Guest Post: Agreement between Canada and Mongolia for the Promotion and Protection of Investments – a Glance at Its Nature, Significance and Features

By Bajar Scharaw

On 8 September 2016, Canada and Mongolia signed an international Agreement for the Promotion and Protection of Investments (the Canada-Mongolia Investment Agreement). The Agreement entered into force on 24 February 2017 and created legally-binding obligations for both countries that can be enforced by investors of either country against the other country before an international arbitral tribunal. This blog post provides an overview of the nature and significance of the Canada-Mongolia Investment Agreement and briefly outlines some of its features compared with other international agreements of this kind.

Nature of international investment agreements

The Canada-Mongolia Investment Agreement forms part of a worldwide web of similar international investment agreements (IIAs) that have been entered into between two States (the parties) to promote and protect foreign investments. It is estimated that countries worldwide have concluded more than 2,900 of such bilateral IIAs. Currently, Germany is leading with a total of 133 concluded IIAs, followed by China which created 129 IIAs. While Canada is a party to 32 IIAs, Mongolia entered into no less than 43 IIAs with countries from all over the world. In East Asia and the Pacific, Mongolia is a frontrunner with respect to the conclusion of IIAs. According to a survey, Mongolia took the seventh place among 24 economies in that region in 2015: only China (129), South Korea (90), Malaysia (68), Vietnam (60), Indonesia (51), and Singapore (45) had more bilateral IIAs than Mongolia.

Countries conclude IIAs such as the Canada-Mongolia Investment Agreement to attract foreign investments into the country or to protect foreign investments of their nationals abroad. IIAs seek to promote in- and outbound foreign investments by providing international rules that protect investments (property and other assets) made by investors of one party to the IIA within the territory of the other party (the host State). For example, IIAs require that expropriations of investors from the other party may only occur in the public interest, under due process of law, on a non-discriminatory basis and against compensation. IIAs stipulate that investors from the other party may freely transfer their funds and capital out of the host State. Furthermore, they require the host State to treat investors from the other party “fairly and equitably” and often to accord such investors a treatment no less favourable than that accorded to own nationals in the same situation (principle of national treatment). The rules in IIAs are of international nature, which means that they cannot be modified unilaterally by one party or through national legislation.

In the case of a dispute, IIAs allow investors from one party to file a suit against the other party (the host State) if the latter has treated such an investor in its territory in a way that violates the above mentioned IIA protection rules. To this end, the IIA entitles an investor to initiate an international arbitration outside the host State. IIAs provide a (State-independent) international arbitral tribunal with seat in Washington D.C., Geneva or elsewhere with the legal power to render a binding decision on whether the host State has indeed violated rules in the IIA and to award compensation to the investor for any damages suffered.

Significance of the Canada-Mongolia Investment Agreement

Traditionally, Mongolia’s extractive industries receive the lion share of foreign investments in the country. According to the UN’s Investment Policy Review on Mongolia, Canada (with Vancouver as the world’s “mining capital”) held an 8% share in Mongolia’s total foreign-investment inflows in 1990-2012. While China was by far the largest source of such inflows with a 32% share during the same period, Canada represented thus one of the most significant sources for foreign investments in Mongolia.

Despite this fact, Canada (and its investors) lacked an IIA with Mongolia for a long time (both countries started to conclude IIAs in the 1990s). Furthermore, unlike Mongolia, Canada is no party to the Energy Charter Treaty as a multilateral international agreement with IIA-similar protection rules. In view of the foregoing, the Canada-Mongolia Investment Agreement is of high relevance as it fills a protection gap. With the Agreement’s ratification in February 2017, Canadian investors are entitled to rely on special international rules for the protection of their investments in Mongolia.

Features of the Canada-Mongolia Investment Agreement

The Canada-Mongolia Investment Agreement provides those protection rules that are characteristic for virtually all IIAs (see above). In addition, the two countries (the Parties) agreed on various further rules that let the Agreement clearly stand out against the vast majority of current IIAs. Particularly noteworthy are the following additional rules:

Article 12 (entitled “Transparency”) requires the Parties to promptly publish investment-relevant laws and regulations, to publish in advance such proposed measures and to provide “interested persons” a “reasonable opportunity” to comment. Importantly, Article 14 (“Corporate Social Responsibility”) requires the Parties to encourage investors to voluntarily incorporate internationally recognized social standards in their practices and internal policies, and to address human rights, labour issues, the environment, community relations and anti-corruption (see also the UN Guiding Principles on Business and Human Rights). According to Article 15 (“Health, Safety and Environmental Measures”), the Parties recognize that it is inappropriate to encourage investment inflows by relaxing domestic health, safety or environmental measures.

The Agreement seeks to secure the Parties’ regulatory leeway in areas that are of particular concern to them, including cultural aspects. For this purpose, Article 16 provides special “reservations and exceptions” relating to the application of certain investment protection rules of the Agreement. For example, Mongolia’s obligation to treat Canadian investors no less favourably than own citizens (Article 4) does not apply with respect to nationality requirements for the ownership of land. This reflects Mongolia’s strong commitment to the traditional nomadic way of life. Furthermore, Article 17 provides “general exceptions” and states, for instance, that nothing in the Agreement shall prevent a Party from adopting measures necessary for (i) the protection of human, animal or plant life or health and (ii) the conservation of living or non-living exhaustible natural resources.

Lastly, the procedural rules (see above) for the enforcement of the Agreement by international arbitration are strikingly detailed to increase legal certainty. For example, Article 25 requires the disputing parties (i.e. an investor from one Party and the other Party) to select arbitrators with expertise and/or experience in public international law, international investment or trade law, or in resolving disputes arising under IIAs. It is especially worth mentioning that Article 30 requires the Parties to publish an arbitral tribunal’s decision and that oral hearings are open to the public. This is exceptional for IIAs and in line with the UN’s recent general initiative to increase transparency in international arbitrations between investors and States (see here). So far, no dispute has arisen under the Canada-Mongolia Investment Agreement.

About the Author

Dr. iur. Bajar Scharaw, LL.M. (UQ) is the author of the book The Protection of Foreign Investments in Mongolia: Treaties, Domestic Law, and Contracts on Investments in International Comparison and Arbitral Practice (Springer 2017). He is a German lawyer admitted to the bar in Frankfurt am Main and practicing in the public international law/ international arbitration group of a US law firm. This contribution is written in the author’s private capacity and does not express the views of his law firm or its clients.

Posted in Bajar Scharaw, Canada, Foreign Investment, Foreign Policy, International Agreements, Law, Trade | Leave a comment

False Dzud Alarms

By Julian Dierkes

Periodically, parts of the Mongolian countryside experience heavy snowfall at the end of a long, cold winter. These conditions combine to deny animals access to any kind of grass under the masses of snow when they are already weakened by winter conditions. This is what is referred to as dzud [зуд]. When dzud conditions extend beyond a region to the nation, this can be catastrophic leading to massive deaths of animals. Since conditions tend to be locally concentrated, it is not a proportional cull, but entire herds often perish.

Dzud can be devastating for herders in the Mongolian countryside. They have clearly been exacerbated in their impact by a struggle around how to prevent the massive death of animals in the absence of any kind of institutionalized provision of fodder. Cambridge’s David Sneath has done some very convincing research that compares feudal institutions, the state-socialist negdel, and today’s individualistic, market-based organization to explain the impact that dzud have had.

Dzud may also be exacerbated by the impact of climate change, especially as it contributes to overall grassland degredation..

Dzud are common at the regional level, though they only extend to a national catastrophe every dozen years or so, at least in the past.

Information

Unfortunately, it is relatively difficult to tell when and how much dzud conditions spread. It is the end of winter that is most dangerous, but conditions in January, for example, do not necessarily seem to be a good predictor of the likelihood of dzud conditions in March.

The National Agency Meteorology and the Environmental Monitoring does provide updates and climate information, of course, but in the past this has not been detailed enough to allow a casual observer to get a sense of the severity or spread of local or regional dzud conditions. While a new SMS service for reporting, but also receiving weather information appears to be up and running (see below), I have been unable to find a WWW interface that would offer this information. If someone is aware of such a service, please do mention it in the comments below.

Exaggerations by Aid Agencies and Journalists

During the past two winters, a number of aid agencies have frequently raised the alarm over dzud conditions. This is unfortunate. Just like crying “wolf!” will ultimately lead to a lack of vigilance, so will repeated claims of catastrophes make a response less likely when a real catastrophe hits.

Journalists, of course, have been eager to amplify these calls for action and attention to an unfolding catastrophe, presumably because humanitarian crises make for news.

One article at the end of February 2017 appeared under the headline “Severe winter killing off livestock in Mongolia“. If anyone read past the first several paragraphs, readers learned that “The current dzud has killed more than 40,000 animals so far, but experts say the worst is yet to come.” 40,000 animals dead? That would be an extremely mild dzud for any year. The statement that the “worst is yet to come” may be true, but is entirely speculative. This journalist, reporting from Beijing though he had previously travelled to Mongolia, most likely did not write the headline that appeared here. Given the headline, however, this is an article that is the journalistic equivalent to crying “wolf!” in my eyes.

Yet, no one really wants to come out and say that a dzud is not in progress. Who wants to claim that the wolf is really a sheep, after all, as there is some chance that it is a wolf and if animals are killed, the person questioning the cry of alarm would be partly to blame.

And it is not just journalists that respond.

By contrast, aid agencies should be much more responsible in raising these kind of alarms.

Look at this Feb 28 2017 screenshot of the Mongolian Red Cross Society:

http://www.ifrc.org/en/what-we-do/where-we-work/asia-pacific/mongolian-red-cross-society/

As we are heading into winter 2017-18, some alarm bells are being run already. In a conversation in Ulaanbaatar, I was told that this winter would be especially hard. When I asked what that prediction was based on, I was expecting some “farmers’ almanach”-like herder wisdom, or some astrological insight, but the explanation I got was, “From the internet”. Hm…

While MercyCorps project of SMS weather forecasts for herders seems a worthwhile initiative (at the glance that I’ve cast at it), the release of information about the initiative does seem somewhat tied to a look ahead at the winter that may bring disaster, again.

I certainly hope that more and better information will become available over time to allow careful observers to double-check alarmist news against indications of real crises. I also hope that some of the journalists and aid agencies involved will consider the long-term impact of their writing/appeals on this topic.

Posted in Countryside, Grassland, Health, Policy | Tagged | 2 Comments

Risking Foreign Relations out of (Partisan) Pettiness

By Julian Dierkes

November is shaping up to be a very busy month of diplomacy across Asia, at least from a North American perspective. It is an odd time for the Mongolian president to seemingly hold some of Mongolia’s most prominent ambassadorial appointments hostage to partisanship, especially at a time when his own foreign policy remains somewhat undefined.

International Relations Across Asia in November 2017

Pres. Trump’s visit across the region is nervously watched everywhere, especially at a time when U.S. foreign policy seems no more coherent than it was earlier in the year, but is facing a “hot-spot” in North Korean that is of particular significance to Mongolian foreign policy as well. While the highlights of the month are the APEC CEO Summit and the East Asia Summit where Mongolia is not represented in any case, these events will focus more diplomatic attention on the region as other leaders, including Canada’s PM Trudeau, are travelling to Asia.

Pres. Battulga’s Foreign Policy

While the Minister of Foreign Affairs is the specific official charged with carrying out Mongolia’s foreign policy, this is an area of policy making that the president is most directly involved in. So far, we do not really have a sense of any kind of substantive emphases that Pres. Battulga brings to foreign policy. He has met with leaders in an East Asian context, but he declined to travel to the UN General Assembly in September, a trip that former Pres. Elbegdorj inevitably made. Pres. Battulga’s decision to skip the UNGA is especially surprising as Mongolia is continuing to pursue its candidacy for a UN Security Council seat in the 2022 election.

Blocking Ambassadorial Appointments

The only concrete action Pres. Battulga seems to have taken in foreign policy so far is to block the appointments of three ambassadors that have already been approved by parliament and even have received their agrément from the countries they are to be posted to.

The appointment of the ambassadors listed below was unusual already in that they were nominated by outgoing Pres. Elbegdorj in his last months in office, possibly under the assumption that he would be succeeded by M Enkhbold as president and that these appointments suited Enkhbold. But apparently, these are appointments that Pres Battulga is not happy with to represent him in key countries.

That means that Mongolia currently does not have ambassadors in Canada, Japan and the USA, three countries that are high on the list of Mongolia’s “third neighbours”.

On May 26, parliament approved

Of these, only Amb Ganbat has taken up his post in Berlin with the official presentation of his credentials on Sept 21.

L Purevsuren for now seems to continue to serve in Pres. Battulga’s office.

Amb Battur, also a former advisor to Pres. Elbegdorj, appears to have been approved.

The other three approved ambassadors have all received the agreement of the countries they are to be posted to (Amb Chimguundari on July 22, Amb Tenger on July 7, Amb Otgonbayar on August 31).

So far, Pres. Battulga apparently has not signed the letter of credence that these ambassadors would receive to present to the head of state of the countries they would be posted to.

There is no official statement on why this letter of credence has not been signed, but partisan reasons to seem to be at play here.

While Amb Ganbat has long been associated with former Pres. Elbegdorj and the office of the president, serving as the director of the Institute for Strategic Studies, Amb Chimguundari’s sister, N Oyundari, is an MPP MP, and Amb Otgonbayar is a former MPP MP. Since both have previous foreign policy experience (Amb Chimguundari having served in Mongolia’s embassy to France most recently, and Amb Otgonbayar with his doctorate from the Diplomatic Academy of the Russian Ministry for Foreign Affairs, and his previous service in the Ministry of Foreign Affairs, and as foreign policy advisor to former Pres. Enkhbayar when he was prime minister), their formal qualifications do not seem to be in doubt.

The impression that much of this is due to partisanship or the attempt to use ambassadorial appointments as bargaining chips is reinforced by the sudden nomination of then-Director of the General Intelligence Agency, B Khurts just days after he publicly accused Justice Minister Ts Nyamdorj of all kinds of malfeasance, as ambassador to South Korea.

Khurts is well-known, nay notorious, to Mongolia-watchers as the “super spy”. He ended up tangling with the German criminal justice system after allegedly kidnapping alleged Zorig murder suspect D Enkhbat in Paris in 2003, hiding him in the basement of the Mongolian embassy in Berlin, and spiriting him – unconscious – onto a MIAT flight out of Berlin. Enkhbat later died in a Mongolian jail. Khurts ended up in German jails after having been arrested in Britain, then extradited to Germany, just as Chancellor Merkel was getting ready to visit Mongolia and his case proved to be quite an irritant. Clearly, Khurts’ credentials as director of Mongolia’s spy agency are beyond doubt, but his diplomatic career has been a little less stellar.

If Khurts’ appointment as ambassador to South Korea were to be approved while the other ambassadorships are still held hostage, this would be a bad sign for any pragmatic collaboration or at least coexistence between Pres. Battulga and the MPP government, and also for the direction of Mongolian foreign policy more generally.

Timely Turnover at Canadian Embassy

By contrast to the absence of a Mongolian ambassador to Canada, the Canadian embassy to Mongolia is fully staffed and the usual turnover of personnel there this summer was completed in a much more timely manner than had been the case in the past.

At least the Canadian side of this bilateral relationship is thus in a strong position roughly one year before the 45th anniversary of the establishment of diplomatic relations on Nov 30 1973.

By contrast, the U.S. embassy may also face a protracted period of limbo after Amb. Galt leaves on November 10 and until her successor arrives.

Posted in Canada, Foreign Policy, Germany, Japan, Mongolia and ..., Security Apparatus, South Korea, United States | Tagged | Leave a comment

New to Ulaanbaatar October 2017

By Julian Dierkes

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

I’ve copied the 2014-16 lists here and am adding to it. New items since previous posts appear in italics.

What has arrived?

  • sadly: Louis Vuitton, KFC, Burberry Kids, Ugg and a Porsche dealership
  • Mini, Bentley
  • child seats
  • sidewalks
  • parks
  • farmers’ markets
  • yoga
  • dogs on leashes
  • Sunday morning joggers and bikers
  • burgeoning coffee culture
  • river walkway along the Dund River (under construction in May 2015 but looking very promising)
  • city park along the Tuul
  • sports cars
  • organic shopping
  • gated communities (virtually all the new developments towards and in Zaisan)
  • wheelchair accessibility (moved from “What Will Appear” category as ministries are now (meant to be) wheelchair-accessible
  • the “#замчөлөөл” hastag, a city campaign to shame property owners about their infringement of public space. Seems – quietly – very successful when you look at many photos posted.
  • large-scale BBQ extravaganza on the banks of the Tuul river, particularly near the ASEM Road. On summer weekends, so many cars parked right on the riverside, BBQs planted right next to them, families camping out, some literally
  • Harley-Davidson (now seemingly endorsed by new PM U Khurelsukh)
  • drive-home service for drivers who have been drinking. You call the service, they drop off a driver who drives you home in your car and is then picked up again. Given – fortunately – much stricter enforcement of drunk driving laws, a great service!
  • bike lanes and bike parking
  • street names and signs in the city
  • fat tire bikes
  • home air filtration systems that everyone is talking about

More bike infrastructure in #Ulaanbaatar.

A post shared by Julian Dierkes (@jbdierkes) on

 What has disappeared, or at least nearly?

  • stationary 80s-office-phone-looking old-granny cell phone booth
  • for-pay scales (actually, they seem to be hanging on)
  • free WiFi on Sukhbaatar, er Chinggis Khaan, er, Sukhbaatar Square, er, Chinggis Khaan Square
  • open gullys/missing manholes
  • street kids (they seem to come and go. In summer 2017 there were very few of them again.)
  • packs of dogs
  • smoking
  • the sixth-floor souvenir shop at the State Department Store (though perhaps seasonal)
    oversized sunglasses for women that were so popular across Asia (?) some years ago
  • Nescafé (see above on coffee culture)
  • surprise at seeing bicycles
  • hillside Chinggis visible from the city centre

What will appear in the future

  • navigation systems
  • mental maps shifting to street names/addresses instead of landmarks
  • new airport, apparently opening in 2018. I drove by there in summer 2017. Oh my, it far from the city!
  • subway (really, I wish they had selected light rail instead)
  • urban renewal and historical restorations embracing district north of government house (National University of Mongolia, German embassy, etc.)
  • road signs in the countryside (and not just the very random, very occasional ones that can be found now)
  • network of cross-country riding trails (though not in central Ulaanbaatar)
  • parking (meters)
  • Combined Heat and Power Plant #5 (yeah, right!)
  • hipsters discovering УАЗ (minivan and jeep)
  • Canada Goose, Arc’teryx
  • giant whole blown into Bogd Khaan mountain to “drain” polluted air out of the valley (that actually is a proposal, but it will not appear!).

What will disappear in the near future

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

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

What will disappear in the medium-term future

I mean around 7 years or so.

  • new (to Mongolia) cars that are right-hand drive
  • the neo-classical Ministry of Foreign Affairs building, with its Stalinist (if that’s an architectural style) spire [Tough call to make as the MFA building is now dwarfed by its own annex]
  • deels in the city
  • some of the downtown university campuses
  • buildings of 4 floors or less in the urban core
  • Russian minivans (УАЗ452) but see above.
Posted in Change, Curios, Ulaanbaatar | Tagged | Leave a comment

Раднаасэдийг өмөөрөхүй

Ж.Мэндээ

Үнэн үг гашуун, гэхдээ хэрэгтэй. Харин үнэнийг зориглон өчсөн нэгнээ мохоох учиргүй. Яг ийм байдлаас болоод өнөөдөр бид буруутайгаа эвлэрээд, буруу хандлагад дээрэлхүүлээд, одоо бүр дасчихлаа.

Эрхэм гишүүн “Монголд өнөөдөр сайд хийх нэр цэвэр хүн олдохгүй, сайдаа гаднаас тавих байдалд хүрэх нь” хэмээн шүүмжлэхэд зарим нь эгдүүцэж, бас “бяцхан” улс төр хийх гэж оролдов.

Мэдээж хэрэг Раднаасэд гишүүний энэ үг бүх улс төрчдөд хамааралтай.

Өнгөрсөн 20 гаруй жилийн хугацаанд давхардсан тоогоор 200-300 улс төрчид засаглалын өндөр албан тушаалуудыг ээлж дараалан хашлаа, эдний маань дунд асуудалд холбоогдоогүй, цэвэр улс төрч бараг л үлдсэнгүй.

Яагаад ийм байдалд хүрчихэв дээ, бид?

Үндсэн мэргэжил нь улс төрч болохоор засаглалын зах зээлд тэд өрсөлдөх учиртай. Гэхдээ тэд маань албан тушаалын шунал гэдэг зүйлд урхиглагдчихсан бололтой.  Ихэнх нь 2-3 ажил давхар хийх сонирхолтой.  Гэхдээ нэг бодгальд хууль тогтоох, гүйцэтгэх засгаа удирдах, бизнесээ чиглүүлэх, хувийн амьдралаа дэвжээх гэсэн олон үүрэг арай л ахадсан баймаар.  Олон ажилтай зууралдаад ирэхээр зааг, ялгааг нь тогтоох, “дүр” бүрийнхээ онцлогыг гаргахад хэцүү. Ажил бүрт нь үүрэг хариуцлагыг нь тооцох гэхээр эд маань “сарьсан багваахай” мэт авирлах нь ойлгомжтой.    Тэгэхээр эл улс төрчдийн маань “универсаль супер” улс төрч болох гэсэн хүсэл шунал (бараг л хобби)-ыг бид хязгаарлаж дийлсэнгүй.

Хэвлэл мэдээллийн хэрэгслүүд маань төлбөртэй, төлбөргүй, санаатай, санамсаргүйгээр эдгээр улс төрчдийн “но”-ны тухай шуугиад байхаар олон түмний хардах сэтгэлийг улам өдөөдөг.  Үндэслэл, нотолгоо сайтай хэвлэл мэдээллийн хэрэгсэл олон байгаа, гэхдээ л дийлэнх нь улс төрчдийн нүүр царайг халхлах гэсэн эсвэл хэн нэгнийг нь муухай харагдуулахыг зорьдог болохоор, бид бүгд ховын ертөнцөд амьдарсаар ….

Эцэст нь, бараг хамгийн гол буруутан нь шүүх, хууль сахиулах байгууллага. Аливаа хов, сэжгийг мухарлаж, буруутанг нь гэсгээх эрх мэдэл шүүх, хууль сахиулах байгууллага (ялангуяа, АТГ, ЦЕГ)-д байдаг. Гэтэл олны чих сэрдийлгэж, дургүйг хүргэсэн олон хэргүүд дорхноо замхран, хэн буруутай нь тодорхойгүй болчихдог болов. Хууль, хүчний байгууллагад итгэх олны итгэл алдарчихлаа.

Ийм учраас эрхэм гишүүн хүртэл одоогийн улс төрчдийн дундаас нэр цэвэр хүн гарах боломжгүй, цаашлаад бүр болохгүй бол гаднаас чадвартай, туршлагатай, хариуцлагатай сайд олохоос өөр аргагүйд хүрэх тухай гашуун үнэнийг хэллээ.

Үүнд эмзэглэх хэрэг алга шиг, харин ч үнэнийг зоригтой хэлсэн нэгэндээ бид талархах учиртай.

Эцэст нь өнөөдөр улс төрд нэртэй, бизнест одтой яваа улс төрчид “Монголдоо” “ирээдүй хойчдоо” өртэй хүмүүс.  Шилжилтийн, хараахан зүгширч амжаагүй тогтолцооны ач буяныг та бүхэн амссан болохоор энэ тогтолцоог “шүүмжлэх” эрхгүй.  Харин энэ тогтолцоог засч, залруулахад хувь нэмэрээ оруулж, хэр зэрэг “эх оронч” хүн гэдгээ л харуулах ёстой.  Тэгэхгүй бол яг л одоо сангийн эрх мэдлээ хязгаарлуулж байгаа шигээ гадаадын мэргэжилтэн урихад хүрэхийг үгүйсгэх арга алга.

Posted in Politics | Tagged | Leave a comment

Guest Post: Five Reasons Why Democracy in Mongolia is Working

By Daniel Schmücking and Adiyasuren J

Mongolia is hailed as an ‘oasis of democracy’, as a shining example of democratic development, and as a model for other post-communist countries especially the Central Asian nations to strive to. Although, many challenges such as corruption and the fragile state of democratic institutions are a cause for concern to the fate of democracy in Mongolia, it is often seen as a relative success in regards to other nations that transitioned from communism to democracy. Indeed Mongolia consistently ranks considerably higher than the five Central Asian republics in a number of studies such as the Corruption Perception Index 2016 by Transparency International, Freedom in the World 2017 report by Freedom House and the Transformationsindex 2016 by the Bertelsmann Foundation. Naturally, many factors lead to this. In this article, it was attempted to point out the five biggest reasons that differentiate Mongolia from other nations with similar starts. Note that every argument is a topic for its own (and lengthy) analysis and thus has been written to give the reader an idea of the many concepts and notions behind it.

1. An early and indigenous democratic movement gave rise to a strong commitment to democracy

As Glasnost and Perestroika were underway in the Soviet Union, an indigenous movement of young Mongolians formed to demand change to the system. This domestic movement started in late 1989 and evolved into large scale demonstrations of more than a hundred thousand people by March of 1990, which in turn forced the communist regime to dissolve the politburo and conduct free and fair elections by June of that year. In 1991, when the Soviet Union collapsed, Mongolia already started and finished its democratic revolution. As the Central Asian republics woke up the news of independence from the Soviet Union, Mongolia already had a head start of two years.

The fact that Mongolia had an indigenous democratic movement also shows that the democratic change was not thrust upon them, but that they gave birth to the idea and fought for it. This sense of struggle for democracy fortifies the trust and confidence of the Mongolian people in the democratic process.

2. A common ethnicity and religion leads to a cohesive national identity

A strong sense of national identity is a cornerstone for any national movement to succeed. History, specifically that of Chinggis Khaan and the Mongol Empire in the 13th century is key to the shaping elusive concept of national identity of modern Mongolia. Nevertheless, there are other factors that contribute to the cohesion or division of a people, chief among which are religion and ethnicity. The nomadic life style of the Mongolians affected their perception of nationalities and ethnicities. During the height of the Mongol Empire, the state incorporated hundreds of ethnicities and thus had a relatively tolerant view towards other people, most of the time. However, for 8 centuries the core of Mongolia has mostly been inhabited by ethnic Mongolians. At the beginning of the 20th century Mongolians along with some Chinese, Russian and Tibetan minorities inhabited the country. Later Kazakhs were added to the mix. This did not greatly affect the makeup of the population. To this today Mongolia could be described as a homogenous state. The lack of large and numerous minority groups may not have played a positive role in the democratic movement, but on the other hand it did not lead to ethnic conflicts in the unstable years after the transition, a theme commonly found in other transitioning states. The question of ethnicity has another face, that of religion. Although, all transitioning nations are secular and they have a history of secularism through communism, we cannot deny the influence religion can have on politics and on national unity and identity. With that in mind Mongolia is a country with many religions and beliefs such as Buddhism, Islam, and Christianity as well as Shamanism. Due to this nomadic heritage religion has never been a central aspect of social life. However, three centuries of Buddhism has shaped a significant proportion the Mongolian identity. Possibly, due to the nomadic way of life, where being attached to a church or place doesn’t make much sense, or due to communism, or even due to the nature of Buddhism, religion does not play a unifying nor dividing role in society. Furthermore, religion hasn’t been used as a political factor.

3. The semi-presidential system and the division of power lead to a fragile yet functioning stability

Possibly the biggest change to the New Constitution of 1992, was the introduction of the semi-presidential system of governance. The Government of Mongolia is established on the basis of a majority vote in the parliament. This is a trait common to parliamentary democracies. However, the Mongolian President is directly elected by the people of Mongolia. This arrangement has had a significant effect on the course and nature of politics in the country. First of all, the absence of president who is the head of the executive branch of the state, decentralizes power from one individual to considerably more. This change was vital to move away from the tradition of a strongman making all decisions and essentially function as a dictator. The communist heritage and style of governance in this part of the world makes it relatively easy for presidents to fall to the allure of authoritarianism. However, the dispersal of power to many individuals serves as a guarantee for democracy, or at the very least assurance against the rule of one person.

Second, the parliamentary aspect of the semi-presidential system ensures the representation of the people and leads to a balance of power between the judicial system attached to the presidency, the legislative responsibilities by the parliament, and the executive duties of the government. Unlike some of the neighbors where power is localized to a specific group of people, Mongolia has created an unstable and often needing of improvement but nevertheless functioning balance of power. However, this comes at a cost. In a system where power is centralized, decisions are made faster and the implementation of it is seen through. In the Mongolian case, this arrangement, designed to restrict the abuse of power, is working so well that the different political parties and institutions are limiting each other with negative effects on economic policy, investment, as well as the reputation of Mongolian law and its longevity.

Third, a multiparty system with two big parties, possibly three depending on who you ask, has become the core of Mongolian political life. A plethora of other parties do exist but with limited reach and gravity. This somewhat rich and arguably healthy political life provides the sustainable setting for a strong opposition movement inside and outside the parliament. Furthermore, a balance of power between the parties, but especially between the two big parties, leads to stability and one of the most essential elements of a functioning democracy, the peaceful transition of power.

4. Strong civil society and free media both check and balance the state

Coupled with a powerful opposition a dynamic civil society fulfills the role of watchdogs in the Mongolian society. The emergence of civil society dates back to early days of the democratic transition. Domestic non-governmental organizations have played an active role to fill the void for the need for advocacy, monitoring of neglected topics and the outreach to disenfranchised groups.

Unlike other states, international civil society organizations are not branded as ‘foreign agents’ or are seen as a negative influence to the country. This positive perception allowed the introduction of a great number of international civil society organizations into Mongolia. These foreign NGOs don’t only enrich the civil society environment in the country but also bring in much needed human and financial resources to areas of vital importance such as the fostering of democracy, the advocacy of human rights, gender equality, environmental preservation, development of democratic institutions, civil participation in political decision making and much more.

An inseparable aspect of civil society is the presence of a free media. There is no denying that big money and politics is closely tied to the media sector in this country. However, their freedoms to report, analyze, and criticize events and persons are ensured. The volume of traditional news outlets and the nearly uncensored social media sector are a key factor to the dissemination of information in the society and its national reach.

5. Foreign policy aligned with democratic and peaceful values

After the collapse of the Soviet Union and even a few years before it, Mongolia has actively tried to position and re-identify itself more with the democratic values of Europe, North America, and importantly East Asian highly developed democracies. Pursuant of its ‘Third Neighbor’ policy, the country has keenly established and developed relations with highly developed democracies and regularly sends a significant portion of its armed forces to UN peacekeeping mission in the spirit of being a responsible member of the international community. This move not only cemented the open and peaceful principles of Mongolia’s foreign policy but it also contributed to make Mongolia a more attractive country for development aid and investment for donors.

About the Authors

Dr. Daniel Schmücking is currently working as the Country Representative of the Konrad-Adenauer-Stiftung in Mongolia. He specializes in political communication und international relations.

Adiyasuren Jamiyandagva is currently the Executive Director of the Academy of Political Education in Mongolia. Previously he worked as a researcher at the Institute for Strategic Studies of Mongolia. His research focus was on Mongolia’s relations to NATO and the OSCE.

Posted in Adiya Jamiyandagva, Civil Society, Constitution, Daniel Schmücking, Democracy, Development, Foreign Policy, Global Indices, Governance, Kazakhstan, Kyrgyz Republic, Media and Press | Leave a comment

Pedagogical Reflections: Role Playing and Cases

By Julian Dierkes

Beyond my research on Mongolia, I also seek out opportunities for teaching and other kinds of engagement.

Overall, Mongolian teaching methods I have observed remain fairly traditional, that is a respected instructor lecturing a large audience of relative passive learners. Planning of workshop and other activities has thus always left me slightly nervous how Mongolian audiences might respond to more involved formats like group discussions, design workshops, pair-and-share, etc. In a recent project we specifically experimented with case-based teaching and simulations. Participants were very engaged and also expressed significant satisfaction with such formats.

Fairly Traditionalist Pedagogy Dominates Schools, Universities and Beyond

Mongolian teaching methods seem relatively traditional in most settings. By that I mean that a respected instructor faces audiences that are passively listening to information dispensed by the instructor. Most teaching situations are structured around this relationship described as Frontalunterricht in German, and captured by an understanding of “lecturing” in English. In pedagogical discourse, this is sometimes described using the metaphor of learners as empty vessels that are filled by the information and learning offered by a teacher.

In giving lectures or offering other kinds of instruction, I have thus found myself faced by audiences that are looking at me in the apparent expectation of a dispensation of wisdom or knowledge. That generally leaves very little opportunity for me to learn from audiences, or their active engagement with subject matter or application of such matter to a different or similar local context.

This conception of a hierarchical and one-way relationship between the person at the lectern and the audience is also quite visible in politics. Most campaign events that I’ve seen in the six national elections that I’ve been in Mongolia for are structured around a podium where candidates sit, stand, and speak, and voters or supporters to listen and applaud the speech. I have seen only some few examples of campaign situations where candidates have listened to anything that voters had to say.

Desire for Active Learning

The prevalence of a lecturing teaching and interaction methodology has made me somewhat uncertain in planning some activities with Mongolian groups. If participants have largely been used to such lecturing, how will they respond to different styles of teaching and interaction?

Windfall Profits Tax

Some years ago, Mendee and I had developed a teaching case focused on the Windfall Profits Tax that existed from 2006 to 2009. Originally, we had developed this as a pedagogical experiment for the Master of Arts Asia Pacific Policy Studies at UBC (MAAPPS). While case-based teaching has been used in business schools for a long time, policy programs have been slower to adopt such methods.

The Windfall Profits Tax seemed to offer an attractive topic as it can be described in the context of a simulated parliamentary hearing, the basic information does not take a great deal of background knowledge, and we have been able to interview some of the key players in the passage of the Tax in development of the case materials.

While I have used the case regularly in my teaching at UBC, we had not used it in engaging Mongolians until the Fall of 2017 even though we have been seeking to do this for some years.

Case-Based Teaching with Young Party Activists

The opportunity to experiment with case-based teaching presented itself in the connections that the German Friedrich-Ebert-Stiftung Mongolia office has not only to the MPP, but to its youth organization (Нийгмийн Ардчилал монголын залуучуудын холбоо – НАмзх) in particular. In contributing to a change in Mongolia’s political culture toward the development of more substantive stances by the political parties, the opportunity to conduct policy simulations with younger party cadres seemed very attractive.

Over the course of a week, we travelled to three Eastern aimags, Dornod, Sukhbaatar, and Khentii in October 2017. With the terrific logistical support from FES and НАМЗХ we were able to assemble participant groups in the aimag centres drawn from the youth organization membership, but not only in the aimag centres, but from the countryside as well.

Practical Experience

Put shortly, our participants were certainly eager to engage and participated very actively in the simulations we organized for them. Our biggest fear ahead of the first session was that we would get passive groups starting at us and unwilling to engage. Our experience could hardly have been further from that fear.

Nature of our experience:

  • Total participants 20-40
  • Groups of 3-7 participants
  • All-day sessions divided into two separate simulations, with coffee and lunch breaks
  • Description of overall aims and content of activity sent ahead, but no pre-workshop homework

Some lessons:

  • Always need a strong local organizational partner to ensure attendance
  • Almost as soon as our introductions/instructions were concluded, participants jumped into lively action
  • Flip charts were very useful in getting groups to produce a position that they could present to others
  • Some small groups were dominated by individuals (through force of personality or expertise)
  • Role playing came easily to participants, including laughter about overacting in their roles. But participants also added to the “reality” of situation. At different events, groups concluded discussions with the national anthem, for example, or ceremoniously signed an MoU they had concluded.

  • Participants seemed to enjoy playing a more distant to their own experience role more than a role that was more similar to their experience. In a group of junior government officials or politicians, the liveliest discussion seemed to come from the group that was assigned the role of company in discussions around mining policy.

Conclusions

While one might fear that Mongolians have been conditioned by dominant pedagogies to remain relatively passive in learning situations, that fear is unfounded when more active learning is expected.

So, as you plan similar activities, do look for more interactive formats and do not be scared by the initial passive faces you might face in the more formal settings that will also be included in a workshop format.

Acknowledgement

The particular experience I’m reflecting on here centrally involved Mendee and Byambajav who were instrumental in the origins of this blog, of course. Below, they sit in the back supervising participants at a workshop and probably whispering snarky remarks like the two old dudes in the Muppets.

Posted in Development, Education, Public Policy, Youth | Tagged | Leave a comment

Change in Countryside – October 2017

By Julian Dierkes

This is Post #500 for our Blog!
What a milestone, we’ll have to commemorate our achievement soon.

For some years, I have now taken notes about visible changes in Ulaanbaatar on my periodic visits.

This year, I’ve started a similar list for countryside changes. The first note appeared in June 2017. Additions/deletions/edits to that list are marked in italics below.

Visible Manifestations of Social Change in the Countryside

What has Arrived?

  • Guardrails in some curves on major cross-country roads
  • While it used to be that street signs (speed limits, warnings of curves, etc.) were a curious rarity (“when there hasn’t been a sign for 100km, why this one?”) they now seem to appear in clusters.
  • The state is reasserting its authority in some places. Roadside safety inspections of vehicles have returned. On a drive between Baruun-Ort and Chinggis (<3 hrs) we were stopped by police three times: marmot inspection (we weren’t carrying), tire disinfection, seatbelt check. The latter was really a bit of a local police extortion attempt.
  • Fences around large parcels of lands. As far as I can tell these are hayed for winter fodder as nothing seems to be planted there. Fences keep out animals in this case to let grass grow.
  • I’ve long heard discussion that many of the projects carried out with the Local Development Fund were public toilets. I have now seen some of these!
  • Not all fences around xashaa (property lots) are wood anymore. There are some prefab concrete slabs, corrugated metals, etc.
  • Ger district conversions in towns. We saw this in Baruun-Urt for example.

  • Virtually all aimag districts now seem to have at least one tall building (8+ stories). 
  • New, modern houses are appearing in sum centres. Only buildings in towns that don’t have a big wooden fence around them.
  • “No littering” signs.
  • Motorcycle helmets.
  • Bike infrastructure in towns.

What has Disappeared, or at least, Nearly Disappeared?

  • The clever move to simply drive cross-country around toll booths on major roads.
  • Satellite phones. Still necessary for country-side connectivity around 2010, now I haven’t seen one in some time. 

What will Appear in the Future?

  • Much more directional street markers.
  • Cross-country biking, hiking, and riding routes away from major roads.

What will Disappear in the Future?

  • Roughly in the 2000s, I would guess, more cars were beginning to show up in the countryside, but road-construction was not revving up yet. That meant that on big cross-country routes, entire valleys were scarred by multiple parallel tracks. Along the paved sections of major roads, these scars are slowly disappearing in the landscape.
  • At construction sites, the paved roads are often simply blocked with large dirt heaps across the lanes. Effective, but scary at night.
  • Greeting of official visitors at city gates.
  • Fancy streetlight design must be a state socialist heritage somehow along with other forms of public art. There are vaguely futuristic designs throughout Mongolia, but they are even more surprising in provincial towns than in Ulaanbaatar. Somehow, I don’t think that they will continue to be built. Two examples below from Dornod aimag.

Fancy streetlight design in Choibalsan. #Mongolia

A post shared by Julian Dierkes (@jbdierkes) on

Die Allee der Kosmonauten in Choibalsan, #Mongolei?

A post shared by Julian Dierkes (@jbdierkes) on

What won’t Disappear in the Medium Term?

  • Composite electricity poles. In the countryside these consist of a concrete base to which a wooden pole is tied with wire/brackets which ends in a triangle that has space for three attached cables. Metal poles have appeared, but I know similar composite poles from the Yukon and Alaska, so they  must be well-adapted to extreme temperatures and will thus last.
  • Litter. Growth in domestic tourism will make the countryside more littered, but awareness of littering will ultimately build. Such a blight on Mongolia!
  • Buried tires to mark property lines. It seems that there are so many practical reasons (cheap, indestructible, visible to off-roading drivers) that this practice will continue.

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Pleased by the Khurelsukh Cabinet

By Mendee Jargalsaikhan 

The recent political developments in Ulaanbaatar have brought ‘hopes’ for some and ‘disappointments’ for others while being simply neglected by the majority as ‘typical’ political jokers and gaming.  Because of the lack of FORMAL institutional lockings, I always see greater uncertainty in any political reforms in Mongolia; therefore – the country often appears to be sitting at the crossroads.  The political system is vulnerable to moves of charismatic politicians, balance of power competitions between factions and interest groups, and temporary social pressures.  Since the institutional checks (rule of law, independent judiciary and apolitical bureaucracy) are weak, the political reform could be easily overridden by poorly thought ‘let’s change it’ syndrome. Thus makes any reform unsuccessful and easily mockerred by election/post hungry oppositions and politicians – along with help of some irresponsible media.  Before making overtly optimistmic stance on Khurelsukh’s reform, I would suggest Khurelsukh’s team needs to show the overall map of ‘how’ they would bring or improve the justice, to reduce the corruption, and to strengthen the public service; to point out difficulties, where they would require support from the like-minded judicial and law enforcement personnel, public servants, business community, and citizens; and to let party members and supporters know they would pursue politically indifferent approach to those corrupted MPP officials. This would add a little trust in Khurelsukh’s team’s dedication and start the New Year with a little bit of hopes – since we have seen how difficult to fight against deeply entrenched corrupt system, which relied on the INFORMAL institutional checks and lockings.

Why Am I Pleased

I do share some of Julian’s dissappointments – 99% double deel appointment, lack of female cabinet members, populist-type of political agenda, and avoidance of defining the party’s values and ideology.

But, I see the glass half full and am optimistic about Khurelsukh’s team’s reform efforts for the following three reasons.

Prioritization of Poltical Stability

The most typical challenge in Mongolia is the political stability, thus often characterized “uncertain” and “shaky” landscape.  This uncertainty nurtures the competitions among politically affilliated businesses and reduces trusts of people, businesses, and investors in the government, politicians, and public servants.  I would suspect Khurelsukh’s choice of his cabinet members was driven by the objective of maintaining the political stability at least within the party and parliament.  If he had chosen the “dan (single) deel” option and marginalized M. Enkhbold’s faction, he would simply lose most of his energy and patience in small battles within the party, standing committee and parliamentary sessions just to establish his cabinet members.  Khurelsukh’s team had demonstrated the difficulty of steering the reform at their will because series of institutional constraints and resourceful factions of M. Enkhbold and J. Erdenebat.  Therefore, the “davhar (double) deel” cabinet, for me, indicates the Khurelsukh’s team’s desire of prioritizing the political stability for themselves and their reform efforts.  Hopefully, we would see a stable cabinet until 2020.

The Party Tilted to Reform

Like DP, after seeing similar money and parochial interest driven politics of the MPP following the 2016 parliamentary and 2017 presidential elections, it was difficult to talk about political developments – rather than strengthening ‘crony democracy’ in Mongolia.  But, few MPP members’ calls to investigate the shady Erdenet deal and Mongol Bank’s corruptive schemes brought some hope.  Then, the government’s inability to implement the decisions regarding the Erdenet non-transparent, hasty privitization, as well as involvement of cabinet members’ business deals (including tax breaks) seemed irritated several young MPP members.  Later, some party members appear to be realized that their praisal of or silence about the ’60 billion tugrug’ (public service trading scheme) might have cost their political careers in coming elections.  Thus led many of them to voice against M. Enkhbold and Ts. Sandui (speaker of the city council) after the disasterous presidential election.  This would clearly indicate that rational party officials and younger ones want to change party leadership and the balance of power (of course, it would be misleading if we believe all wanted to reform and justice).  However, all young MPs, who called the resignation of Prime Minister J. Erdenebat’s cabinet, didn’t fight for cabinet seats.  If they became Khurelsukh’s cabinet members, today we would simply joke them as the ‘second echelon’ is going to the dining hall (i.e., cabinet).  This led me to see a hope of the party reform.

Emphasis on Professionalism

The emphasis on the professionalism of the public service is hihgly laudable.  Although the initial move of having more single deel posts than double deel ones failed, Khurelsukh’s cabinet pushed for at least some experience of serving at respective ministries.  He, indeed, brought professional ministers (with legislative capacity) at the ministries of justice, finance, and foreign affairs while yielding to have some fresh ones at two important ministries (environment/tourism and mining/heavy industry).  Since we have not seen these fresh ones run the ministries, it is hard to comment and predict.  At the same time, Khurelsukh’s cabinet also included MPs with previous executive office experiences – especially those coming from M. Enkhbold’s faction.  Having ministers with equal footings in the parliament and cabinet would certainly strengthen Khurelsukh’s government vis-a-vis to the parliament (State Great Khural).  Now, if all ministers would remain truthful for the professional public service and refrain posting any of their clients (patrons) to senior posts at the ministries and agencies, it might raise the professional confidence of public servants and a bit trust among public in the government.  However, the most important part for the public service reform is to establish a long-term institutional protection for public servants and seal all possible holes for politically affilliated entreprenuers to penetrate into the ministries, agencies, and provincial governments for their personal/factional benefits.  Thus needs to be done with the president, parliament, and judiciary.

Above all, I am a bit optimistic about Khurelsukh’s team’s reform effort because they seem to be prioritizing the political stability, tilting towards party reform, and emphasising the importance of professional public service.  But, if his team wanted to make a lasting reform, they must dismantle all INFORMAL institutional checks (patronage networks and factions) and strengthen all FORMAL institutional checks (judiciary, law enforcement) to lock against reversal tide.  The most important aspect at the moment is to lay out the main strategy and challenges to all – letting them to neglect small, temporary shocks and be prepared to support a long term overhaul for the justice and trusted public service if his team needs to fight against the party, parliament, and presidency.

Posted in Judiciary, Mendee Jargalsaikhan, Mongolian People's Party, Politics | Tagged | Leave a comment

Disappointed by the Khurelsukh Cabinet

By Julian Dierkes

My dominant view of developments in Mongolia is, “If only…”. The economic, political and social development promise is there, yet its fulfillment is always one or two good decisions away. In my view, Khurelsukh’s cabinet unfortunately signals that this fulfillment has once again been pushed further away. As an eternal optimist when it comes to Mongolia, I am happy to give PM Khurelsukh and some of his ministers the benefit of the doubt, but there are a number of aspects of this cabinet that make me less likely to expect good things.

With Mendee, I’ve already offered an initial assessment of the new cabinet at The Diplomat. Hopefully, he’ll offer a counter-point to my specific points below.

Why Did I Think Anything Good Was Happening?

Cynical observers might question the notion that anything good was going to come of a change in government. But, as I said, I remain optimistic. Here are the reasons in this particularly situation, some of which Mendee laid out in a post as well.

  1. Khurelsukh. I have not met him, but I did seem him speak to party activists at a final presidential campaign event in June. He was the most relaxed MPP speaker that I’ve seen. He joked, he spoke freely. More so than any other MPP grandee at the event, certainly including M Enkhbold. Accordingly, he was greeted enthusiastically.
  2. Reformist ferment in the MPP. In meetings with younger party activists, I have seen some ferment brewing. It is brewing around a push for generational change, something that the MPP had been successful at in the past (entirely unlike the DP), but seemed to be stalling. Some of this ferment has been building around Khurelsukh in part because of his ties to the MPP’s youth organization.
  3. Perception of “City” faction as corrupt. Some have been upset by M Enkhbold’s seeming monopolization of all positions for his associates because they wanted some of the spoils of electoral victory, others because the lack of a political agenda in the City faction calls into question any purpose for political office other than political gain.
  4. Rivalry with Princelings. The sons of rich, powerful politicians are rarely a positive force in politics around the world. Some princelings are itching for power in the MPP, but Khurelsukh is opposing them.
  5. Timing. The next election is nearly 3 years away. That is long enough to make some decisions that are not based on electoral calculations.
  6. Battulga. The president has not given any indications that he is pursuing a political agenda in his presidency. That would seem to allow the prime minister to grab a more explicit substantive leadership role.

How Does Cabinet Composition NOT Signal Reform?

Here are some of the points that make me worried about the likelihood of reforms being initiated and carried out by PM Khurelsukh and his cabinet.

Note that I raised Point 3 below first in a quick tweet which has become my most re-tweeted ever.

  1. Process: Party. Khurelsukh seems to have made a strategic decision to take over the government ahead of taking over the party, the reverse order from what has happened in the MPP in the past. That means the Party Congress remains a looming threat because the City faction or the princelings may fight back in that forum. The abstention of many MPP MPs from Khurelsukh’s election signals that this remains a real challenge.
  2. Process: Forming Government. Clearly, Khureksukh was not able to assemble a cabinet free from party factions because he has not consolidated power in the party. In the end, it was the MPP parliamentary group that sent Khurelsukh the list of ministers, not he who selected his cabinet.
  3. Double deel. Other than Khurelsukh himself, every member of cabinet is an MP. I have never been that concerned about the simultaneous role of parliamentarian and government executive, but this is a slap in the face to the public, especially since Khurelsukh had indicated a desire to appoint experts in cabinet. Of course, there are competent MPs. That’s part of the reason why I do not think of the double deel as a challenge in principle, but there are only a few members of this cabinet who seem obviously prepared and competent for their portfolios. That would include D Tsogtbaatar (Foreign Minister), Ts Nyamdorj (Justice), Ch Khurelbaatar (Finance). At the opposite end of this spectrum sits D Sumyabazar whose competence in mining matters has remained well-concealed during his service in parliament so far. Likewise, D Sarangerel is a journalist by profession and so far has not displayed any inclination toward her health portfolio.
  4. Lack of inspiration: women and new faces. Once Khurelsukh had been forced into an all-MP cabinet, he had very few choices that would have been inspirational. But how I wish he had signalled a desire for reform by bringing in competent new faces, including younger politicians and especially more than two women. Women play so many important roles in Mongolian organizations, they need to be included in the most visible and most important decision-making bodies! D Sarangerel is a woman, but her assignment to the Min of Health is not where she is knowledgable and along with Ts Tsogzolmaa at the Min of Education, it is classic assignments for women in cabinets.
  5. Political agenda. Obviously, much remains to be defined. While his delivery was uncharacteristically flat, Khurelsukh’s address to parliament after the election included some topics that could define his government and could move toward much needed fundamental reforms. Some of his speech was perhaps somewhat generic including elements pointing at social development. But judicial reform did seem to get some mention. My personal preference would be for public service reform as the first big task, but judicial reform is obviously linked to an independent judiciary. And perhaps Nyamdorj is the right minister to lead such efforts. We shall see.
  6. No ideology or Politics. Some of the ferment in the MPP has been around a desire to define the party more substantively. Often this is tied to the social-democratic moniker that many party members subscribe to. There has been nothing social-democratic in Khurelsukh’s speeches so far, his cabinet members do not stand for any particular ideological position. Of course, the party congress might be the more obvious place to push for a more substantive understanding of the party, but this does not seem likely at the moment. A change of the Mongolian political culture away from a perception of public office as an earnings opportunity toward the pursuit of substantive policies that allow Mongolians to participate in determining the country’s future is an urgently needed reform, but Khurelsukh may not be the person to bring this about.

What to Watch for in Coming Months

Of course, being an optimist, I have not given up on Khurelsukh and on political reform.

Here are some developments I will be watching in coming months.

  1. Khurelsukh. Let’s hear some more speeches to find out whether he has a political agenda and what that is.
  2. Further appointments. Will there be vice ministers? Will they be political appointments or competent or both? Will there be a wholesale rotation of personnel, again?
  3. Party congress. Obviously, this may turn into a battle. Or not.
  4. Constitutional reform. Currently, the desire for constitutional reform seems to have subsided. Will Khurelsukh re-invigorate discussions or simply drop them?
  5. Cohabitation. Khurelsukh will have to find some way to cooperate with Pres. Battulga. Will this relationship be confrontational, or an active collaboration, or a stand-off?
  6. More bikes. Will state limousines be replaced by Harley-Davidsons?
Posted in Judiciary, Mongolian People's Party, Politics, Public Service | Tagged | Leave a comment

Khurelsukh Cabinet

By J Mendee & Julian Dierkes

It has been an odd development that the MPP government led by Prime Minister J Erdenebat fell, even though the MPP still has its super-majority in parliament. Ultimately, this has been fallout from M Enkhbold’s defeat in the presidential election. Now, U Khurelsukh comes in to a lead a new MPP government that at least carries the whiff of genuine reform around it, especially when it comes to issues like state appointments (following the ₮60b scandal). Khurelsukh’s cabinet gives us some further indications of whether the desire for reform is a mere whiff, or if real change can be expected.

The Khurelsukh cabinet, like Erdenebat’s, has 16 ministers and 13 ministries. All ministers were appointed from parliament like Prime Minister Elbegdorj’ cabinet of 1998. Only 2 members of cabinet are women.

On Oct 13, the cabinet still awaits final approval from the president and parliament, but we’ve offered an initial assessment at The Diplomat.

The cabinet was confirmed and sworn in on Oct 18 2017.

Julian has expressed his disappointment with this cabinet. Mendee feels a bit more optimistic about the cabinet.

Prime Minister (Монгол Улсын Ерөнхий Сайд): U Khurelsukh (MPP)
Born 1968
Defense University of Mongolia (Political Science), Institute of Public Administration and Development (Public Administration), National University of Mongolia (Law)
Deputy Prime Minister 2014-2015
MPP Gen Secretary 2008-2012
Member of Parliament 2000-2008
Minister of National Emergency Agency 2004-06
Minister in charge of Professional Inspections 2006-08
Deputy Prime Minister 2016-17

Cabinet Secretary (Хэрэг эрхлэх газрын дарга): MP  G Zandanshatar (MPP)
Born in Bayankhongor
Economist
Graduated from University (Irkutsk, Russia), University of Economy and Law (Russia)
Vice President, Khaan Bank 2003-2004
Vice Minister of the Ministry of Food and Agriculture 2004-2008
Foreign Minister 2012-2013
Member of Parliament 2008-2012 and 2016-Present

Deputy Prime Minister (Шадар сайд): MP O Enkhtuvshin (run second for the Prime Minister candidacy in October at the party plenum)
Born in Khuvsgul
A career party bureaucrat from 1980
Director of Mongolian and Radio and Television 1996-2005; Secretary of the MPRP 1996-1997 and also 2012-2013
Member of Parliament 2000-2004, 2008-2012, 2012- Present
Cabinet Secretary 2006-2007
Minister for Education, Culture and Science 2006-2008

Minister of Justice and Interior Affairs (Хууль зүй дотоод хэргийн сайд): MP Ts Nyamdorj
Born in Uvs
Lawyer, Graduated Leningrad State University (Russia)
Member of Parliament 1996 to Present
Minister for Justice and Internal Affairs 2000-2004 and 2008-2012
Chairman of Parliament 2005-2007
Vice Chairman of the Parliament from 2016

Minister of Finance (Сангийн сайд): MP Ch Khurelbaatar
Born in Uvs
Economist, Graduated from the Financial and Economic Institute (Leningrad, Russia) and University of Sydney (Australia)
Lecturer, Mongolian State University 1998-2000
State Secretary of the Ministry of Finance and Economy 2007-2008
Minister for Energy 2008-2012
Member of Parliament 2008-Present

Minister of Defense (Батлан хамгаалахын сайд): MP N Enkhbold
Born in Tuv Province
Engineer-Economist, graduated from the Press Institute of Moscow (Russia), Communist Party Institute (Russia), University of Sydney (Australia)
Advisor to the Deputy Premier 1997-2000
Member of Parliament 2000 – Present; Vice Chairman of the Parliament 2008-2012.

Minister of Energy (Эрчим хүчний сайд): MP Ts Davaasuren
Born in Khuvsgul
Engineer and Economist, graduated from Polytechnical University (Russia), Management Academy, Saitama University (Japan)
State Secretary of the Ministry of Finance 2005-2008
Member of Parliament 2009 to Present
Chairman of the Budget Standing Committee for 2008 and 2012 parliament

Minister of Education, Culture, Science and Sports (Боловсрол, соёл шинжлэх ухаан, спортын сайд): MP Ts Tsogzolmaa
Educator (history)
Graduated from Pedagogical University (Irkutsk, Russia)
Management Academy
Worked in youth and children’s organization 1996-2004
Governor of Sukhbaatar District
President of Social-Democracy-Mongolian Women’s Association (MPP’s women’s organization) 2013 – Present
Member of Parliament 2016 – Present

Minister of Roads and Transport (Зам, тээврийн хөгжлийн сайд): MP J Bat-Erdene
Graduated from Polytechnical University, Irkutsk, Russia 1989 and Law Institute of the Mongolian State University 1998
President of “Ashid-Erdene” LLC 2000-2004
Director of Transportation Agency 2007-2012
State Secretary of the Ministry of Road, Transportation, and Tourism 2008-2012
Board Member of Mongolian Railway and MIAT 2011-2016

Minister of Environment and Tourism (Байгаль орчин, аялал жуулчлалын сайд): MP N Tserenbat
Born in Uvs
Economist
Graduated Mongolian University of Science and Technology
Vice Director, Uvs Khuns LLC 2010-2012
Transinconsult LLC 2015; CEO “UFC”2016
Member of Parliament from 2016

Minister of Foreign Relations (Гадаад харилцааны сайд): MP  D Tsogtbaatar
Born 1970 in Ulaanbaatar
Speaks English, Russian, Khmer and Thai
Diplomat, Graduated from the Moscow Institute for Internaitonal Relations (Russia), Australian National University.
Worked at the Ministry of Foreign Relations 1994 – 2002
Foreign Policy Advisor to the President 2002-2008
State Secretary of the Ministry of Foreign Relations 2008-2012
Minister for Environment and Tourism 2014-2015
Minister for Construction and Urban Development 2014-2015
Member of Parliament from 2016

Minister of Mining and Heavy Industry (Уул уурхай, хүнд үйлдвэрийн сайд): MP D Sumiyabazar (wrestling champion)
Graduated from the Mongolian University of Science and Technology.
General Director, “ABC Development” LLC 2003-2006
Vice Director, “Asashoryu Foundation”
Board Member, National Investment Bank
Member of Parliament, from 2016

Minister of Labor and Social Protection (Хөдөлмөр, нийгмийн хамгааллын сайд): MP S Chinzorig
Economist
Graduated from Mongolian State University
Deputy Governor of Uvurkhangai Province, 1992-1996
Chairman of Citizens’ Council of Uvurkhangai Province, 1996-2000
Vice Minister of the Ministry of Social Welfare, 2000-2008
Minister for Labor, 2014-2015
Member of Parliament from 2016

Minister of Construction and Urban Development (Барилга, хот байгуулалтын яам): Kh Badelkhan (Kazakh)
Born in 1971
Graduated from the Polytechnical University and Management Academy of Moscow
President of the “Orken” foreign trade company 1994-2000 and construction company 2000 – 2005
Governor of the Bayan-Ulgii Province  2008-2012
Member of Parliament 2008 – 2012
Vice Minister of the Ministry of Industry 2015-2016

Minister of Health (Эрүүл мэндийн сайд): MP D Sarangerel
Journalist, Graduated from Omsk Technological Institute (Russia) and University of Rostov (Russia)
Director, Editor, MM News Agency, 1995-2000
General Director, TV5 2005-2011
President, Mongolian United Association of Journalists 2005-2011
Secretary of the MPP 2011-2012
Member of Parliament from 2012

Minister of Food, Agriculture and Light Industry (Хүнс, хөдөө аж ахуй, хөнгөн үйлдвэрийн сайд): MP B Batzorig
Designer, Economist
Graduated Light Industry Institute (Czechoslovakia), Management Academy Agricultural University
CEO, Kyokushuzan Foundation 1999-2008
Member of the Citizens’ Council of Ulaanbaatar City 2004-2012
Governor, Bayanzurkh District 2008-2012
Vice Minister for the Ministry of Food and Agriculture 2015
Member of Parliament from 2016

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President Kh. Battulga addressed the Parliament

By Bulgan B

Mongolian President Kh Battulga addressed the Parliament during the opening of the fall session on October 2, 2017. While skipping the pleasantries, President listed the major challenges that Mongolia is confronted by and his opinions on those issues. The first item on the list is the formation of the cabinet (which is a matter of time since U Khurelsukh has been appointed Prime Minister – interesting article by a Mendee J here ) and its swift action in tackling many challenges the country is facing. For the sake of easier reading, I divided the President’s perspectives 1. On domestic issues 2. On mining, and 3. On Justice. I then offer some short reflections.

On domestic issues, the president started off by disclosing his dissatisfaction with the 5.3 percent of expected economic growth in 2017 and the IMF’s decision to invalidate livestock as a deposit and the IMF’s classification of children’s benefit as a welfare payment. He states that livestock and population growth (children’s benefit) are important to Mongolia thus advised to revisit this issue with the IMF. He continued his speech emphasizing the importance of passing next year’s budget that supports the private sector. He citds the full implementation of the Law on Procurement of Goods and Services on State and Local Budgets further. Not only children lunch, examples were illustrated on items such as boots production (targeting the markets of military, law enforcement organization, mining and construction workers) could support the national shoe factories, leather processing shops and herders. He states that herders could supply the hides for the boots with a fairer price than today’s three hides for a cup of instant noodle price. He continued to emphasize the importance of state organizations and state-owned companies to be supportive of national production not only at the policy level but also to procure locally made produce for their canteens.

The President also demanded a law which regulates the expenditure of international credits limiting its use only on projects which has investment return, not infrastructures and social institutions, like the credits were spent up until now. He shares his disappointment in fake promise to support food production and his hope in increasing agricultural exports thus creating diverse pillars of the economy that is not as vulnerable than single mining focused policy.

On Mining, The President positioned himself as anti-mining without much subtlety. He charged that the dropping coal price is guilty for failing economic growth thus causing demonstrations by educators and healthcare workers for higher pay. Not only the failure of the economic growth but also tainting justice in politics, economy, and society were blamed on the “dirty money” from mining. In addition, the mining businesses and highest authorities were in the largest corruption network as he portrays it. He also made a point that welcoming mining business owners to the cabinet and other executive bodies need to be stopped.

The President also requested that the parliament and the new cabinet do better in the management of mining income. He reiterated the constitutional right of Mongolians to natural resources, demanding justice, stating that people have MNT 3 trillion more debt than before the mining boom. His dislike of mining was further expressed as he sees that only a few elites (or wealthy families) have access to the profit from mining and natural resources, halting the public to benefit from the exploitation of the natural resources. Furtherly, the President sees that the Law on Mineral Resources is enabling those few elites to get even richer and the public deep in debt. Therefore, he calls for a change in the law and the policy.

In making changes to the Law on Mineral Resources, President signifies “gold” and makes a justification to have a full state ownership of thethe President enumerated that gold has the ability to define the value of the national currency and our two neighbors exercise special privileges when it comes to gold.

Justice. He repeatedly mentioned how judicial institutions, executive institution, and law enforcement were rigged, covering up crimes and conspiring to revenge their opponents. He mentions the cases of off-shore accounts, 60 billion’s case, tobacco law and S Zorig’s assassination case. He declared that he will attach special importance to restoring justice in the judiciary.

Reflections on his speech, the tone of “populism[i]” was engraved in every part of his speech. He repeatedly mentioned wealthy families and mining business and how they were rigging the system to profit at the cost of the commons. Also, his take on justice was not new, hence he shared his dissatisfaction with the judiciary and law enforcement (and legislative body, executive body) when he was a member of parliament.

On the other hand, his take on mining and its elaboration sounds immature and misleading. Although I agree with his general conclusion that Mongolia has not governed the revenues from natural resources well , if at all,  I cannot share his sentiment that mining is the evil. Mining exposes Mongolia to global competition thus revealing many of its shortcomings and vulnerabilities (and might I say, advantages too).n or governance of the income.

Ending his speech, the president warned the harsh winter and challenging economy which could overcome by mutual collaboration. I worry that there would not be a collaboration unless there is a common understanding of mining challenges and its opportunities and map out a common vision and ways which we pursue the vision and we also have to consider the vicious cycle of politic, democracy, and citizen participation. Well, as he said:

Мөнх тэнгэр биднийг ивээг!

PS: For full speech

Mongolian at http://president.mn/taxonomy/1086

English at http://president.mn/eng/newsCenter/viewNews.php?newsId=2197

 

[i] Populism is a political doctrine that appeals to the interests and conceptions (such as hopes and fears) of the general population, especially when contrasting any new collective consciousness push against the prevailing status quo interests of any predominant political sector. https://en.wikipedia.org/wiki/Populism

 

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A New Prime Minister: Same Politics or Reform?

By Mendee J

The election of U Khurelsukh as Prime Minister and surrounding politicking raise two interesting questions:

(1) Do they (so-called reformist faction of the MPP) mean business and want to reform the party?   Or, is the ‘second echelon’ of the MPP taking over the executive offices?

(2) If they mean business, will they have the resolve and resilience to overcome the deeply entrenched patronage politics within the party and government institutions?

Khurelsukh’s answers at the parliamentary sessions as well as the speech made some indications that he seems to be serious about the reform.  He pledged to keep his promises of strengthening the bureaucracy, fighting against corruptions, and upholding the rule of law.  Interestingly, at the end of his first speech as Prime Minister, he made the only, specific request (probably aimed at his party inner circle)

“Please don’t ask or pressure me and my cabinet to do anything unlawful. I would obey the law.” (link)

Obviously, time will tell whether Khurelsukh and his colleagues can reform the country’s most-corrupt institutions (i.e., the political party according to pundits, studies, and polls); thus have long-term implications for the party, the government, and the state.

If they can clean or at least marginalize the patronage network within the ruling and largest political party, the MPP would have a good standing in upcoming elections in 2020.  If they can prioritize professionalism, rule of law, and accountability within government institutions (ministries, agencies, and provincial authorities), this would result in effective governance at least in the next two years.  If they can provide ‘true’ autonomy to judiciary and law-enforcement agencies and demand the professionalism from these institutions, the statehood would be enhanced and respected.

Second Noticeable Push for the MPP Reform

This appears to be the second noticeable push within the MPP to rid the party of cronyism and clientelism since 2007.  In December 2007, another charismatic leader, S Bayar, and his faction called for the party reform and introduced the most technocratic cabinet. Despite strong public support for his reformist agenda, his team was overwhelmed by the financial crisis of 2007-08, July 1 rioting over the disputed election, and backlash of the defeated factions within the party.  Frankly, the reform for fixing the oldest, largest political party yielded to patronage politics.

Here we are about to witness another noticeable push for party reform – if Khurelsukh’s team fails, the MPP will simply follow the fate of the DP.  The DP has lost its core values and ideological orientation. Money-driven power politics has overtaken the party’s key institutions.  The party-chairmanship, governing board, and local branches have become the tool (or the leverage) for loosely-connected factions and groups to advance their interests and influence.  At the end, the change of the cabinet for the DP-led government simply indicates the change in the balance of power among factions – as all say in UB, ‘the next echelon’ is taking over state institutions.

If Khurelsukh’s team succeeds, we would expect something positive because the timing seems quite favourable.  First, the next election is a bit far away.  All (current and future want-to-be parliament members and political office holders) would take a little bit break.  And, they all wanted to look good and like rational actors publicly.  Second, the public and party supporters began cautiously applauding the reformist call of Khurelsukh and his colleagues after seeing the indifferent and indecisive politics of M Enkhbold (Speaker and Party Chairman) and J Erdenebat (Prime Minister) than their colleagues of the DP.  Third, economic conditions appear to be improving in spite of public debts. Commodity prices are gradually rising and the macro-economic policy is now tied to larger economic structure (i.e., IMF).  And, importantly, Russia and China are willing for more trade.

Khurelsukh’s Next Battles for Power

It is apparent that Khurelsukh is facing several difficult battles at multiple fronts – these battles would tell us whether he would truly bring positive changes to the party, government, and the country or not.  Like M Enkhsaikhan (DP in 1996) or Bayar (MPP in 2008), he was able to gain support to empower the Prime Ministership – especially choosing his team (cabinet members).  And, we would see if he could set up professionally-dedicated team of ministers in coming days.  For which, he needs to overcome pressures from his own faction, collaborating faction, and also contending faction within the party.

The no-show of 28 MPs to yesterday’s parliamentary session is evidence of the difficult battle ahead. In the end, Khurelsukh was elected by 47 MPs, a clear majority in the 76-member State Ikh Khural, but far short of the MPP’s 65 seats.  It also indicates that he needs to deal with his own party’s strong, loosely connected factions – some disgruntled over his actions of either taking down the Erdenebat’s cabinet or not offering any slots within his cabinet.  This faction would continue to challenge any of his policies or actions at the parliament and very likely at the party’s upcoming Congress (in November) to choose the party new chairman and other leadership. This would, certainly, force Khurelsukh to open up more cabinet seats to MPs in order to (1) build a strong coalition in the parliament and (2) prevent triggering anti-Khurelsukh campaign before and during the party congress.

At the moment, President Battulga and the DP’s parliamentary group have been the most supportive of Khurelsukh’s nomination and his will to establish a professional cabinet, but there are areas which would bring inevitable differences over mostly economic deals (i.e., railroads, mining deals, and banking).  The other evident battle, which will occur in coming days, is the power-arrangement over the security and law-enforcement agencies (esp. , police, intelligence, anti-corruption, marshall, plus procurator’s offices) with President Battulga (of course, with the DP prominent ones).

New Cabinet

Although Khurelsukh was adamantly proposing the professional (in reality – united and controllable) cabinet without davhar deels [i.e., parliament member simultaneously holding the cabinet post] and vice ministers, he began to tone down his priorities.  Having a few MPs with cabinet post would enable the Prime Minister (without the parliament membership and also party chairmanship) to maintain influence within the parliament and bargain with ‘friendly factions’ within the MPP.  Similarly, in spite of being criticized harshly, vice minister’s posts are also useful for his cabinet and party – (1) allocate tasks and responsibilities, especially ministries with large portfolios and (2) bring new party leaders (as on-the-job training) and entice the support of younger generations within the party.  Despite the unpopularity of the “double deel” and vice ministers in the public, MPP’s key political opponents – the President and DP’s parliamentary group – will not pressure Khurelsukh to get rid of them while some of his own party MPs vehemently fighting for the cabinet slots. The most pragmatic solution for Prime Minister Khurelsukh could be more davhar deel postings.

As a result, Khurelsukh’s cabinet will not bring any structural changes, but it will likely be composed of individuals with somewhat professional connection, experience, and most importantly answers to Khurelsukh rather than his/her factions.  However, the over-riding principles for the cabinet selections are to pick people with professional relevance to ministries’ portfolio and senior leader-type of work experience at the respective ministry.

Here are potential (rumoured) candidates for each ministry:

  • Prime Minister – Khurelsukh
  • Deputy Premier – MP (Ulaan or Enkhbayar)
  • Chief of Cabinet Secretariate – MP (Zandanshatar or Sumiybazar)

General Functional Ministries:

  • Environment and Tourism – MP (Sodbaatar or Tsogtbaatar)
  • Foreign Relations – MP (Zandanshatar or Tsogtbaatar)
  • Finance – MP (Khurelbaatar)
  • Justice and Internal Affairs – MP (Byambatsogt – incumbent)
  • Labor and Social Welfare – MP (Chinzorig)

Sectoral (Directional) Ministries:

  • Defence – non-MP (LTG (retired) Togoo) or MP (Bat-Erdene – incumbent)
  • Construction and Urban Development – MP (Baatarzorig)
  • Education, Culture, Science, and Sports – non-MP or MP (if MP, Enkhtuvshin)
  • Road and Transportation – non-MP or MP (if MP, Enkhamgalan)
  • Mining and Heavy Industry – MP (Sodbaatar)
  • Food, Agriculture, and Light Industry – non-MP or MP (if MP, Terbishdagva)
  • Energy – MP (Davaasuren)
  • Health – non-MP

 

 

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Guest Post: Resource Governance Index Points to SOEs as Key Reform Target  

By N Dorjdari

NRGI’s Resource Governance Index measures good governance in the extractives sectors of 81 countries. This year, Mongolia’s mining sector ranked 15th out of 89 assessed extractive sectors, with an overall score of 64 out of 100 points—a relatively satisfactory result indicating that progress has been made in some areas of resource governance. Good governance of extractives is a critical precondition for sustainable development in resource-rich countries, and Mongolia would do well to use the RGI’s findings as a roadmap in its efforts to plan and implement necessary reforms.

A half-full or half-empty glass?

Global indices like the RGI often provide a single overall country score that is a composite of many component and sub-component scores. While there can be many merits to this approach, a composite score might conceal problem areas if the relative significance of sub-components is not properly captured, or if scores for some well-performing indicators sharply contrast to those for problematic areas. The RGI’s assessment of Mongolia provides a clear example of the latter, and it is worthwhile to explore issues that are obscured by Mongolia’s satisfactory overall score.

Mongolia’s results are mixed: the score indicates that the country has strong governance procedures and practices in some areas, but needs improvements in others.

The RGI measures governance across three components. The first is value realization, which covers issues related to licensing, taxation, local impact and state-owned enterprises—factors determining whether a country gets an expected return for the use of its resources. The second component is revenue management, which covers issues related to government budgeting, subnational revenue sharing and management of revenues through different wealth funds. The third component draws on pre-existing measures of governance and assesses a country’s enabling environment—the extent to which the country creates an environment conducive to transparent and effective policies. While Mongolia scored relatively well on the enabling environment component (73 of 100), its scores for revenue management (54) and value realization (63) indicate that there is much room for improvement, especially on the two components that are directly related to the benefits the country derives from its extractive industries.

Digging deeper reveals even more discrepancies among sub-components (see Figure 1). For instance, the lowest sub-component score is for state-owned enterprise governance (40), while the highest score is for open data policies (92). The 52-point gap between the two sub-component scores highlights the need to take a more holistic approach to strengthening extractives governance. The key issues impacting good governance of the sector are highly interrelated. Indeed, even one unaddressed issue may result in the failure of the overall policy.

Figure 1. Mongolia scores for RGI sub-components

Notes: Dots represent global maximum scores for each component. Dark green, light green, yellow and amber indicate good, satisfactory, weak and poor performance, respectively.

The RGI reveals a big “implementation gap” between rules related to extractives governance and the practice of implementing these rules. On average, the score for all legal frameworks assessed by the RGI (54 of 100) exceeds the score for practical implementation (45). This gap is even larger for Mongolia—20 points. Weak implementation of policies and laws has always been a challenge for Mongolia. Sayings like “Mongolian laws last three days” are well known, even by school children. The RGI confirms what many Mongolians already know. The enforcement of laws and regulations related to transparency and accountability is especially weak. The Glass Account Law or Open Government Partnership commitments are just two examples.

Focus on details

Public demand for greater transparency and accountability in the Mongolian mining sector has led to many reforms in the past two decades. Such progress—including the implementation of the Extractive Industries Transparency Initiative—has positively impacted Mongolia’s overall RGI score and contributed significantly to the volume of extractives-related information people can access.

Despite its strong overall score, the devil is in the details. The government needs to keep working to increase transparency and accountability. One key area of concern revealed by the RGI is the governance of state-owned enterprises, in particular that of Erdenes Mongol, the largest state-owned holding company. This company holds the country’s strategic mining assets; good governance of Erdenes Mongol can have a profound effect on the wider economy. However, at present, the company does not make essential information (such as annual financial reports) publicly available, and it ranks quite low in comparison to similar entities in other countries. Unlike governance challenges that depend on factors beyond a government’s control such as commodity price volatility, reform of state-owned enterprises largely depend on the existence of political will.

Mongolia’s mining revenue management can be improved via prudent budget spending and better sovereign wealth fund management. The government devised the Fiscal Stability Fund and the Future Heritage Fund for this very purpose, but both bodies still exist purely on paper. As indicated by high deficits and the threat of defaults, the government budget remains unstable. Mongolia has not managed to conserve portions of its mining revenues for future generations, which is a result of politically motivated spending and shrinking revenues. Rules governing these funds change much too often, and there is little publicly available information or scrutiny on these funds’ policies.

Extractive company beneficial ownership disclosure and improved transparency around extractive contracts are two other needs. The former is a relatively new challenge that, if addressed effectively, can help end ownership anonymity, build trust with the public, and prevent tax evasion and corruption. The latter is a long-standing challenge in Mongolia. Both these issues are also a part of Mongolia’s commitments under the OGP and EITI. Most importantly, these reforms would both lead to a more level playing field for investors and ensure that the benefits from the sector trickle down to all Mongolians.

About Dorjdari

Dorjdari Namkhaijantsan is the Mongolia manager for the Natural Resource Governance Institute (NRGI).

Posted in Dorjdari Namkhaijantsan, Global Indices, Mining, Mining, Mining Governance | Leave a comment

Prime Minister-in-spe Khurelsukh

By Julian Dierkes

Assuming that U Khurelsukh will be elected prime minister by the Ikh Khural, his term will be primarily inward-looking and focused on domestic politics. He will likely establish a working relationship with Pres. Battulga, but neither of them is likely to make any kind of splash internationally. Instead, within the constraints of the IMF agreement, Khurelsukh will try to dampen perceptions of negative impacts of some of the cutbacks in state benefits, while hoping for a continuation (or resumption, given the past month) of the rise of copper prices to bring revenues to the government that might increase his ability to shape policy more actively.

Khurelsukh, the Biker. From inet.mn news website

But, who is Khurelsukh?

Khurelsukh’s Recent MPP Activities

Given endorsement by the MPP Party Council, U Khurelsukh should be voted in as prime minister shortly, as predicted by Marissa Smith in her recent blog post. His cabinet will be voted in alongside. Given the super-majority held by the MPP in parliament, the party council endorsement should more or less guarantee his election. Khurelsukh has already announced that he will not change the structure of the government, but instead will name new ministers to existing posts.

He will come into the primeministership with the backing of significant parts of the MPP, mostly younger, perhaps reform-minded, but against the opposition of M Enkhbold’s city faction. It was clear to me that he is popular in the party when he spoke at the final campaign event before the first round of the presidential election in June. He was welcomed like a long-lost son by a cross-section of party activists even though that event should have been celebration the leadership and candidacy of M Enkhbold. He cut a much more charismatic figure than any of the other speakers among the MPP leadership.

Khurelsukh’s Government Trajectory

At 49, Khurelsukh is not especially young, but he is generally associated with the MPP youth organization (Монголын Ардчилсан Социалист Залуучуудын Холбоо) for which he served as the president after founding the organization in 1997. In 1990, he was the first officer who resigned from the Mongolian military to continue in a political career. He was elected to parliament in 2000, 2004, and 2012. He served as minister twice in cabinets from 2004 to 2008, and has been deputy prime minister in 2014-15 and again from summer 2016 until now. In between, he was General Secretary of the MPP from 2008 to 2012.

He will be only the fourth (of 30) non-MP PM after M Enkhsaikhan (1996-98), J Narantsatsralt (1998-99) and S Bayar (2007-08), although he has been an MP in the past.

Scrappy Khurelsukh

Khurelsukh’s rise to power is to some extent at least due to the overreach of M Enkbold’s attempts to place associates in positions of power without including other parts of the MPP. Enkhbold’s fall from triumphant parliamentary election winner in June 2016 to his current position of barely hanging on to Ikh Khural speaker’s position after a disastrous presidential bid has been rapid and may not be at its nadir yet.

V Putin, I’m looking at you! From vip76.mn website.

But even prior to his challenge to Enkhbold recently, Khurelsukh has a reputation as someone who embraces elements of accountability to his party and is not afraid to take on entrenched forces within the part.

Two moments in the past stand out in this regard.

During N Enkhbayar’s prime ministership in 2002, he called out the alleged involvement of Enkhbayar’s wife, Tsolmon, in various financial activities. As this came at a time when Enkhbayar seemd to have a relatively firm grip on the party, it was a surprise, and has given him a reputation of being courageous.

Then, he was closely involved as general secretary in the party’s name change from Mongolian People’s Revolutionary Party to Mongolian People’s Party in 2010.

When the MPP’s defeat in the 2012 parliamentary election was partly blamed on the name change, he took responsibility for the defeat and resigned from the seat he himself had won in that election.

Parliamentary Battle Photo from news.mn

His reputation for being scrappy was certainly enhanced by a fight in parliament with fellow MP G Bayarsaikhan in Sept 2012. There are also numerous other photos in circulation that seem to show him as decisive, individualistic and having some fight in him.

In contrast to his image of personal accountability, Khurelsukh appears to be somewhat wealthy, considering that he does not seem to have any direct business interests. Recent news reports comparing the three MPP candidates report his wealth as ₮1.7b or approx US$700k.

 

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