tavan Tolgoi mines in particular, has forced Erdenet, as the lone major functioning enterprise, into the spotlight, as also happened in the late 1980s and early 1990s.

Currently, Mongolians are waiting for response from Rostec and the Russian government. As Foreign Minister Munkh-Orgil visited Russia on a working visit February 13-14, Mongolian journalists and social media users were quick to note that the Erdenet matter was not discussed in press conferences, and the Mongolian Ministry of Foreign Affairs responded to inquiries that a meeting between Munkh-Orgil and Rostec CEO Sergei Chemezov had not been requested.  The text of a letter reportedly sent to Prime Minister J. Erdenebat from Chemezov and circulated among members of Parliament was printed by major news outlets news.mn and medee.mn, stating that reversing the sale would damage Mongolia and Russia’s reputations in the eyes of investors, and suggested that the matter be taken to an arbitration court in Singapore. If true, this text could be understood as a move to keep Russian-Mongolian relations in a holding pattern, as public discussions between Lavrov and Munkh-Orgil did, continuing to gesture towards the Shanghai Cooperation Organization, Eurasian Economic Union, and One Belt One Road’s China-Russia-Mongolia Economic Corridor as wellsprings of cooperative economic development. These have so far been unsuccessfully tapped, however, and Lavrov restated firm Russian opposition to a Chinese-backed dam project that has gotten the furthest of any of the OBOR projects in Mongolia. Munkh-Orgil will visit China February 19 to 20.

What can be expected to happen now with the 49%? And with Mongolia’s international and regional relationships? As emphasized on this blog and elsewhere Rostec demonstrated substantial desire to “cash in” the 49%. A possible scenario is that the Erdenet 49% be reprivatized to entities that will maintain the status quo (as also before Rostec acquired the 49% in 2007) in which Erdenet maintains Mongolian ties to Russian enterprises and involves social groups beyond the Ulaanbaatar-based elite (members of which have included many of the most adamant proponents of Erdenet’s privatization over the course of the last three decades), groups that are in comparison marginalized in Mongolian politics and business. The activity of these networks has long been demonstrated to have benefits for the nation as a whole.

There is some speculation that the sale and its illegalization are moves to force Russia’s hand to lend more aid to a Mongolia in deep crisis. (As a piece from Bloomberg’s editorial board stated three days ago, “the [Mongolian] government, along with a state-backed development bank, is on the hook for more than $1 billion in maturing bonds over the next year, starting with a $580 million payment due in March.” Currently, Erdenet constitutes a, if not the, major nexus of Russian-Mongolian relations in the form of important trading relationships between firms; for instance on February 2nd director of Russian manufacturer Uralmashzavod’s mining division named Erdenet as a major purchaser in an interview with leading Russian business journal Kommersant. In 2007, Erdenet joined other privatized Soviet enterprises when the 49% was taken into Russian state corporation Rostec, and thus was rearticulated with other such enterprises as well as the Russian state. It can easily be imagined that Russians as well as Mongolians are worried about the loss of tax revenue, business activity, and employment (not to mention the risks to the city built around the Erdenet mine, one of Mongolia’s only two second cities and a major infrastructure hub) were the Erdenet Mining Corporation to collapse. Furthermore, Cold War-era Mongolia expert Robert Rupen (in How Mongolia is Really Ruled: A Political History of the Mongolian People’s Republic, 1900-1978, Stanford:Hoover Institution Press: 1979, pg. 92) remarked as Erdenet was under construction that the gigantic mining operation (at the time, Asia’s largest open pit mine), city, and the road and railways connecting it to Ulaanbaatar and Irkutsk constitute a “defensive shield” for the section of the Trans-Siberian Railway that had to be built close to the Mongolian border in order to pass south of Lake Baikal.

About Marissa Smith

Marissa Smith obtained her PhD from Princeton University’s department of anthropology in 2015, after defending a dissertation about Erdenet and its position in local, national, regional, and international contexts. She currently teaches at De Anza College in Cupertino, California. 

Posted in Business, Corruption, Erdenet, Marissa Smith, Mining, Mining Governance, Policy | 21 Comments

Drop in 2016 Corruption Perception Index Score Not Very Meaningful

By Julian Dierkes

As readers of the blog know, I have developed an interest on Mongolia’s position on various global rankings over the years. I have written about indices in methodological terms as well as to try to understand Mongolia’s results. I have also become involved in formulating Mongolia’s scores for a number of indices myself.

Transparency International’s “Corruption Perception Index” (CPI) is one of the more important global indices. Not only does it have a long track record with a respected international non-governmental organization, but it is also an index that is used as a building block for many other indices, in part because corruption is difficult to measure, and there are not many alternatives to the CPI.

However, I’ve also been somewhat skeptical of the Mongolia scoring in the past and have written some notes about previous CPI rankings in 2012:

Mongolia in the 2016 CPI

Let’s look at what actually happened in Mongolia in the newest CPI that was released in January 2017:

2016 2015 2014 2013 2012
Rank 87 (of 176 countries included) 72 (176) 80 (175) 83 (177) 94 (174)
Score 38 (out of 100, higher = perceived to be less corrupt) 39 39 38 36

Before I get into methodology and an attempt to explain the change in score, it’s worth noting that the movement in rank (-15) is fairly substantial, while the score hasn’t changed much. The obvious interpretation of this year’s CPI is thus that not much has changed in Mongolia, but a number of other countries are perceived to be less corrupt.

Methodology and Meaning

Note that the CPI is fundamentally an aggregate score, i.e. it takes data from other rankings (that is interpreted to be related to corruption), standardizes that data on a 0-100 scale, adds it all together, and, presto!, a CPI score is born.

Transparency International does provide the xls sheets of data used in the calculation so that we have a look at the data included for Mongolia. Since the score changed from 2015 to 2016, let’s look at what was included with what score in those two years.

  WB CPIA WEF EOS Global Insight Country Risk BTI IMD World Competitiveness
2015 47 42 42 36 37
2016 47 38 47 35 35
WJP Rule of Law PRS Intl Country Risk EIU Country Rating Freedom House Nations in Transit
2015 35 31 38
2016 38 32 34 37

WB CPIA = World Bank Country Policy and Institutional Assessment
WEF EOS = World Economic Forum Executive Opinion Survey
Global Insight Country Risk = IHS Global Insight Country Risk
BTI = Bertelsmann Foundation Transformation Index
IMD World Competitiveness = IMD World Competitiveness Yearbook
Rule of Law = World Justice Project Rule of Law Index
PRS Intl Country Risk = PRS International Country Risk Guide
EIU Country Rating = Economist Intelligence Unit Country
Freedom House Nations in Transit

In comparing the two years, let’s first note the additional data point for 2016, i.e. the Freedom House Nations in Transit score. Then let’s also note that there are several, relatively small changes in a number of the other scores. Scores that went down: WEF EOS (-4), BTI (-1), IMD (-2), EIU (-4). Scores that went up: Global Insight (+5), Rule of Law (+3), PRS (+1). If these are added together we get a -2 overall movement. This is then reflected in a shift in the aggregate average of these scores of 38 for 2016 and of 38.5 for 2015 (rounded to 39). This makes it very clear that the score shift from 39 to 38 is NOT particularly meaningful. If any of the component scores had been just one lower in 2015, the score would have been 38 already.

Face Validity: What Happened in Mongolia in 2016?

With the conclusion that the change in the score is very slight only, there really isn’t that much of a point to a closer investigation of face validity in light of events in 2016.

Conclusion

What global indices can do is provide a benchmarking against other countries and a rough tracing of longer-term trends.

The 2016 CPI is another example of a year-on-year change in score that will likely be reported (I tweeted about it myself), but that should probably be ignored as it does not seem to be substantively meaningful.

Posted in Corruption, Global Indices | Tagged | Leave a comment

International Relations in the Trump Era

By Julian Dierkes

As someone who thinks and writes about political risk regarding Mongolia, my focus is on domestic politics more than on international relations. Yet, with Donald Trump becoming U.S.-president, I have to add a fairly random element to any risk assessment that acknowledges the utter unpredictability of the new president and thus the chance that he might make statements that have a pointed impact on Mongolia’s international relations, whether or not those statements are then backed up by any action.

Pressing Challenges

Mongolian foreign policy is built on two pillars:

  • positive relations with both geographical neighbours, Russia and China
  • ever-closer links with “Third Neighbours” as deepening relations with countries beyond the immediate neighbours, and also as a safeguard against either of these two neighbours becoming more than overbearing

These pillars have been in place more or less since the early/mid-1990s and generally go unchallenged by Mongolian parties and commentators. Even President Elbegdorj’ somewhat hasty Sept 2015 proposal of “permanent neutrality” was couched in terms of this foreign policy.

While little has changed about Mongolia’s outlook, its neighbourhood has shifted.

Russia has become significantly weaker vis-a-vis China since its isolation as a consequence of the annexation of the Crimea in 2014. Left without allies or business partners in Europe, Pres. Putin turned to China, but more as a supplicant than a partner. Given only rare moments that the Russian government has shown active interest in Mongolia (uranium resources, gasoline sales and distribution), this has meant that China has become a somewhat dominant player in this trilateral relationship. At some pushy times, this has taken on the form of a “Pu(tin)-Xi-Pincer”. Yet, even with Mongolian concessions in the recent spat over the visit of His Holiness the Dalai Lama, this pincer has not been very noticeable in international relations. The strongest indication of any change would be if Mongolia finally agreed to join either the Shanghai Cooperation Organization (as desired by China), or the Eurasian Economic Union (as desired by Russia).

Some third neighbours’ interest in Mongolia has declined noticeably in parallel with world commodity prices and those partners’ interest in the mining sector. That would be true – sadly for me personally – of Canada to some extent, but also of Australia.

U.S. Relations

Over the past 25 years, Mongolia’s relations with the U.S. have been characterized by a steady undertone of benign neglect with occasional and some sustained flurries of greater attention. I’m sure that many of those involved in the bilateral relationship (particularly, diplomats on both sides) would disagree with that assessment as perhaps a bit unkind, but I think it summarizes the relationship.

The two visits by then-Secretary of State James Baker in 1990 and 1991 were probably the high point of the (re-)establishment of relations with democratic Mongolia. Mongolia’s decision to participate in George W Bush’s “Coalition of the Willing” was certainly the impetus for the closest relations Mongolia has had with any president, including Pres. Bush’s visit in Mongolia in November 2005. Ultimately, this also led to the attention to Mongolia by the Millennium Challenge Corporation.

During President Barack Obama’s terms, relations have gone somewhat dormant again, though Secretary of State Hillary Clinton visited in July 2011, and Vice-President Joe Biden shortly thereafter, in August 2011.

Possibilities

Others will be much more qualified to offer interpretations or predictions on Trump’s foreign policy. In the context of Mongolia, suffice it to say that Trump is a) personally unpredictable, and b) not wedded to conventional wisdom on U.S. foreign policy, making him even more unpredictable. While his foreign policy team is somewhat more predictable, we will not known until some time into the Trump presidency, how actively involved in foreign policy he will be (when it is not also domestic policy), or how disagreements between him and his advisors/cabinet or congress will play out. Note that for Mongolia’s foreign policy, this is a new context, i.e. when the foreign policy of one of the reference points for Mongolian policy, the U.S., becomes significantly unpredictable, and possibly random.

Random interest in Mongolia

Over the course of the Trump presidency there is some non-zero chance then, that Mongolia will catch the president’s eye. There are some aspects of the situation that Mongolia finds itself in that make this a possibility, though I would not speculate on the degree of likelihood for lack of a deeper understanding of Trumpian foreign policy. In all likelihood, Trump would notice that Mongolia exists in the context of a confrontation with China, Russia, or North Korea, be that a purely verbal, possibly even digital exchange, or something more serious than that.

In any kind of confrontation with or harder line against Russia or China, Mongolia stands to gain attention by presenting itself as a down-trodden small, but democratic neighbour of either of these giants.

Confrontation with Russia

Trump’s relationship with Russia has dominated some of the attention in the transition period. Again, I have no insights on that, but it is clear that this relationship is complicated and volatile.

If at some point Pres. Trump takes a hard(er) line of some kind against Russia, Mongolia could certainly present itself as potentially victimized by Russian bullying. In that case, one might imagine that a Trump confronting Russia could become interested in Mongolia and back up assurances with greater attention or other means.

Confrontation with China

Confrontations, rhetorical and possibly more, with China seem very likely under Trump. Here, again, Mongolia could easily portray itself as a (potential) victim of a China that was attempting to gain regional power and establish something like a “sphere of influence”. Unlike the Russian leadership who would probably only be mildly bothered by Trump cozying up to Mongolia, the Chinese leadership might actually react to such cozying up. That in turn makes closer links with Mongolia potentially attractive to a Trump who might look for ways to needle/bully the Chinese leadership. But obviously, there are great risks associated with such a strategy given the degree of dependency on China of the Mongolian economy. Yes, U.S. attention is a good thing, probably, but not at the expense of losing the single greatest and really only viable large customer for Mongolian resource exports.

So, there’s an element of “be careful what you wish for” in U.S. attention in the context of the China relationship.

Confrontation with North Korea

The DPRK is obviously already a somewhat random element in Northeast Asian international relations, but what if Trump suddenly becomes active on this issue, for example by abandoning the Six Party Talks entirely or by deciding to call Pyongyang’s bluff on some particular issue.

If there is a confrontation that even hints at a military confrontation, Mongolia’s position as a potential mediator becomes much more important, esp. if Trump has a largely adversarial relationship with the Chinese leadership. Given continued close and somewhat cordial relations between Mongolia and North Korea, the long-standing offer of hosting talks or playing some other kind of mediating role might become that much more important to the U.S. (and Asia, and the world) in case of any kind of violent confrontation.

Whither Mongolian Foreign Policy?

If there is some possibility of direct engagement of Trump on Mongolia matters, how should Mongolian foreign policy prepare for that moment?

Obviously, an awareness of the possibility of any direct engagement is important. With that awareness should come some scenarios of how such engagement might play out in the context of U.S. confrontations with any countries in Asia, but especially in the three relations mentioned above. One obvious choice if scenarios of confrontation have any degree of likelihood of coming about (this will change over the course of the Trump presidency, presumably) is to intensify engagement with Third Neighbours other than the U.S. The EU as a whole (even without the UK) has a different relationship with China and Russia than the U.S., for example. Germany in particular, as one of Mongolia’s closest links to Europe has a very different relationship with both of Mongolia’s neighbours, especially under Chancellor Merkel.

Attempts to reduce the dependency of the Mongolian economy on China should continue regardless of the U.S., but what if a U.S.-China confrontations vis Mongolia (admittedly a somewhat far-fetched scenario) leads to some kind of closing of the border to China? That leaves Mongolia virtually isolated, especially if relations with Russia were to sour at the same time. Here, only Europe can provide much of an answer, and possibly Turkey via its engagement in Central Asia.

Democracy

Under Pres. Elbegdorj, Mongolia has placed a lot of emphasis on democracy as a platform for greater international visibility. Trump has not indicated any particular interest in the spread of democracy, though it could be assumed that the Republican leadership would be more committed to that.

I am a particular fan of Mongolian efforts to establish itself as an actor in democratization efforts, particularly via its International Cooperation Fund that targets Asian countries like the Kyrgyz Republic and Myanmar in supporting their democratization efforts. It is difficult to imagine that these efforts would harm Mongolia under any of the confrontation scenarios even though China, Russia, and North Korea will not be particularly charmed by such efforts.

Impact of Mongolian Presidential Election

As I am speculating about the impact of a new president in the U.S. on Mongolia’s foreign policy, I would be remiss not to also think about the Mongolian presidential election. A good part of Mongolia’s outsized international visibility relative to its geopolotical and economic success has been due to Pres. Elbegdorj’ efforts, however (in)credible they may seem on democratization in a domestic Mongolian context. A President M Enkhbold would inherit some of that international visibility, but would likely struggle to enhance or even maintain this. There’s little in the MPP’s history that says democracy (other than the peaceful relinquishing of power in 1990), and Enkhbold’s personality does not seem particular well-suited to international schmoozing. Yes, he would try to attend Davos every year as Elebgdorj has for seven years now, but would he make an impression? The same holds for any other MPP candidates that might be on the horizon should Enkhbold choose not to seek the presidency.

And the DP? Lu Bold as a president might have a good chance at making an impression on Trump given his own wealth and business background. He also has experience in international settings as a former foreign minister, but a democracy claim would not be obvious for him. Some kind of reform candidate, that is a younger DP representative, might have a better chance in this regard.

Posted in China, Foreign Policy, International Relations, Mongolia and ..., Nationalism, North Korea, Presidential 2017, Russia, UN, United States | Tagged | 2 Comments

Thoughts and Comments on Organic Mongolia

By Julian Dierkes

Early in December a bit of inspiration struck after I had read an ADB blog post and received a lot of responses to a tweet about that post. I wondered aloud whether it would be possible for Mongolia to go entirely organic.

I received a lot of tweeted, emailed, commented, mentioned-in-conversation replies to that idea and want to offer these here as well. Obviously, I was just presenting an idea and I wasn’t making a specific proposal, in part because I don’t know very much about Monglian agriculture. My conclusion from these comments is, however, that the idea is a bit radical, maybe even crazy, but that it might be worth thinking about further.

Just to recap: my idea was that since organic agriculture (plants and meat) seems to offer significant high-value export opportunities, why not pursue all-of-country certification for organic produce, i.e. for all agricultural products to be organic?

A number of comments seemed to like the idea, but there were also serious doubts expressed.

How organic is agricultural production now?

One of the premises of my idea was that much of Mongolian agricultural production currently is organic. I therefore imagined that some of the obstacles to organic production in the objections of existing producers might be less strong in the Mongolian context.

It may not be the case that agricultural production is as organic as I imagine. Some comments mentioned that there are examples of farming and animal husbandry practices (particularly around veterinary diseases) that will not stand up to organic certification.

Animal health

The health of Mongolian animals  may be a particular concern in this regard. Yes, for some significant portion of the national herd, animals may be raised in a very organic fashion, foregoing vaccinations and other veterinray intervention, for example, but that also means that animal diseases are fairly widespread. There is a careful balance to be struck between organic practices and health issues, particularly in industrial production and certification.

Certification

The cost and organizational effort tied to organic certification are significant. This has been an obstacle to the pursuit of producer-certification in the past.

In part, my idea hopes to side-step this issue by finding some way to actually certify all Mongolian products. Current certification won’t allow for that, I don’t think, so some creative solutions would be needed  here either in collaborating with certification agents, or in creating a for-Mongolia certification. The various standards that are employed by existing certification schemes are knowable, so they could be compared to come with standards of particular relevance to Mongolia. If those were made known in a transparent manner and enforced with credibility, a Mongolia-only certification could be a solution, I imagine. If such a route was successful, it could even be explored with other countries that could consider a similar switch, perhaps even through the Ministry of Foreign Affairs International Cooperation Fund, Mongolia’s foreign aid program.

Obviously, the proliferation of organic standards is not particularly desirable as it confuses consumers, but if other avenues are not feasible for Mongolia, this should be considered.

Enforcement

But, how to enforce a nation-wide organic agriculture?

The simplest solution would be a ban on imports of relevant chemicals. An example of this is the ban on mercury. But, that is also an example of an ineffective ban as all observers agree that mercury is used extensively in mining, small and medium scale.

Also, as my former PhD student Bern Haggerty pointed out, would a fertilizer ban get by the WTO, for example?

But, if there wasn’t an import & production ban, how could nation-wide certification work? And, how could imports be prevented, really?

This seems to be an objection that is both fundamental and practical. I don’t quite see how to get around that easily, but others may have ideas/experience from other policy arenas.

General Pessimism

A number of replies also focused on “nice idea, but it’ll never happen”. We know that the Mongolian state and politicians seem to be particularly challenged by implementing plans and laws that have been developed. There have been a number of past efforts at branding Mongolian products and Mongolia that have not gone anywhere, so why would an all-country organic certification?

I share the pessimism and readily suggested that the idea was a bit crazy. At the same time, the craziness might be just right to make this sort of thing work.

More Comments, Please!

I’m not about to submit a formal proposal to parliament or for funding to support an all-country organic branding, but I’d still be curious to hear more comments. And maybe, some day, something will come of this idea…

Сайхан хооллоорой!

Posted in Countryside, Development, Environment, Grassland, Infrastructure, Policy, Public Policy, Regulation, Tourism | Tagged | 3 Comments

Blogging in 2016

By Julian Dierkes

In the sixth calendar year of the existence of this blog, we were once again very happy to find a significant number of readers. In the course of the year, we wrote 68 new posts.

Highlights of Google Analytics data of our readership for calendar 2016:

Comparing to 2015

If we compare to 2015, our readership has remained roughly stable, though this year’s readers read more posts.

There were more Chinese readers this year.

Social media referrals are up.

 

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Bullied by China over Visit by the Dalai Lama

By Julian Dierkes

[With thanks to Bulgan B for her help in understanding the interview and subsequent statements.]

Late in November, His Holiness the Dalai Lama visited Mongolia. This was the first visit since 2011. Previous visits occurred in 2006 and 2002. Each time, the Chinese government predictably slipped into its petulant child role and protested loudly, going as far as blocking the Transsiberian Railroad for a brief period in 2002. As before, this was not an official visit, but rather a private one. The only government role thus comes in the granting of a visa.

Chinese Reaction

As before, the Chinese government threw a fit, leading to the raising of some fees at border crossings. But this time, the reaction in the background must have either been more severe, or Mongolia’s economic dependency in the midst of a public debt crisis is so extreme, that the Chinese government could easily bully the Mongolian government into caving only two weeks or so after the Chinese government first objected to the visit and continued to complain through editorials, etc. (which I will not dignify by adding links here), lecturing Mongolia on “core interests” and the other usual terminology characteristic of all Chinese reactions to the Dalai Lama.

A Foreign Policy Test for MPP Government

This was the first real foreign policy test for the new MPP government and it does not bode well for the future.

Of course, it’s not really the Erdenebat’s government’s fault that it has found itself in such a debt crisis (though the MPP’s objections in 2012 were muted enough to say that it was complicit in the taking on of this debt). The challenge is that the first part of the Chinggis Bond is due on March 21, 2017 and all attention (ratings agencies, creditors, investors, the IMF) is focused on this date and the question whether Mongolia will default on debt or not.

The expectation had been that the Chinese government would step in with short-term financing that would bridge some of the immediate financial needs. Of course, this option is entirely unattractive, as it will only deepen Mongolia’s dependence on the Chinese economy as well as on the Chinese government, but few alternatives are in sight, even with IMF discussions under way and the Prime Minister currently making the rounds in potential other creditor countries like Japan, South Korea, etc.

It’s in this troubled financial situation that the Dalai Lama visit has created some foreign policy havoc for the Mongolian government and Foreign Minister Ts Munkh-Orgil.

A Change in Policy?

An interview with FM Munkh-Orgil appeared in Mongolian newspaper Unuudur on Dec 20. No official statement has appeared since then (as of Dec 22) to clarify or (dis)confirm what FM Munkh-Orgil said in this interview, but the gist of it was interpreted by Chinese and other foreign media. For example, on Dec 21, Xinhua, the Chinese press agency released a summary of the FM Munkh-Orgil interview. This then seems to have lead to something that looks like a Mongolian version of this statement, released by Mongolian official press agency, Montsame. In the interview, FM Munkh-Orgil may or may not imply any real change in policy.

Here is the English version:

Mongolian Foreign Minister Tsend Munkh-Orgil said Tuesday Mongolia will not allow the Dalai Lama to visit the country.

The foreign minister said Dalai’s visit to Mongolia will not be allowed by the government in the future, even under the name of religion, according to a report in Today, a leading Mongolian newspaper.

[…]

Munkh-Orgil expressed regret over the visit’s negative impact on China-Mongolia relations.

Some Questions

Future Visits

Did FM Munkh-Orgil suggest that the Dalai Lama will “never visit Mongolia again” or that he will not visit on government invitation? The recent visit was not an official one, so there would be no change in policy if the statement implied no Dalai Lama visit on an official invitation. Offering that the Dalai Lama will not be invited by the government is nothing new at all.

However, FM Munkh-Orgil also seems to suggest that another even non-official visit by the Dalai Lama would not happen under the current government.

The qualification “under the current government” makes this a shift rather than a real change in policy, I would suggest. This is especially the case, since previous visits have come on roughly five-year intervals (2002, 2006, 2011, 2016), so it would be unlikely that the Dalai Lama would come again during the current MPP government, i.e. before 2020.

If, however, FM Munkh-Orgil’s statement were taken more literally that the Dalai Lama will not (be able to) visit Mongolia again, it would be a shift in policy that many Mongolians would object to.

Of course, the installation of the 10th Jebtsundamba Khutuktu has been discussed previously as an occasion that the Dalai Lama would attend and there had been speculation that this would happen during the recent visit. In the interview, FM Munkh-Orgil emphasized the separation of state and religion and that such questions would best be addressed at Gandan Monastery officials.

Regret?

The nature of the regret that FM Munkh-Orgil expressed is still a little unclear (to me). Is this the kind of regret that says, “too bad this happened”, or an actual apology? Obviously, NE Asia has many examples of years of diplomacy wrapped around seemingly simple statements of regret (usually by Japanese officials), so perhaps it’s better not to read too much into FM Munkh-Orgil’s statement here, but still, it seems a bit odd to make statements of regret and what seems like a shift in policy in a newspaper interview. Was this a response to a direct Chinese request? Or, was the bullying by the Chinese government more “subtle” and FM Munkh-Orgil or the MPP decided to be “proactive” in responding to this bullying?

Implications

No word yet (Dec 22) on China switching from sticks to carrot in its response, i.e. stepping in with bridge loan on bond repayment. Whether or not that happens, this brief diplomatic spat/crisis may turn out to be a sign of things to come for Mongolian foreign policy in an ever-more-dependent-on-China situation.

Posted in China, Dalai Lama, Foreign Policy, Religion | Tagged | 1 Comment

What if Mongolia Went All-Organic?

By Julian Dierkes

I recently re-tweeted an ADB tweet about one of their blog posts, “The Foreseeable Future of Mongolia’s Agriculture

My RT proved surprisingly popular and ended up with over 20 RTs and over 3,500 impressions (yes, I watch these Twitter stats!). It clearly resonated. The post was generally very good, but as you can see in my tweet, I find the potential of high-value exports to China, Japan and Korea particularly interesting given the organic quality of Mongolian meat, especially.

Among the reactions to my RT were those pointing out some of the challenges in setting up such high-value exports. For example,

Country-Wide Certification

This question gets raised regularly and there have been a number of attempts at certification and establishing product chains to benefit from the quality of Mongolian produce. Generally, such attempts as well as branding attempts have faltered and thus leaves many people skeptical.

Would it be possible to consider all-of-Mongolia certification as an alternative?

Rather than certify individual producting sites, why not go all-pesticide(and other nasty things)-free for all of Mongolia?

Has anyone considered this?

Obviously, going all organic would be a challenge to some producers, but it would not be a challenge at all to others. Most mobile pastoralists who are raising animals are probably doing so in organic fashion already. Grasslands (given prevailing wind patterns, etc.) should be certifiably organic.

The question then might be that if industrial production can be set up (that’s a topic that E Enerelt’s blog post focusses on), would that automatically imply a shift to more intensive production, presumably raising the possibility of hormones, antibiotics, etc.

The constraints that have kept Mongolia from realizing its meat export potential include low technological and production capacity, logistics limitations, few meat plants, quotas, and phytosanitary barriers. Existing processing plants require substantive upgrading to improve production capacity and meet quality and sanitary requirements. Due to poorly developed logistics and trade procedures, the costs of trading across borders are considerable.

If any of these obstacles can be overcome without introducing chemicals, etc. would that not be an innovation that would be worth considering?

Some elements of Mongolian agricultural production are so recent (or are getting re-established recently) that they should be able to adjust more easily to a different production paradigm, organic.

Other Possibilities

Organic certification would be quite natural for a number of Mongolian agricultural products, especially meat.

But sea buckthorn (чацаргана) is also produced organically, I would guess, as is honey or pine nuts.

Gobi Cashmere is already promoting their organic line, so the label seems to be meaningful in the cashmere context as well. The same logic would hold for some of the Mongolian skincare/beauty product brands that are establishing themselves.

I don’t know if ingredients for Chinggis Beer are sourced locally, but if they are, their lager could be “organic lager”.

All-country organic certification would make marketing simpler as it could simply advertise all Mongolian agricultural production as organic, possibly raising the possibility of buy-in from a variety of producers (and perhaps donors).

Finally, any marketing of all Mongolian agricultural products as organic would reinforce the kind of eco-tourism that is regularly touted as a diversification possibility for the Mongolian economy.

Crazy idea? Been done before? Comments, please!

Posted in Cashmere, Countryside, Development, Environment, Grassland, Infrastructure, Policy, Policy, Public Policy, Regulation, Tourism | Tagged | 4 Comments

Impacts of International Exchanges

By Julian Dierkes

[With thanks to CIRDI’s Marie-Luise Ermisch for contributing some of these.]

During the first workshop we co-organized with the Mongolian Ministry of Foreign Affairs’ International Cooperation Fund, a number of impacts arose in an incidental manner, but bolstered my belief in the utility of providing a forum for exchange between actors in emerging resource economies.

Here, I list some unintended impacts of the second workshop  held in Bishkek in early November.

Some of these are professional impacts, some of them a bit more personal or curious.

Mongolia-Kyrgyzstan Links

At the workshop we co-organized in Bishkek, one of the most concrete impacts right then/right there was that the Mongolian Mining Association and the Kyrgyz Mining Association signed an MOU to collaborate and exchange experiences.

Another very palatable impact was fellow blogger Mendee‘s joy at discovering a bit of Central Asia. It was very interesting to observe him speak Russian with Kyrgyz who were clearly puzzled, but to whom he immediately explained that he was Mongolian, a fact that was not obvious to them by his facial features, dress or mannerisms. And, Mendee felt quite at home in Bishkek, it reminded him of Ulaanbaatar in the 1980s!

Exchange between National Resource Companies

At the workshop, we were very pleased to have delegations from Timor Leste and Myanmar participating along with a group from Mongolia and many Kyrgyz participants, obviously.

As Myanmar and even more Timor Leste are much more focused on the oil and gas sector, the question of exchanges between national oil companies arose and came along the observation that there are relatively few points of interaction between national companies, even of emerging oil economies. When these are looking to expand/invest should they not follow their expertise and look for projects in other emerging economies?

Mongolian Public Servants’ Health

Following our workshop, we had a chance to visit the Kumtor gold mine. As the mine is located at 4,000+m, we had to undergo several health checks that were primarily concerned with blood pressure.

Curiously, all the male members of our delegation from the Mongolian Ministry of Mining were unable to participate in the site visit due to elevated blood pressure levels. Perhaps enough of a reason for the Ministry to examine its health policies or the health of its public servants more closely?

The Mongolian delegation bought a significant amount of fruit before their departure. We are pretty confident that vitamin C levels among the delegates and their families spiked in mid-November, hopefully promoting good health outcomes.

Language Skills in Hotel Staff

Some of the young receptionists and waiters at the hotel we stayed were thrilled to have an opportunity to practice their German. I am always happy to indulge German practice, so perhaps language skills were slightly elevated by the time we left.

Overall, I was very surprised to bump into real German skills at several moments. This is something that I delight in during Mongolia travel, but I didn’t know it was prevalent in Central Asia, or at least Kyrgyzstan as well.

Canada’s Reputation

Central Asia seems to be a bit off the map for Global Affairs Canada (despite the very competent and energetic work done by the Canadian embassy in Astana). Given the somewhat troubled history of the Canadian Kumtor investment, perhaps our workshop left a positive impression of Canadian initiatives.

Posted in CIRDI, Development, International Agreements, Kyrgyz Republic, Mining Governance | Tagged | Leave a comment