A Professional Minister vs. Professional Bureaucrats

The political climate in Ulaanbaatar is now in favour of the pro-professional cabinet.  President, Chairman, members of parliament, and even well-known columnist Baabar advised Mr. New Prime Minister to recruit professionals outside from the parliament and to tame the parochial interests.  This is not new.  The majority of past governments, either the coalition or the ruling party, had tried. But, I would doubt – this ad hoc solution would address the deep problem of governance – because the current structure of the public service continues to create incentives for anyone to follow their parochial interests, but not the fine laws of the Public Service and professional merits. 

First, professionals are frustrated – they don’t want to see another around of the politicization.  Now we can categorize the public servants into three major categories: (1) old cadre and senior specialists, (2) newly recruited professionals through merits, and (3) political party-affilliated specialists.  The first group are people who are familiar with the bureaucratic routines – who were either part of or worked with experienced cadre of the pre-1990 administrations.  Now most accept – they [senior specialists – ‘ахлах мэргэжилтнүүд’] are shouldering the heavy workload.  The second group has been recruited through a standard public service entry process [following the professional merits].  They are hardworkers, but poorly paid.  The last group could be divided into two sub-categories: (1) the true party fanatics – who come and go depending on the election results and (2) assimiliators – who find ways to become public servants through the political party line.  In comparison with previous two groups, the third group has less incentives and expertise to work, but more accessible to benefits (e.g., travel, schools, awards, bidding, contracts).  For sure, the new professional minister and vice minister will bring his/her own team (e.g., advisors, assistants) and will attempt to provide another opportunities for political party-affilliated specialists.

Second, it will deepen the unequal distribution of the workload and benefits.  After each election, at the national and provincial/local governments, we would see strong (most of the time, quite explicit) competitions for posts of ministers, vice-ministers, chiefs, and deputy chiefs of agency, chiefs of departments, senior positions of the state-owned enterprises.  Why, because these posts are highly paid and accessible to all sorts of public funds and assets.  And, even these senior officials create new positions and units for ‘their’ persons, but not for the workload.  This parochial interest-driven process creates unequal distribution of workload and benefits for public servants.  The majority of public servants could not complain because they could be easily marginalized or victimized by temporary political appointees.

Third, the appointment of the professional minister and the ignorance of professional bureaucrats weaken the bureaucracy – which is the core of any government.  Obviously, we would see three types of professional ministers in this new cabinet: (1) A true professional minister – an skillful manager, who can uphold his professional expertise and ethnics over other interests.  (2) A ‘hijacked’ minister – a good manager, but caught up in his/her personal, factional, and tribal (i.e., provincial) interests.  (3) A ‘balanced’ minister – who tries to balance his professional and parochial interests.  But, all these ministers will work under same structural constraints.  For one, they are all uncertain about the fate of the coalition government – since they could not see the lifespan of the new government within and beyond one and half year.  Second, they and their team would spend 3-6 months to figure out, 3-6 months to implement, and 3-6 months to choose their options before the 2016 election.  Third, political parties, political and economic factions, their provincial homeland associations (нутгийн зөвлөл), and others will often pressure them either to support their candidates, polices, and tenders or not to endanger these interests.  Some professional ministers would fight against these structural constraints, but most wouldn’t because of the audience costs.

So, what should be done.

Yes, Mr. New Prime Minister has no options other than to appoint professional ministers, but, it would be a temporary fix – and exacerbate the underlying problems.

This is up to the parliament.  The parliament is the only institution – that could establish a non-partisan commission to examine the public service, to brainstorm with the past and current experts, and to implement a long-term public service reform plan.

The commission could be headed by influential politicians – former presidents and prime ministers – along with non-partisan experts.  They could examine past experiences (even including the communist periods and along with transitional periods of 1990s), asks hard questions on why our fine public service law, regulations, and standards are not solving the problems, and, produces the long-term public service reform strategy.

The public service is the core, the main processor (i.e., computer PC), of the state.  Our processor needs an overhaul, if we delay this reform process, the state will implode; the bureaucracy could not respond to any external and internal crisis.   With a short-term fix, parties will continue to see the public service as a school for their cadre, an asset for their election, and a source of income whereas the political-economic factions will consider the bureaucracy a tool to increase and protect their profits. Only the parliament could dismantle this current public service structure that forces public servants to side with politicians, parties, and factions to survive, but not pursue their professional merits. 

 

Posted in Governance, Party Politics, Politics, Public Service | Tagged | 1 Comment

A Little Correction to Mr. Enkhsaikhan’s Push for Constitutional Reform

Coinciding with the birth of New Prime Minister, Mr. Enkhsaikhan, former Prime Minister and one of the political heavyweights, made an interesting presentation at the research workshop on the “Constitutional Reform” – link. He was sharing his view on creating a bicameral legislature and a strong president.  For making his points clear, he referred to two academic sources.  But, he didn’t use his sources properly – either intentionally or unintentionally.  And, I like to make a little correction.

He referred to Dr. Steven Fish’s article – “The Inner Asian Anomaly: Mongolia’s Democratization in Comparative Perspective” – published in the peer-reviewed journal of  Communist and Post-Communist Studies in 2001.  First, Enkhsaikhan was correct that Fish called Mongolia as an anomaly, but Dr. Fish wouldn’t interpret as Mr. Enkhsaikhan did.  Second, Fish didn’t mean that the political institutionalization of Mongolia had intention to destroy (in the Enkhsaikhan’s line “to burn”) the state institution.

There are two scholars (political scientists) examined our political institutionalization processes and published several in the peer-reviewed, academic journals.  One is Dr. Steven Fish.

His first article appeared in the Journal of Democracy in 1998 – argued that Mongolia’s democratic transition succeeded due five factors: (1) to the compromise between the communist party leaders and the opposition in 1990, (2) institutional choice of semi-presidentialism in the 1992 Constitution, (3) a strong multi-party system, and (5) vibrant civil society.  Therefore, Mongolia made a successful transition to democracy without any prerequisites.

Then, in 2001, he compared Mongolia with five Central Asian states and asked why only Mongolia succeeded in transition and was moving forward to the democratic consolidation.  So for him, Mongolia’s successful trajectory of democracy was an anomalyin comparison with Central Asian states, but not other democracies.  In other words, theories that  explain the political trajectories (e.g., failure of democratization and autocracy) of post-Soviet states, esp., those in Central Asia, could not explain the Mongolia’s success; therefore, Mongolia is a theoretically deviant, outlier case.

He listed five reasons – why the Mongolian democracy was successful.  First, Mongolia did not have abundant natural resources, especially oil and gas.  Second, Mongolia was not geo-strategically important for great powers, especially for Russia during 1990s.  Third, Mongolia, given its location and the small size of population, did have any pretensions to becoming a regional power like Kazakhstan and Uzbekistan. Fourth, there was no national father figure in Mongolia at a time of transition.  Fifth, Mongolia successfully dispersed the political power between the president and the parliament while all five Central Asian states and Russia concentrated power in one institution – the president.  This is the article, Mr. Enkhsaikhan referred.

Interestingly, I would like to share a few of Dr. Fish’s warnings for Mongolia – because he was (in 2001) still considering Mongolia was in transition and needed to pass some tests.  It might be easier, to cite them:

“….if Mongolia’s hopes for great oil wealth [natural resources] are realized, the state may quickly become little more than a battleground for actors seeking control over the proceeds from oil rents. Such a circumstance would critically endanger democratization” (p. 336).

“Were Putin to pick a particular politician or political force in Mongolia and back such an individual or force unconditionally, democracy’s prospects in Mongolia could suffer severely” (p. 336).

“Whether Mongolia can maintain a reasonably high level of democratic attainment depends in large part on the skill and imagination of its political leaders” (p. 337).

Later in the same year, he also included Mongolia in his comparative study of post-communist states in Central and Eastern Europe and former Soviet republics. The book is called Postcommunism and Theory of Democracy.  One of his major findings was that only states, including Mongolia, that avoided the superpresidentialism through dispersement of power between the president and parliament, remained as democracy in the post-communist bloc.  And, he even presented his formula for democratic reversals that would lead into superpresidentialism by using the presidential powers.

Although we’re always sceptical about foreign scholars who are writing on Mongolia, we could not misinterpret their research findings, especially when they devoted reasonable efforts by talking to our politicians from both spectrum, bureaucrats, scholars, and foreign observers. Dr. Fish had provided the list of his interviewees.

In sum, I don’t think that Dr. Enkhsaikhan’s usage of the scholarly source was helpful for our academic and policy debates over political institutionalization if we misinterpret it.  However, I am very glad that politicians are devoting their valuable time and effort to connect the theory and practice before going into a difficult battle.

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Saikhanbileg Elected Prime Minister

On the morning of November 21, the Mongolian parliament elected Ch Saikhanbileg as the new prime minister.

He was elected by a 42:2 vote which means that 32 members of the State Great Khural were absent for the voting. While I’m waiting for an exact listing of votes cast the absence of the MPP from the vote suggests that he was elected with (near-)unanimous support from the previous DP+Justice Coalition + Civil Will Green Party coalition.

Assessing a Future Saikhanbileg Government

I had previously posted some thoughts on what a Prime Minister Saikhanbileg might signal (compared to R Amarjargal by comparison).

Some days later now, my basic assessment holds. It is hard – though possible – to imagine Prime Minister Saikhanbileg elected by the same coalition as a significant departure from the previous government and it is thus equally hard to place great faith in his government in addressing some of the pressing social and economic issues that Mongolia is facing.

The two aspects of his election that might lead to a slightly more optimistic assessment are: his age (born in 1969 he is clearly of a different generation from leaders like Altankhuyag, Amarjargal or Pres. Elbegdorj) and the possibility of a more pragmatic cabinet of experts and professionals (following the political mood that I found earlier in the week in Ulaanbaatar in this regard).

By contrast, Saikhanbileg’s role in the previous government as cabinet secretary and his biography as a career politician (he was an MP and minister during the 1996-2000 period of DP government which turned somewhat disastrous in the last two years) do not give much cause for optimism.

The final cause for some concern is the chaotic manner in which this election came about. Given how seemingly self-destructive some of the political games that were played by leaders were and the extent to which a comparison with the implosion of the Democratic Union coalition in 1998-2000 seems obvious, there may be some doubts about how durable the Saikhanbileg government will be. It would be surprising to see Saikhanbileg serve out the remainder of the term until June 2016 from my perspective. The next moment of ferment might come after the lunar year, a period going into the Spring that traditionally brings some restlessness to Mongolian politics.

I had previously posted a bio for Saikhanbileg and re-post that here:

Some Background on Saikhanbileg

Chimed Saikhanbileg (Чимэдийн Сайханбилэг) was born in 1969 in Dornod. He was educated at Moscow State University for the Humanities (History), at the National University of Mongolia (Law) and at George Washington University (Law). He speaks English and Russian.

Saikhanbileg was an MP from 1996-2000 and served as Minister of Education 1998-2000. More recently he has served as Minister of the Cabinet Office under Prime Minister N Altankhuyag since 2012. He was elected as an MP in 2008 from Ulaanbaatar’s Bayanzurkh-Nalaikh riding and re-elected in 2012 from the DP party list.

He came into the Democratic Party from the Mongolian Youth Federation where he was president from 1997-2002. From 2008-12 he served as the leader of the Democratic caucus in parliament.

In both his most recent roles, i.e. as caucus chair 2008-12 and as cabinet secretary he has been associated primarily with party work and has had less of a public profile on policy issues. He belongs to the Polarstar faction of the DP. He is said to have had a very good relationship with frm. President Enkhbayar but is also perceived to be close to Pres Elbegdorj.

While Saikhanbileg has Twitter and Facebook accounts he has largely stayed off social media for the past year. Along with former wrestler Bat-Erdene, he may well be the tallest member of parliament.

 

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Political Mood Amid Chaos

As always, I was thrilled to have a chance to visit Ulaanbaatar, even if it was for a mere 40 hours.

Political Mood: DP Partying Like It’s 1998

Most friends and acquaintances I spoke to are puzzled by the current chaos. Especially puzzling is the apparent repetition of the 1998 mistakes by the DP. This is even more puzzling when considering that many of the principal players then, are still involved today (Elbegdorj, Bat-Uul, Altankhuyag, Amarjargal, Saikhanbileg…).

Then, the DP had won big in the 1996 election and had turned the state bureaucracy upside down in the first years of its government. Then – as now – the DP (then still a looser coalition) went on a self-destructive bender that saw an endless series of unstable governments and a rotation of prime ministers, including current president, Elbegdorj, and PM contender, Amarjargal.

All of this ended in DP slaughter in the 2000 election and many of the main players in the party subsequently went abroad for some time.

From Altankhuyag’s announcement of a long-term electoral alliance with the MPRP that was bound to and did raise the ire of many DP members, including leaders, to the tussle between the Great State Khural DP caucus vs. the National Consultative Council with one endorsing Amarjargal, the other option for Saikhanbileg, I and many people I spoke to would be hard-pressed to imagine a more effective way for the DP to implode. The only step that hasn’t been taken has been some kind of splintering with new parties founded by dissidents, though if whatever government is forming in the coming weeks will fall before the 2016 election such a split also seems like a very likely possibility.

All of this is happening in the absence of any clearly emerging new leaders with both DP and MPP stuck with the leaders of the past 10+ years. Where either party does have some promising leaders, they seem to have been side-lined by internecine warfare or are deliberately keeping a relatively low profile in the current chaos.

Elbegdorj seems to have also removed himself from some of these discussions. I would still expect that he’s hoping to move to some international office at the end of his term in 2017, but surely he is also maneuvering to keep some measure of control over the DP. Bat-Uul is likely to mount a very strong candidacy for the presidency in 2017 despite the DP’s woes based on his popularity as UB mayor.

What’s Needed? Pragmatic Problem-Solving

All the political shenanigans seem to be fuelling a desire for pragmatic and competent leadership, something that Saikhanbileg and Amarjargal also seem to be endorsing, though Amarjargal perhaps slightly more credibly.

There is a certain exhaustion with political games when many people do see the economic crisis and mounting debt load as pressing issues to be addressed. Political parties are not seen as the solution to this situation, but individuals and non-MP ministers to some extent are. That has reinforced my expectation that whatever cabinet might emerge will have a significant share of non-MP ministers, wearing a single deel, that of a technocract.

Almost all other questions seem to be answered by “Can’t even begin to guess.” by my interlocutors. Coalitions (including wilder possibilities like a DP+MPP+some others), PM, ministers, all these seem to be open for speculation.

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Side Notes on Very Brief Visit

On recent visits I have almost always try to note the small differences I see in Ulaanbaatar (see, for example, “New to Ulaanbaatar in 2014“). Here are some very few ones I noticed on this visit:

Construction continues with many residential blocks being built on the way in from the airport and to the South of the downtown core. Some of these are getting rather fanciful names, “Bella Vista”, “Marshall Deluxe Village”, “Encanto Town”.

Construction in Ulaanbaatar, Nov 2014

The “mountain road” hugging the south side of the Tuul along the city has been opened and now gives drivers from the airport two options into town, but it also provides drivers from Zaisan going out of town the option to avoid downtown.

New Ulaanbaatar “Mountain Road”

There are many new highway signs going up and traffic circles, animated pedestrian lights, and more carefully-designed intersections suggest that Ulaanbaatar is awash in traffic engineers.

In the downtown core, construction continues on the Shangri-la despite the small construction fire earlier in the fall. This will be a huge hotel and convention complex and the road that runs East-West in front of it past the UB Mart is now two-lane and straight.

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An Outlook on an Amarjargal or Saikhanbileg-led Government

The signs at the moment suggest that Saikhanbileg will end up as the next prime minister of Mongolia. Given his past association with Pres. Elbegdorj, it would seem like his nomination to parliament should go through. That leaves the question of the coalition that would support him as PM, especially after the DP seems to have opened the door to discussions with all parties.

Yet, the DP seems to also have exhibited a bit of a self-destructive streak recently, so who knows what might still happen. If Z Enkhbold is able to consolidate some authority if not power over the party, perhaps that will settle some of the internecine warfare.

Coalitions

Whether the new PM is able to make progress on some very important issues will depend to a large extent on the coalition that will be assembled. Put very briefly, I don’t have much confidence in the previous constellation (DP + Justice Coalition + CWGP). The DP has been bogged down in factional warfare and seems to be a bit of a deer-in-the-headlights regarding some of the economic challenges and the 2016 election. It’s hard to think of the Justice Coalition as a constructive force in politics and MPs Oyun and Demberel’s influence is naturally limited. So, independent of who ends up being PM, a renewal of the current coalition would lower my confidence that significant movement on OT, the fiscal situation, other pressing issues is likely to happen in the next six months. Beyond that, the 2016 election will begin to loom.

A grand coalition with the MPP, by contrast, would at least hold the promise of more decisive action that would have a broad enough majority to not be threatened by caucus-internal debates.

Leadership: Amarjargal vs. Saikhanbileg

Amarjargal

I don’t quite buy the “technocrat” narrative on Amarjargal. Yes, he’s been an academic in the past, but he hasn’t really been running any larger scale public administration effort that would give him the managerial experience and drive to steer the government ship in a different direction. And his academic merits are also fairly domestic in nature and somewhat limited. However, his technocrat image might speak to a desire to devise policies for their substantive impact, not necessarily for political/electoral expediency. That would obviously be a welcome shift.

His somewhat maverick instincts and apparent stubbornness could be a great thing, of course, but only if he picks some constructive policies to be stubborn about and it’s not clear to me that we really know what direction he might go. I find it hard to imagine him working with the previous coalition effectively given DP shakiness and Justice Coalition intransigence.

Saikhanbileg

And Saikhanbileg? I have had a chance in the past to spend some time with him and had a good conversation, he certainly made a positive impression in terms of his substantive knowledge and interests. But is he not fairly similar to someone like Altankhuyag, i.e. focused on managing party concerns with a bit of the implication of being in government for government’s sake, not for the nation’s or the people’s sake? He is of a younger generation and would represent a step away from the original democracy activists in the DP. But so far, the younger generation of DP politicians has not really stood out for any specific substantive policies that they have embraced that would distinguish them from Elebgdorj, Bat-Uul and that generation of leaders.

Would either of them initiate a wholesale personnel rotation again? This has done such harm in the past, including the past two years by destabilizing the government apparatus and forcing people into unfamiliar positions. The fact that Saikhanbileg has been part of the government for the past two years suggests that he may well leave many ministerial posts (beyond the ministers themselves) alone, while Amarjargal’s maverick instincts might lead him to replace more people.

My big question, of course, is: how likely is either to make progress on OT and get some other matters (fiscal, etc.) sorted? In the end I think the coalition may be more important than the PM on that matter.

Cabinet

I wouldn’t dare to guess whom the next PM might appoint to cabinet. One of the initial questions might be whether the new PM goes with the 13 ministries reform initiated by Altankhuyag. That has only been in place for such a short time that I don’t imagine it’s really cast in stone. On the other hand, why expand cabinet again after the double-deel debates of the Spring, etc.

It’s hard to imagine either coalition scenario producing a cabinet that would be dominated in any way by non-MPs with significant substantive qualifications. Amarjargal’s technocratic image and lack of strong faction ties/obligations might lead one to expect that he would exert his influence more in the direction of somewhat more independent ministers.

In a grand coalition, the main question would be what ministries the MPP would bargain for. M Enkhbold is not a politician that many people would expect decisive action on substantive files on, so the MPP ministers and their portfolios might play a significant role in decisions the government might make.

Some of the ministers that have been performing well in the previous government (Bold as FM, Oyun for Green Development, Oyungerel for Culture) are probably relatively unlikely to be in cabinet again.

Comments?

As always, I assume that some of my understanding of the current political context in Mongolia will be off and welcome corrections and comments using the blog’s comment function.

Posted in Civil Will Green Party, Democratic Party, Mongolian People's Party, Mongolian People's Revolutionary Party, Party Politics, Politics | Tagged | 1 Comment

Another Nomination for Prime Minister: Ch Saikhanbileg

And for another twist… After the DP caucus in the State Great Khural had nominated R Amarjargal, the party itself now seems to have given the nod to Ch Saikhanbileg.

Of course, his election to the prime ministership still requires nomination by the President, and a majority in the State Great Khural (which requires that he build some kind of coalition with other parties).

Some Background on Saikhanbileg

Chimed Saikhanbileg (Чимэдийн Сайханбилэг) was born in 1969 in Dornod. He was educated at Moscow State University for the Humanities (History), at the National University of Mongolia (Law) and at George Washington University (Law). He speaks English and Russian.

Saikhanbileg was an MP from 1996-2000 and served as Minister of Education 1998-2000. More recently he has served as Minister of the Cabinet Office under Prime Minister N Altankhuyag since 2012. He was elected as an MP in 2008 from Ulaanbaatar’s Bayanzurkh-Nalaikh riding and re-elected in 2012 from the DP party list.

He came into the Democratic Party from the Mongolian Youth Federation where he was president from 1997-2002. From 2008-12 he served as the leader of the Democratic caucus in parliament.

In both his most recent roles, i.e. as caucus chair 2008-12 and as cabinet secretary he has been associated primarily with party work and has had less of a public profile on policy issues. He belongs to the Polarstar faction of the DP. He is also another recent politician from the West, from Khovd. [Corrected Nov 20, following pointer from reader @tuvshin77] He is said to have had a very good relationship with frm. President Enkhbayar but is also perceived to be close to Pres Elbegdorj.

While Saikhanbileg has Twitter and Facebook accounts he has largely stayed off social media for the past year. Along with former wrestler Bat-Erdene, he may well be the tallest member of parliament.

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Nominated for Prime Minister: R Amarjargal

On November 12 the State Great Khural Democratic Party caucus selected a candidate for prime minister, Rinchinnyam Amarjargal. This vote came a mere week after former Prime Minister N Altankhuyag lost a vote of no-confidence on November 5. This does not mean that Amarjargal has been elected since that vote has to come in the full State Great Khural. The DP is also open to discussions about coalitions that would form to support Amarjargal as a candidate. In the meantime, the nomination was widely supported by DP MPs but opposed by Altankhuyag who is still party chair for now, an office that has been tied to the prime ministership in the past.

Background on R Amargargal

R Amarjargal (Ринчиннямын Амаржаргал) is 53 years old and previously served as the last prime minister of the 1996-2000 Democratic Union coalition government, from July 30, 1999 to July 26, 2000. He had been elected to parliament for the first time in 1996 and served as foreign minister when current president Ts Elbegdorj was prime minister from April to December 1998. He was elected chairman of the Mongolian National Democratic Party (Монголын Үндэсний Ардчилсан Нам) in 1999 which was a member of the Democratic Union coalition and merged into the Democratic Party of today following the massive election defeat in 2000.

As prime minister in 1999/2000 Amarjargal had to resign his seat in parliament which he regained (running as an independent) in 2004. He was reelected representing Khovd and the Democratic Party in 2008 and representing Ulaanbaatar’s central Sukhbaatar district in 2012.

He would continue the recent dominance of politicians from Western Mongolia in politics. President Elbegdorj is also from Khovd and former prime minister Altankhuyag is from Uvs.

Amarjargal was educated in Russia at the  Plekhanov Russian University of Economics and speaks fluent Russian. In 1995, he obtained a MSc in Macroeconomic Policy and Planning from the Univ of Bradford in the UK. He was an early democracy activist and quite involved in the initial privatization of state assets.

Recently, Amarjargal has been somewhat of a gadfly or an independent spirit in parliament, focusing especially on economic policy. He is a member of the MUDN (Mongolian National Progress Party) faction of the Democratic Party headed up by the former Min of Construction Ts Bayarsaikhan. But he is generally seen to not be very beholden to the faction. He has a reputation as being fairly uncompromising and willful which has hurt his standing in the DP in the past and would be a strong contrast with former prime minister Altankhuyag’s style. He was one of the 8 members of the DP who voted against Altankhuyag on Nov 5.

Amarjargal tweets @AmarjargalR

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Guessing the Next PM

In response to some discussions on Twitter, I now offer this prediction board in three categories, time to election of new PM, coalition that will elect the new PM, and the new PM.

While individuals may choose to enter into private wagers on these matters, my employer, I, and anyone putting their name down for an option do not condone illegal gambling.

Remember that I’m collecting guesses of who will be elected how, not endorsements. These are not opinions on who should be PM, but guesses as to who will be.

Time to Election of PM

Before Nov 14: @MBBontoi | @SJJargalsaikhan | @temuulen384

Nov 15-21: @jdierkes | @TsogtbaatarB | @Taitamco | 

Nov 22-28: @ncousyn

After Nov 28: Jangar | @civicmongolia

PM Elected

N Altankhuyag:

R Amarjargal@SJJargalsaikhan

M Batchimeg

E Bat-Uul: Jangar | @swickhamsmith

S Bayartsogt@altanalim (1/2)

D Dorligjav: @TsogtbaatarB (1/3)

M Enkhbold:

Z Enkbold: @TsogtbaatarB (1/3) | @JamesMNHarris | @altanalim (1/2) | @temuulen384 (1/2) | @allysonseaborn
[Note that Enkhbold has ruled himself out!]

L Gantumuur@ebulgand (1/2)

Ch Saikhanbileg@lutaa01 | @ebulgand (1/2) | @TsogtbaatarB (1/3) | @Taitamco | @temuulen384 (1/2) | @MBBontoi | @civicmongolia

Coalition Electing PM

DP-Justice Coalition-CWGP: @MBBontoi

DP-MPP: @TsogtbaatarB | @jdierkes | @Taitamco  | @temuulen384

MPP-DP:

MPP-other parties:

Your Guess?

Join the fun and tweet your guess using #MGLpoli to mark your guess. I’ll try to keep track of guesses tweeted with that hashtag.

November 21 2014: The Results

Barring yet another twist & turn, the Nov 21 election of Saikhanbileg by the continuing coalition of DP + Justice Coalition + CWGP means the following guesses were winning guesses:

Time to Election of PM

Nov 15-21: @jdierkes | @TsogtbaatarB | @Taitamco | 

PM Elected

Ch Saikhanbileg@lutaa01 | @ebulgand | @TsogtbaatarB | @Taitamco | @temuulen384 | @MBBontoi | @civicmongolia

Coalition Electing PM

DP-Justice Coalition-CWGP: @MBBontoi

 

Posted in Civil Will Green Party, Curios, Democratic Party, Mongolian People's Party, Mongolian People's Revolutionary Party, Party Politics, Politics | Tagged | 3 Comments

What/Who Comes After Altankhuyag

In the morning of Nov 5, 2014, 11 of the 17 members of the standing committee of the State Great Khural voted in support of a vote of no confidence in PM Altankhuyag. This passed the motion to the full parliament where 36 of 76 members voted in support with 30 voting against. The 36 supporters of the no-confidence motion included a number of DP MPs:  R Amarjargal, D Battsogt, Kh Battulga, J Batzandan, R Burmaa, L Erdenechimeg, B Narankhuu, M Zorigt. 7 DP members were absent: D Arvin, M Batchimeg, G Bayarsaikhan, S Erdene, D Ganbat, D Ganhuyag, S Odontuya (all save Batchimeg from the Shonkhor (Falcon or Hawk) faction). From the MPRP Ts Oyunbaatar, Ch Ulaan were absent while L Tsog and G Uyanga voted against Altankhuyag. The total number of votes (66) satisfied the requirement of two thirds of MPs present for this vote.

N Altankhuyag was the longest-serving PM from the DP with 819 days in government. Since 1992 only two PMs have served full terms: Jasrai from 1992-1996 and Enkhbayar from 2000-2004.

What Happens Next

First, a care-taker government under deputy PM D Terbishdagva has taken over.

As the DP-Justice Coalition coalition still holds a majority, the first discussions will surely be DP-internal to see if the party might rally around a candidate for PM to propose to its coalition partner. The sense that some of the DP MPs revolt was sparked by the agreement Altankhuyag signed with the MPRP suggests that a candidate for PM will have to resolve or at least address that tension in some way. The party council is reported to have been called for this Friday.

In all likelihood, discussions about candidates and possible alternative coalitions are already in full swing.

If the DP cannot agree on a candidate or discussions with the Justice Coalition around support for a DP candidate fail, the next most likely option would seem to be discussions about a grand coalition between the DP and MPP, with or without other parties (more likely without). This would suggest a DP PM and MPP Speaker of the Great State Khural as one possible scenario.

A remote possibility also exists that a coalition under MPP leadership could form with support of defecting DP members and/or the other parties.

The final possibility is that parliament is dissolved and new elections are called.

Legal Provisions

Without going into too many legal issues, the basic situation seems to be as follows.

Parliament is obligated to elect a Prime Minister within 30 days (from Nov 5). If a Prime Minister cannot be elected in this period, this triggers presidential involvement for another 45 day period.

At any moment if the president deems parliament incapable of proceeding, the president can suggest a vote to dissolve parliament to parliament. Seven days after that determination, the president can dissolve parliament by decree.

Parliament can also decide to dissolve itself with a two thirds majority.

Note that the President on his own initiative cannot put a candidate forward for a parliamentary vote.

Thanks and Comments

Thanks to G Damdinnyam & J Mendee (both UBC grad students) for helping me understand the context.

If there are any factual errors in the above, I certainly welcome corrections. Please also share your views of likely scenarios using the comment function.

Posted in Civil Will Green Party, Democratic Party, Mongolian People's Party, Mongolian People's Revolutionary Party, Party Politics, Politics | Tagged | Leave a comment

Political Turmoil – November 2014

This is approximately the third time that the Altankhuyag government seems to have faced serious opposition in parliament as well as in the DP itself. PM Altankhuyag has been surprisingly and impressively skilled at staying in the PM’s position despite giving no clear signs of a policy agenda that he is pursuing. Instead, his government collectively appears to be primarily in the business of being in government as an end in and of itself, rather than for specific policy aims.

From my perspective, perhaps limited to a naive outsider, I would have to note that Mongolia is facing significant policy challenges at the moment, especially in economic policy, and none of the current political shenanigans offer any significant hope that they will facilitate the making of tough decisions. Instead, everything I see (in virtually all players, individually and political parties) suggest a self-interested short-term perspective that cumulatively looks likely to be to the detriment of Mongolians.

A Brief Chronology

Two weeks ago PM Altankhuyag signed an agreement with the MPRP that seems to lock the DP into a cooperation with former president Enkhbayar’s party through the 2016 election. It is very unclear to me why Altankhuyag would want to commit to this cooperation. The MPRP seems to offer no policy perspectives to the government and seems to be beholden almost entirely to its leader, Enkhbayar. The alliance with the MPRP seems to further seal the DP’s likely electoral defeat in 2016, so why? Most of the explanations would likely focus on the personal motivations of President Elbegdorj (more on that below) or on backroom deals between various leaders.

The announcement of this agreement (pointedly made while Elbegdorj was traveling in Europe) immediately drew out DP leaders in opposition to this deal. Jenco Battulga and UB Mayor Bat-Uul were most vocal in their opposition and went into open rebellion against Altankhuyag within the DP.

Last week Altankhuyag then resigned the chairmanship of the DP [see note below], a decision that will have to be reviewed by a DP party congress. Since the law on political parties specifies that the PM should be the leader of the strongest party in the Ikh Khural, his resignation would imply that he would have to be replaced by anyone who is elected as leader of the DP in his succession. Any other constellation (i.e. anyone else as party leader, but Altankhuyag stays on as PM) would seem to be in contravention of the law on political parties.

Over the past weekend, however, there have been calls for DP party unity that might prolong Altankhuyag’s tenure.

The Opposition

Most of the MPP is probably right in feeling quite confident about its electoral chances in 2016. Though many things might change in 20 months until the election, it’s difficult to imagine a sequence of events until then that would give the DP a strong position in the election.

This confidence is reflected in an apparent attitude by some of the party to let the DP flounder further in its current convulsions and to simply clean up come the 2016 election.

I find that to be an equally short-sighted and irresponsible position in that I cannot imagine under what scenario a responsible politician with a concern for his/her nation’s future would prefer another 20 months of inaction/failure for the promise of a sure electoral win, especially in a situation where the MPP has not distinguished itself by proposing viable alternative policies to those “pursued” by the DP.

In fact, the strongest pitch for a MPP government appears to be that it would be staffed by different people, though it is entirely unclear what policy directions this would entail. M Enkhbold as leader of the MPP has certainly not distinguished itself by specifying any policies that would be genuine alternatives to the current mess.

While the focus is on the DP-internal turmoil this week, there surely still is some possibility for a grand coalition at some point which would likely be the scenario that holds the greatest potential for constructive decisions by the government.

The DP and the Opposition

Inherent in some of these considerations may also be an element of revenge that will be difficult to repress come an electoral win in 2016. The DP has made the very unfortunate (in policy terms) decision to replace almost all personnel in the state bureaucracy with new individuals. This has led to a great amount of turmoil and lack of continuity though it may have also placed some individuals of significant competence in responsible positions. Regardless of their competence, the DP has clearly been engaged in a game of distributing patronage appointment and using state powers to hamper the opposition. This strategy is reminiscent of the DU’s electoral triumph in 1996. What may be different this time around, however, is that the then-MPRP was restrained in its reaction when it won the 2000 election. Given the DP’s reversion to 1996 form since 2012 it is unlikely that such restraint will run strong through a 2016 MPP government.

Individual Players

Factional politics in the DP are very difficult to follow and I’ve never been so focused on these to really understand what’s going on. Surely some of what I say below would appear in a different light if factional politics were taken into account. But I also want to emphasize that from an outsider’s perspective, it’s difficult to fight the impression that the factional divisions within the DP have turned some of the business of governing into more of a political game than a mechanism to arrive at constructive solution to policy challenges.

Elbegdorj

In conversations with Mongolians, I am regularly reminded that most people suspect  Elbegdorj’s involvement in the current turmoil, even though he has appeared restrained in public. My own sense had been that he was primarily interested in using the platform afforded to him as president to secure an international position for himself for after the end of his presidency in 2017. His courting of different kinds of countries (landlocked, democratic, non-aligned, etc.) seemed to be aimed specifically at some kind of UN job. From my perspective he might actually be an effective spokesperson for a UN agency, though his managerial credentials or his policy convictions do not suggest as much.

Currently, however, speculation about his involvement seems to be focused more on attempts to secure a post-2017 political future for himself in Mongolia. This could involved “doing a Putin”, for example, i.e. running the DP again after completing his second presidential term, and perhaps paving the way for a future prime-ministership or another run at the presidency in 2021. What I fail to see in this speculation is a logic for the current action. I could imagine that Elbegdorj is cementing his personal power, but he would seem to be doing so, by letting the DP flounder, much as the opposition is prone to do.

Bat-Uul

Bat-Uul has arguably had a good run as mayor of Ulaanbaatar. Changes to the downtown are visible and the public mortgage subsidy seems to have encouraged the construction of small-scale condo projects that have begun to offer an alternative to Mongolians living in ger districts. Bat-Uul is rumoured to harbour presidential ambitions for the 2017 presidential elections and being the mayor of Ulaanbaatar is surely a viable platform for those ambitions.

Enkhbold Z

As speaker of the Ikh Khural, he is already close to the centre of power, but he is almost certain to be eager to have a shot at the PM’s job. He has recently appealed for party unity, however, denying a push to replace Altankhuyag in the short term.

The Constitution

In the context of the current turmoil constitutional discussions have surfaced once again. What remains unresolved is the division of power between the presidency and parliament/cabinet/PM. This has led to almost constant simmering tension between presidents and prime ministers, whether these occur in a cohabitation setting or with officials from the same party. Yet, the current turmoil has little to do with this constitutional tension and surely it isn’t the time to resolve such an issue at the moment.

Conclusions

Predictions about what is likely to happen are fruitless in the current chaos. It does seem clear to me that a coalition government (DP and MPP in some constellation) would be most likely to have a chance at addressing some of the challenges Mongolia is facing whereas a continuation of the Altankhuyag government seems to offer the lowest probability of constructive action.

Some kind of decision should be brought about by Altankhuyag’s resignation as party chair as that resignation will have to be accepted/acted upon in some ways this week. But I’m offering no odds on the likelihood of any particular reaction to this resignation.

PS: Comments and Corrections

A number of Twitter followers have pointed out that Altankhuyag has apparently not resigned, but was simply testing the waters with talk of resignation.

I would welcome further corrections to what I’ve written above if there are errors. Please use the comment function below by clicking on <Leave a Comment>!

Posted in Democratic Party, Mongolian People's Party, Mongolian People's Revolutionary Party, Party Politics, Politics | Tagged | 4 Comments

Parliament(s), Rifles and Me

With all the turmoil in the Mongolian government at the moment it seems very challenging to write a blog post that will add any clarity as it will become obsolete virtually the moment I might press <publish> because SMS originating from Malta will once again re-configure the current political scene.

But in other political news this past week, something odd happened to me.

September 2013 in Ulaanbaatar

Last September, I was in Ulaanbaatar for the World Economic Forum’s Strategic Dialogue on the Future of Mongolia. Following this event I attended a discussion about mining in Government House on September 16. The Great State Khural (parliament) is also housed in Government House. The meeting lasted most of the morning, but at some point, we were told that someone had taken shots at Government House with a rifle.

When I left Government House, I headed across Sukhbaatar Square only to encounter a police cordon and a large crowd. In this crowd I met the staff of the Canadian embassy to Mongolia who had been evacuated from Central Tower because of a bomb threat to that building.

It turned out that Munkhbayar was behind the rifle shots and the pipe bombs that had been planted as an apparent act of eco-terrorism. No one was harmed, of course, and it wasn’t entirely clear that harm had been intended, but Munkhbayar received a harsh 21 years prison sentence nevertheless. The whole situation was even odder because I had met Munhkbayar once in the mid-2000s to learn about his environmental activism.

September 2014 in Ottawa

Fast forward to this past week when I was travelling across Canada for some conferences. I arrived in Ottawa on Tuesday morning and had a series of meetings and gave a presentation on Mongolian foreign policy at Canada’s Department of Foreign Affairs, Trade and Development.

On Wednesday morning I had a very productive meeting at the Mongolian embassy to Canada and then cross the street for a meeting at Export Canada (EDC). I was met in the lobby by two official from DFATD and two more from Export Canada for a 30-minute or so meeting to discuss political risk and economic development in Mongolia. My next appointment after this was to be on Parliament Hill.

Of course, all this was interrupted by the shots that were fired that morning and I ended up being locked-down in the EDC building for five hours. My unfortunate hosts got to hear more about Mongolia than they ever had planned to, but we managed to spend a productive and enjoyable day.

Jinx?

All this begs the question of whether I am some kind of jinx on the combination of parliament, foreign affairs, embassies and rifle-brandishing criminals, since I am in no way associated with the shooters (other than that years-earlier interview with Munkhbayar). As a precaution, I will avoid parliaments for the time being and will not schedule meetings with Canadian foreign affairs officials on the same day as visiting any parliament.

It’s also curious that in both cases the label “terrorist” was used quickly for the perpetrators yet both had used low-tech rifles and while they had political motivations, lots of mental health questions are certainly being raised in the Ottawa context.

Posted in Curios, Security Apparatus, Ulaanbaatar | Tagged | Leave a comment

Progress on Oyu Tolgoi?

The Mongolian government has been battling a homemade economic crisis for some two years now. It has been a largely self-inflicted crisis brought on by some hasty policy decisions regarding investments that have led to a massive loss of (foreign) investor confidence, coupled with some large-scale public borrowing and spending on variously popular and populist projects.

In May this year, I wrote an editorial in the UB Post that tried to make the case that the main task for the Mongolian government should be to get Oyu Tolgoi (construction and operations) (back) on track. There are some tentative signs this week that Mongolia is coming up to a turning point for short and medium-term economic development. The long-term prospects for Mongolia have not really been in doubt given its mineral wealth and positive factors like a small population, democracy, and a young and educated workforce.

Two pieces of news came in the last days regarding the giant Oyu Tolgoi project which is controlled by Rio Tinto but in which the government of Mongolia holds a 1/3 stake: First, a tax dispute seems to have been settled on mutually agreeable terms, but perhaps more importantly, a new feasibility study that examines the continued construction of Oyu Tolgoi underground has been released. These two pieces of news may be just the impetus that continuing discussions between Rio Tinto and the government have needed. This is especially true as a September 30 deadline from banks regarding the financing of the expansion looms.

Resolution of Tax Dispute

The resolution of the tax questions is hopefully an indicator that both parties recognize the importance of cooperation in all areas. Obviously, the Government of Mongolia should expect Oyu Tolgoi to fully comply with all regulations and laws of Mongolia, but Rio Tinto as the partner in Oyu Tolgoi should also expect cooperation form the Government in the form of the pursuit of a productive relationship.

OT Feasibility Study

The feasibility study is important not because of the price tag it quotes for underground expansion (which is in line with previous estimates), but because costs for construction up to the beginning of production had been a bone of contention for over a year between Rio Tinto and the government of Mongolia. Some of the costs associated with construction of above-ground facilities and some underground operations had been questioned by Mongolian officials. President Elbegdorj raised many of his concerns in a speech to parliament in February 2013. As part-owner the Government of Mongolia balked at approving further expansion until a feasibility study provided some potential clarity on costs that would arise from this expansion. The feasibility study announced US$4.9b as the necessary expansion of capital for underground operations.

The costs incurred in construction crucially determine any calculation on part of the government for when they might actually begin to see income streams from their stake in Oyu Tolgoi following the massive up-front investment costs of a block-caving operation.

Up until the announcement of these news items, there had been very little movement on discussions between Rio Tinto and the government for a very long time, at least no movement that was publicly visible. Obviously, some of the discussions between partners in a commercial venture ought to be held privately, but the Mongolian public certainly deserves to be kept informed about significant progress in negotiations. While government officials had claimed that such progress was being made in the last year, there was little evidence for such claims giving rise to suspicions that Rio Tinto may be relatively happy to accept a stall in the interest of avoiding further capital investments at a time of financial strain, or to seek out investment in the project by some other third party which would complicate matters for the government, especially if that third party was a Chinese concern.

The fact that the announcement of the feasibility study has come from Rio Tinto (via Turquoise Hill Resources, its Oyu Tolgoi “vehicle”) suggests that strategic decisions for further construction and expansion may have come from Rio Tinto and potentially alleviating the fears about contrary plans.

Timing

If these announcements are indeed a turning point in the relationship between Rio Tinto and the government, this comes at an opportune moment.

Foreign Relations

Not only is the financial crisis in Mongolia growing more acute with the massive decline in FDI and the ballooning of debt, but Mongolia is also potentially being squeezed by its immediate neighbours, Russia and China, in the context of a cozying up to China by Russian Pres. V Putin following his ostracism by European and North American countries over the Crimea and Ukraine.

While any agreement between Russia and China poses no existential threat to Mongolia, it is likely to constrain the country in terms of its foreign policy options. For example, is there room for Mongolia to not participate in a proposed Russia-China-Mongolia customs union even though the Mongolian meat sector may be the only potential beneficiary while other benefits would primarily accrue to Chinese and Russian exporters? Pres Elbegdorj’s tightrope walk to retain Mongolia’s observer status at the recent meeting of the Shanghai Cooperation Organization points to some of the challenges that Mongolia will face in coming years.

This context is relevant to the OT decision because the recent visits by Pres Xi and Pres Putin involved a warm embrace of economic “goodies” on offer in terms of investments and commitments to infrastructure projects, etc. These overtures along with the likely participation of Chinese and Russian investors in the offering of new exploration licenses in Mongolia (delayed from the originally planned Sept 24 date) might signal an ever-increasing economic collaboration with the immediate neighbours that will be balance well by a reassertion of foreign (ie non-Chinese and non-Russian) interest in OT.

It is also hard to imagine that any Russia-China collaborations would support Mongolian democracy in any way should it ever be challenged by deepened economic crisis. This would be especially unfortunate as Mongolia is just beginning to play a role in democracy-promotion around Asia, particularly vis-à-vis the Kirghiz Republic and, potentially, Myanmar.

Electoral Cycles

Contrary to Mongolia’s potential role in democracy promotion, the current developments may come just in time in terms of the electoral cycle as well. Almost two years remain before the next parliamentary election and already the rumour mill about a replacement of the current governing coalition by a grand coalition has been heating up all year. Any decisions about Oyu Tolgoi that do not come very soon are likely to be doomed by politicization of the process and the looming electoral campaign.

Not out of the woods, but…

There is nothing definite in the current news that spells out a quick resolution of the Oyu Tolgoi disputes between Rio Tinto and the government, but for the first time in a while, there is some concrete and positive movement.

Posted in China, Foreign Investment, Foreign Policy, Mining, Mining, Oyu Tolgoi, Policy, Russia | Tagged | Leave a comment

Appreciating the Work of the Canadian Embassy

I am not even Canadian, and I don’t work for the Canadian or for the Mongolian government for that matter, though they are obviously important interlocutors for me given my interest in economic, political, and social development in Mongolia.

Yet, in the 12 years that I’ve worked as an academic focused on Japan and Mongolia in Canada, I have come to appreciate interactions with Canadian diplomats very much. In my previous experience, I found German diplomats to be largely uninterested in the work of German country experts (like me), although I am beginning to revise that impression through some interactions with the German embassy and foreign ministry recently. The US always offers such a large field of academics that contacts with the State Department are also relatively limited. Relations with Japanese diplomats posted to Vancouver have always been very good and the interactions with the Japanese embassy in Ulaanbaatar have also been interesting, but largely focused on information exchange and knowledge of each other’s activities.

By contrast, I have found Canada’s diplomatic missions to be very open to discussions about in-country developments and to an exchange of views.

The Canadian Embassy in Ulaanbaatar

The Canadian embassy to Ulaanbaatar has been a particular pleasure to work with. Set up under Ambassador Anna Biolik in 2009, the embassy has established itself as one of the most active players on the Ulaanbaatar diplomatic circuit under Ambassador Greg Goldhawk over the past four years in tandem with the efforts of Maxim Berdichevsky as Counsellor at the embassy.

In my interactions with Canadian diplomats I have come across different types as to their preferred interactions with academics. There are officials who are very academic in their own outlook and interest in countries, i.e. they seek out analytical views of developments to compare with their own. There are some officials who are somewhat indifferent to academic interests, sometimes paired with a strong focus on economic and business relations. And there are a few officials who have a somewhat conflicted relationship with academics for whatever reason.

For the past four years, Amb Goldhawk and Maxim Berdichevsky have not really fit into any of these categories, but instead have been active, supportive and welcoming in all interactions I’ve had with them on Canada-Mongolia relations, despite the constraints (not just budget) that they’ve been operating under.

It has been a particular pleasure to work with them and to be able to establish a relationship where I have been able to share my views on Mongolia, to have these taken seriously, and to know that they are being taken into account in the formulation of policy in some small way. Amb Goldhawk and Maxim have also been terrific discussion partners as they have kept such a sharp eye on events in Mongolia and their observations have thus often had a significant impact on my own understanding.

Obvious Achievements of the Embassy

Over the past several years there have been notable achievements for the embassy.

The most obvious and concrete change was obviously the move to the permanent location in Central Tower. The offices there are attractive, er, centrally located, and seem to be working out well as far as an outsider can tell.

The other outwardly visible achievements were the multiple visits by officials in both directions as well as the ramping up of a bilateral aid program for Mongolia.

Some of the most notable visits:

Mongolia -> Canada

  • Prime Minister, S Batbold (Oct 2010)
  • Speaker of the Ikh Khural, Z Enkhbold (March 2013)

Canada -> Mongolia

Substantive Achievements

While the embassy building and official visits are easily seen from the outside, the substantive work of the embassy may sometimes be less immediately visible. In the case of the Canadian mission in Ulaanbaatar there are a number of areas of particular activism on the part of the embassy.

Education and especially higher education is of obvious interest to me as a university professor. Here, the first-ever Canadian education fair in Mongolia in October 2013 was a real milestone. The general push to let Mongolians know about education opportunities in Canada is surely also linked to the over 30 Mongolian students we now have at UBC.

International agreements are another obvious marker in bilateral relations and discussions around a FIPA have been on-and-off since PM Batbold’s visit to Ottawa and his initial request for the opening of trade negotiations to which the FIPA is seen as a first step. Currently, the FIPA discussions seem to have gathered some momentum again, no doubt in part through the persistence of the embassy in Ulaanbaatar, but also at DFATD headquarters and the very engaged Mongolia desk there, I imagine.

While the Canadian embassy is a small mission, I have heard much about its activities from Mongolian interlocutors. This is in part due to the Mongolian recognition of Canada as a 3rd neighbour with particular expertise in resource issues, but surely also due to the active advocacy by the embassy on issues like the ongoing development of mining regulation where Canada clearly is an advocacy leader in Ulaanbaatar.

Amb Goldhawk and Maxim’s tenure also coincide with a push onto social media by Canadian missions. Maxim has been very active in this regard on Twitter. But the embassy also has a presence on Twitter and Facebook now.

 The Future of the Canadian Embassy

While Amb Goldhawk and Maxim have left Ulaanbaatar, I have not seen an announcement of a new ambassador. Obviously, I hope that this appointment will be announced soon and that relations with the embassy will be as productive and enjoyable in the future as they’ve been in the recent past.

Amb Goldhawk is now head of office in Canada’s High Commission Trade Office in Johannesburg with responsibility for Canada’s commercial interests across Sub-Saharan Africa. Maxim Berdichevsky has returned to DFATD headquarters as a Deputy Director involved in investment treaties negotiation. I wish them all the best in their new postings!

Posted in Bilateral Aid, Canada, Foreign Policy, Governor General's Visit 2013 | Tagged | 2 Comments

Why are American investors struggling in Mongolia?

Unlike the 1990s, Mongolia is now in the radar of US investors. Then, Mongolians were desperate for US investors, but few responded because of the unattractive market environment, uncertain political and socio-economic development, and undeveloped regulatory framework for foreign investment. Today, Mongolia is described as a high-potential investment destination for US investors, although there remain some complications.

Mongolia has restructured its macroeconomy with assistance from international financial institutions (IFIs), entered into a series of agreements with the US to increase bilateral trade and investment, and even offers short-term visa exemptions for US citizens. Above all, Mongolia recognizes the US as a vital ‘third neighbor’ to balance the influence of its powerful neighbors, China and Russia. Mongolia sought to strengthen its relationship with the US by renewing its commitment to democracy, deploying over 2,000 military personnel to Iraq and Afghanistan, and constantly seeking opportunities to develop closer ties. In spite of cultural and geographic distance, Mongolian officials have invited US corporations to invest in large-scale mining and infrastructure projects. Moreover, Mongolia is committed to democratic principles, proximate to East Asian economies, and is not experiencing any armed conflict. Why then are major US investors struggling to close investment deals in Mongolia – especially, in areas of mining and infrastructure development?

It is neither because of changes in our foreign policy objectives nor limited knowledge about Mongolia’s investment environment. The ‘third neighbor’ foreign policy has been re-affirmed by politicians in policy statements and in meetings with US officials. This soft-balancing strategy has never been challenged by China or Russia. They seem to respect Mongolia’s strategy as long as Mongolia remains militarily neutral. Nor can ignorance be the problem: an enormous amount of knowledge has been generated by IFIs, ranging from the World Bank to the European Bank of Reconstruction and Development, embassies, trade representatives, local branches of multinational corporations, legal firms, consulting services, and media ever since Mongolia’s opening in 1990 and re-opening of mineral wealth in the first decade of the millennium. Mongolia has been recognized as the new frontier for US entrepreneurs.

The main obstacle for US investors is domestic politics in Mongolia. Self-interested politicians and political-business factions increasingly dominate domestic politics and foreign policy. This results in weak government institutions, unaccountable politicians and political parties, and unclear decision-making processes.

The government’s ability to make long-term policies has been weakened by the politicization of public service. In theory, public servants are supposed to serve as gatekeepers against parochial, short-term interests by adhering to long-term developmental policies that would benefit Mongolia as a whole. Following the first parliamentary election in 1992, there was competition in Mongolia between two major political parties as well as smaller ones to appoint party-affiliated individuals to senior, mid-level and junior positions of the government and state-owned enterprises. This encourages individuals and public servants to seek political party affiliation, and in turn, discredits merit-based professional public service. The emerging pattern now is that political parties either attempt to reduce politicization during coalition governments, as in 2004 and 2008, or take revenge and politicize positions when one party dominates both the legislature and the Cabinet as occurred in 1996, 2000, and 2012. As a result, key policymaking areas are understaffed with career technocrats while overall posts were filled with party-affiliated officials whose main aim is to benefit within the four-year election cycle.

Similarly, Parliament, a key legislative, policymaking body, lacks nonpartisan professional staff and research capacity, which are important aspects of parliamentary democracy if there is to be policy continuity. The absence of such capacity allows politicians to intrude on the lawmaking process without much analysis by politicizing any issue on populist grounds. For example, Parliament has been unable to produce substantial studies and reports on major developmental projects like strategic mines or infrastructure development for the public since its establishment in 1992. In the vacuum, influential individuals and factions spur public opinion with one-sided facts to cancel or delay other factions’ projects and to advance their own interests. That means the government is operating on flash-drive memories of influential politicians and factions rather than the hard-drives of capable, professional government institutions.

Another related problem is increasing unaccountable, opportunistic behavior by government officials at the national and local levels. Particularly at the national level, members of Parliament and the Cabinet are influential political actors. They engage in competitions over governmental posts at ministries, agencies, and state-owned enterprises such as the Erdenet copper plant, airlines, and railways, as well as in newly established ones in the mining and infrastructure sectors. Since political parties are divided along factional interests and are losing political cohesiveness to self-interested individuals and business factions, the two major political parties are unable to hold their members accountable for opportunistic behavior. Politicians and factions favor short-term construction projects in their locality for quick benefits, rather than supporting long-term major projects. In general, politicians are afraid of allowing their opponents to get credit for implementing major long-term projects – like Oyu Tolgoi and Tavan Tolgoi, two of the largest mining operations in Mongolia – and related infrastructure. This creates an environment that favors blame game tactics against opponents and encourages unaccountable, opportunistic, political behavior. As a result, members of Parliament and the Cabinet are perceived as skillful rent-seekers who make false promises to foreign and domestic investors.

The other problem is an unclear decision-making process. On paper, Mongolia has a clear decision-making process where all issues can be openly debated in public. But, over the last decade, the decision-making processes have been overtaken by informal politics and bargaining among politicians and political-business factions. Good intentions become hostage to self-interested politicians, factions, and political entrepreneurs who seek to disadvantage opponents to improve their own bargaining position. Therefore, politicians and business factions enter into a non-transparent decision-making processes. This creates opportunities for others to upset the balance of power to trigger more rounds of crises, bargaining, and compromise. As a result, no major development projects and policies to solve socio-economic challenges are fully implemented. No single study has been completed on the pros and cons of any major investment agreement or policy. The public and investors (both foreign and domestic) suffer while self-interested individuals and factions benefit.

The self-interest-dominated Mongolian politics is worsened by competition among foreign and domestic investors. Unlike US, German, and Japanese companies, the main competitors in Mongolia are not obligated under international and domestic anti-bribery and corruption acts (e.g., the Foreign Corrupt Practices Act, OECD Antibribery Convention). As a result, competition over major projects generates incentives for politicians and political factions to gain short-term benefits at the expense of national priorities. For such politicians, narratives of geopolitics and nationalism are easy ways to spur public opinion while meeting their short-term self-interest.

Mongolian politicians are aware of the importance of US investments to strengthen the ‘third neighbor’ policy. But, ‘short-termism’ in Mongolian politics is weakening the institutional capacity of the state to reach and honor investment agreements while implementing long-term policies to cope with socio-economic challenges. Unless politicians and political-business factions restrain their short-sighted interests and focus on national priorities that would strengthen state sovereignty and benefit Mongolians as a whole, the country will become an unstable, debt-ridden ‘island of the poor’ in the stormy sea of Inner Asia. Celebrations of democracy will not save the nation and keep third neighbors close by. Disciplined, professional, and apolitical state institutions together with responsible political parties and politicians will create an ‘island of opportunities.’

Note: re-posted with the permission of the PacNet of Pacific Forum CSIS, for the original news, PacNet #61.

Posted in Business, Foreign Investment, Mining | Tagged | 2 Comments